Authorities have arrested Merrimack Pharmaceuticals’ director of statistical programming. The case alleges that Songjiang Wang leaked positive results for three different Merrimack clinical trials to an employee of Akebia Therapeutics, who, in turn, shared tips about a study run by his company, Reuters reports.
Details of the case first came to light in June when the SEC sued the Akebia employee—director of biostatistics Schultz Chan—for leaking information about an upcoming data readout to his wife and a friend. The SEC alleged the three people made $288,000 through trades made on the strength of the leaked information. The friend was alleged to have made $105,000.
At that time, the identity of Chan’s friend was not known publicly. Now, authorities have arrested Wang and linked the two sets of allegations. Wang is charged with conspiring to commit securities fraud.
The case against Wang dates back to 2013 and 2014. According to federal prosecutors, Wang tipped Chan to upcoming positive clinical trial data from Merrimack. Over that two-year period, shares in Merrimack rose almost 90% on the back of positive results from its pipeline programs. Officials accuse Chan of illegally profiting from the gains using information leaked by Wang.
Chan and Wang’s cases are part of a slate of investigations into biotech fraud in recent years. Some, like Chan and Wang’s cases, are traditional accusations of misuse of privileged information. The case SEC brought last year against Puma Biotechnology’s former senior director of regulatory affairs, Robert Gadimian, falls into this bracket.
Others are more modern examples. The SEC pursued multiple traders in 2015 for either allegedly stealing information from newswires, tricking executives into sharing their passwords or posting lies on Twitter to manipulate stock prices.