BOSTON (Reuters) – Two former employees of rival biopharmaceutical companies were convicted on Tuesday on U.S. charges that they used their access to confidential information about drug studies to profit in the stock market through insider trading.
A federal jury in Boston found Schultz Chan, a former Akebia Therapeutics Inc employee, and Songjiang Wang, who worked at Merrimack Pharmaceuticals Inc, guilty on conspiracy and securities fraud charges.
Jurors delivered the verdict after less than an hour of deliberations following a two-week trial. Both men are scheduled to be sentenced in early October.
Lawyers for Chan and Wang declined to comment following the verdict. The men have denied wrongdoing, and their attorneys contended they did not rely on inside information to place trades in the stock of each other’s companies.
Prosecutors said that from 2013 to 2014, Wang, Merrimack’s director of statistical programing, tipped his friend Chan, 54, three times about positive results in drug studies before the Cambridge, Massachusetts-based company announced them.
The tips allowed Chan and his wife to buy Merrimack stock before the studies’ results were announced, prosecutors said. They said on one tip alone, Chan and his wife made $136,000 trading before the results of a cancer drug study were revealed.
Prosecutors said Wang, 54, also provided Chan money, which he used to buy Merrimack stock on Wang’s behalf. Chan later in March 2015 wrote Wang a check for $84,000, which prosecutors said represented Wang’s profits.
Prosecutors said that soon after Chan in August 2015 started a job as director of biostatistics at Akebia, he began buying the Cambridge-based company’s stock after learning details about a study for a drug it was developing.
Chan also tipped Wang, who likewise began buying Akebia stock and risky call options before the company announced the results of the study, which involved a drug to treat anemia patients who also had chronic kidney disease, prosecutors said.
At trial, Chan testified that he had placed trades in both companies’ stocks based on his own analysis of public information they had released, rather than anything he learned while working at Akebia or talking to Wang.
“He did not tell me anything,” he said.
Chan also said he wrote the $84,000 check to repay Wang for loans he provided Chan to cover the costs of hiring contractors to repair two properties. But under questioning by a prosecutor, Chan could not name the contractors he said he hired.
Reporting by Nate Raymond in Boston; editing by Susan Thomas and Lisa Shumaker