October 16, 2014
By Mark Terry, BioSpace.com Breaking News Staff
A former employee of Merck & Co. was charged by New York federal prosecutors with insider trader on Friday, accused of passing information to a business school friend, now a trader at an unidentified bank, regarding possible mergers ahead of public statements.
Zachary Zwerko, a, formerly a senior finance analyst, sent information to the unnamed bank trader, not charged, about Merck’s possible takeover of Idenix Pharmaceuticals and stock of two other companies, Ardea Biosciences and ViroPharma Inc. Ardea and ViroPharma were also potential targets of Merck.
“Zachary Zwerko was a spy in the camp of his own company,” said U.S. Attorney Preet Bharara in a statement, “who passed secret merger and acquisition information to his co-conspirator so that lucrative, illegal trades could be made.”
According to the prosecutors’ filing, Zwerko is being charged with one count of conspiracy to commit securities fraud. On Friday, October 10, Zwerko was arrested in Cambridge, Mass., and released on a $1 million bond.
Merck acquired Idenix for $3.8 billion in 2014. In 2012, Merck was eyeing Ardea, which has since been bought for $1.2 billion by AstraZeneca . According to the allegations, about $722,000 in profit was made as a result of the insider information.
Zwerko left Merck in July 2014 and currently works at Repligen . Zwerko’s attorney, Jeff Denner, stated, “At this point, these are just charges. I’ll be talking with prosecutors today and hope to learn more about the situation and can comment at that point.”
A charge of conspiracy to commit securities fraud carries a maximum sentence of five years in prison and a maximum fine of $250,000.
“Zwerko is charged, like so many others, with insider trading,” said FBI Assistant Direct-in-Charge George Venizelos in a statement. “This is a crime that undermines the public’s faith in our financial markets and puts companies at risk. The FBI remains committed to curbing corruption to better ensure fairness in the marketplace.”
In June 2014, Merck announced an agreement to acquire Idenix Pharmaceuticals, Inc. for $24.50 per share in cash. The transaction was valued at approximately $3.85 billion. Idenix focuses on the development of antiviral medications, and currently has three drug candidates for the treatment of hepatitis C (HCV). Merck also has several HCV compounds in development. In April 2014 Merck announced the start of Phase 3 clinical trials for its HCV fighting combination compound MK-5172/MK-8742.
