Former Akebia and Merrimack Employees Convicted of Insider Trading
By Alex Keown
Schultz Chan, the former director of biostatistics at Cambridge-based Akebia Therapeutics and Songjiang Wang, a director of statistical programming at Merrimack Pharmaceuticals (MACK) were convicted of insider trading by a federal grand jury in Boston.
Chan was convicted of one count of conspiracy to commit securities fraud and three counts of securities fraud. Wang was convicted of one count of conspiracy to commit securities fraud and two counts of securities fraud. The verdict was handed down after less than an hour of deliberation by the jury, Reuters reported. Both men will be sentenced in October.
According to the charges the two men conspired from November 2013 to September 2015, which was one month after Chan became director of biostatistics at Akebia.
Chan was charged on three counts of securities fraud in June 2016. According to the U.S. Department of Justice, Wang and Chan conspired to commit securities fraud by trading insider information regarding successful clinical drug trials at their respective companies. Wang allegedly traded on inside information Chan provided regarding a clinical study conducted by Chan’s employer. When the charges were handed out, the U.S. Attorney’s office did not specify which clinical study the duo traded on, Law 360 reported last year that the two used information regarding a Phase II trial for Vadadustat, a drug used to treat dialysis patients with anemia. In September 2015, Akebia announced positive results from the Phase II trial of Vadadustat and company stock jumped 45 percent.
Wang acquired shares of Akebia before the announcement and made approximately $105,000 off the deal, according to the government charges.
Wang, the government argued, reciprocated with inside information about trials being conducted at Merrimack. Wang gave money to Chan, prosecutors said, so he could acquire Merrimack stock based on that information. In March 2015, the government said Chan wrote a check to Wang for $84,000 for his share of profits from those trades, Reuters reported.
Both Chan and Wang pleaded not guilty to the charges. During the trial Chan argued that he made the trades based on his own independent analysis from publicly available information, not from information provided by his friend, Reuters said.
When asked about the $84,000 check, Chan told the prosecution that it was repayment for a loan used to pay contractors to work on two properties. When pressed by the prosecution though, Chan could not come up with the name of the contractors, Reuters said.
Chan was re-arrested last fall following charges he had violated his bail conditions. There were questions of whether or not Chan and his wife planned to flee the country to China. In the summer of 2017, Chan’s wife acquired airline tickets for herself, Chan and their daughter.