He was the prestigious medical investigator with a bird's-eye view of some of the most sensitive confidential data in the industry. His new friend was a schemer, paying tens of thousands of dollars for the privilege of chatting him up and demonstrating new ways to show his concern. Together, they allegedly set the stage for the biggest insider trading case in biotech history.
|Sidney Gilman--Courtesy of U. Mich.|
When Sidney Gilman met SAC's Matthew Martoma in person for the first time, the trader had prepared a lunch. At future meetings, Martoma would go over the details of his family history. Calls would follow, with Martoma asking after Gilman's health and well-being, all part of a charm offensive that Gilman spelled out to the jury hearing the insider trading case brought against Martoma. And a number of news reports in recent days highlighted Gilman's testimony that he was gradually won over by the charming Martoma at a time the doctor was chairing the safety committee overseeing the development of the one-time Alzheimer's blockbuster hopeful bapineuzumab.
"I thought it was very touching," Gilman said at one point, according to the Wall Street Journal, as he reviewed one occasion where Martoma spent an hour tracking him down in Istanbul, saying he was worried about Gilman.
At first, Gilman testified, he resisted Martoma's questions about the data that were being gathered on the Alzheimer's drug's efficacy and safety. But eventually, reported the New York Post, he succumbed to the charmer and started filling him in on the juicy details.
Two years after they met through the Gerson Lehrman Group, which was paying him $100,000 a year, Gilman would tell Martoma that investigators had determined the drug wasn't working--giving Martoma the info he needed to reap $276 million in profits and averted losses on his trading of Elan ($ELN) and Wyeth shares ahead of the announcement.
That's Gilman's story, which confirms the feds' case against Martoma. The speculation now is that the defense is preparing to hammer away at the 81-year-old's reliability as a witness, questioning his memory about the events that transpired in an effort to raise a few doubts in the minds of jurors.
Gilman lost his job at the University of Michigan Medical Center over the notorious bapineuzumab affair. In exchange for his testimony, prosecutors aren't trying to put him in prison. Martoma, on the other hand, faces 15 years behind bars.