February 8, 2017
By Alex Keown, BioSpace.com Breaking News Staff
CAMBRIDGE, Mass. -- Songjiang Wang, a director of statistical programming at Merrimack Pharmaceuticals , has been charged with insider trading, Reuters reported Tuesday afternoon.
Wang, who has served in his role since 2011, allegedly engaged in the trading scheme with Schultz Chan, the former director of biostatistics at Cambridge-based Akebia Therapeutics Inc. Chan was charged on three counts of securities fraud in June 2016, but pled not guilty.
According to the U.S. Department of Justice, Wang and Chan conspired to commit securities fraud by trading insider information regarding successful clinical drug trials at their respective companies. Wang allegedly traded on inside information Chan provided regarding a clinical study conducted by Chan’s employer. Although the U.S. attorney did not specify the study in the statement, a September 2016 article on Law 360 reported the two used information regarding a Phase II trial for Vadadustat, a drug used to treat dialysis patients with anemia.
Additionally, the government said Wang reciprocated with inside information about trials being conducted at Merrimack. Wang allegedly gave Chan cash, which Chan used to purchase shares of Wang’s employer. Chan subsequently sold those shares and paid Wang back, the government said in its statement.
The government said the two conspired from November 2013 to September 2015, which was one month after Chan became director of biostatistics at Akebia. In September 2015, Akebia announced positive results from the Phase II trial of Vadadustat and company stock jumped 45 percent, Law 360 said. With prior information in hand, Wang acquired shares of Akebia before the announcement, according to the Boston Business Journal. Wang reportedly made $105,000 off of that deal.
The government said Wang provided Chan with positive information about three different trials conducted by Merrimack, allowing him to acquire shares in that company before news was made public.
Merrimack told Reuters the case was an “isolated matter involving a single, non-executive level employee.” Merrimack also told Reuters that Wang was no longer an employee of the company. Merrimack’s statement did not indicate how long Wang had been separated from Merrimack.
In December, Akebia struck gold with Vadadustat. The company signed a collaboration and license deal in the U.S. with Japan-based Otsuka Pharmaceuticals that could ultimately bring in more than $1 billion for Akebia if certain milestones are hit.
In January, Merrimack tapped a new chief executive officer and completed a strategic review of its business strategy that included the completion of the termination of about 80 percent of its staff and the sale of two cancer drugs, including Onivyde, to Ipsen , a France-based pharmaceuticals company, in a deal that could net more than $1 billion if milestones are hit. Additionally, Merrimack announced at the time that it was refocusing its pipeline on three drugs, MM-121, MM-141 and MM-310.
Shares of Merrimack are trading at $3.22 this morning. Merrimack stock has declined steadily since March 2016, when it was trading at a high of $8.75 per share.
