Former Immunomedics CFO Charged with Insider Trading

, ,

Former Immunomedics CFO Charged with Insider Trading

The U.S. Securities and Exchange Commission filed insider trading charges against Usama Malik, the former chief financial officer of Immunomedics, Inc. The government said Malik informed friends of an FDA decision during a “trading black out” that resulted in gains of approximately $88,000.

Late Thursday, the SEC announced charges against Malik and his former live-in girlfriend Lauren S. Wood. Immunomedics, which Gilead Sciences has since acquired, was allowed to halt a clinical trial for a breast cancer drug early due to compelling clinical data. Malik was prohibited from making trades with company stock during this time.

However, he informed Wood and three other family members of the U.S. Food and Drug Administration decision where they acquired shares of Immunomedics stock. The stock acquisition resulted in a gain of $67,060 for Wood and a combined $21,000 for Malik’s family members.

After the trades were made, Malik was questioned about the stock purchases by the Financial Industry Regulatory Authority (FINRA). The SEC said he failed to identify Wood as his live-in girlfriend since the trading black out to which he was subjected extends to those in his household.

Additionally, Malik “falsely claimed” he had not communicated with Wood about the FDA decision regarding the breast cancer drug, which is presumably Trodelvy (sacituzumab govitecan-hziy), a first-in-class Trop-2 directed antibody-drug conjugate (ADC) that was given accelerated approval by the FDA in April 2020.

The approval of Trodelvy sparked the $21 billion acquisition of Immunomedics by Gilead Sciences last year. Trodelvy is expected to become a cornerstone of Gilead Sciences’ oncology business.

After the charges were made public, Malik, who had been helming recently-launched Fore Biotherapeutics, was terminated from the role he assumed at the beginning of this year. In a brief announcement, Fore Biotherapeutics said Malik is no longer CEO or a director in the company. Temporarily taking over at Fore is Dieter Weinand, the former CEO of Bayer Pharma AG who currently served as chairman of the Fore Board of Directors. Weinand has been tapped as executive chairman of the company and will remain in place until a new CEO has been found.

Source: BioSpace

Malik and Wood have both been charged with violating the antifraud provisions of the federal securities laws. The government is seeking a permanent injunction against both of them, as well as a civil penalty. The government is also seeking to bar Malik from holding an officer or director position again.

In addition to the charges brought by the SEC, the U.S. Attorney’s Office for the District of Jersey also announced criminal charges against Malik and Wood.

“Public company executives have a duty to safeguard material nonpublic information and must not use it for their personal benefit, as we allege Malik did by tipping Wood and his family members,” Joseph G. Sansone, chief of the SEC’s Market Abuse Unit said in a statement.

BioSpace source:

https://www.biospace.com/article/former-cfo-immunomedics-charged-with-insider-trading-loses-current-ceo-role-at-fore-biotherapeutics