The U.S. Securities & Exchange Commission (SEC) has hit Puma Biotechnology’s ($PBYI) former senior director of regulatory affairs Robert Gadimian with an insider trading charge. SEC alleges Gadimian profited to the tune of $1.1 million by making a series of trades informed by non-public knowledge of the status of trials of Puma’s breast cancer candidate neratinib.
According to the SEC, Gadimian bought $261,530 of Puma stock in August and September 2013--during a blackout period and without getting permission to do so--after he learned neratinib was performing well in the the I-SPY 2 trial. Puma posted data from the trial on December 4, sparking a 68% jump in its stock price. Gadimian sold his stock the following day, netting $95,000 in profits in the process, according to the SEC.
A bigger payday followed in 2014. Gadimian bought $215,880 in Puma stock and placed a $34,500 bet that the company’s share price would rise in the near future. The SEC alleges Gadimian’s actions were motivated by insider knowledge about the data lock. Then, on July 22, positive data from the trial sent Puma’s shares up 295%. When Gadimian sold up he realized profits of $1.1 million.
“We allege that Gadimian used valuable confidential information about his employer’s drug trials to trade illegally and enrich himself,” said Antonia Chion, associate director in the SEC’s Division of Enforcement, in a statement.
The trades caught the attention of the Financial Industry Regulatory Authority, leading to an internal investigation at Puma. In its litigation, the SEC claims Gadimian deleted certain entries from his trading record before providing them to the internal investigators, but ultimately admitted to trading Puma securities without permission and during blackout periods when questioned by his then colleagues. Gadimian is alleged to have said his actions were motivated by “greed.”
Puma was quick to dispense with Gadimian, firing him 11 days after interviewing him for the internal investigation in October 2014. Since then, the severity of the situation facing Gadimian has escalated, leading to the SEC hitting him with the insider trading case and the U.S. Attorney’s Office for the District of Massachusetts filing criminal charges.
Yet Gadimian continued to work in biopharma as the SEC team and prosecutors in Massachusetts built their case against him. According to his LinkedIn profile, Gadimian started work at Syner-G Pharma CMC Consulting in December 2014. A presentation by the Boston, MA-based consultancy lists Gadimian as senior director of regulatory CMC, a position he gained on the strength of 20 years of work on INDs, NDAs and global filings at companies including Puma, Cougar Biotechnology, Abraxis Bioscience and Amgen ($AMGN).