Former Immunomedics CFO Usama Malik and his ex-girlfriend have been charged with using inside information he had obtained about one of the pharmaceutical firm’s drugs to trade in its shares.
According to the U.S. Securities and Exchange Commission, Malik was living with Lauren Wood, Immunomedics’ former head of corporate communications, when he tipped her off in April 2020 that a clinical trial to evaluate the company’s Trodelvy breast cancer drug had been halted because existing data already showed it was effective.
Within minutes of receiving the tip, Wood bought Immunomedics shares, eventually realizing profits of $213,618 when she sold the stock after the company announced the favorable news about Trodelvy, the SEC said in a civil complaint.
Malik also allegedly tipped off three family members, who made a total of about $21,400 in illegal trading profits. He and Wood were arrested Wednesday on parallel criminal fraud charges.
“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 Sansone, chief of the SEC’s market abuse unit, said in a news release.
Malik, a former Pfizer executive, joined Immunomedics as chief business officer in August 2017, adding the CFO role a year later. In those leadership positions, he knew that “positive news about a drug trial will likely increase a company’s stock price,” the SEC said.
During a conference call on April 2, 2020, the FDA agreed with outside clinical research experts that the phase 3 trial of Trodelvy could be halted based on compelling evidence of the drug’s efficacy. After the news reached Malik later the same day, he allegedly passed it on to Wood, who invested $64,000 in Immunomedics’ shares.
Immunomedics made the public announcement on April 6, 2020, sending the stock up 99.79% by the end of the day.
Wood allegedly used a portion of her illicit profits to repay Malik for the $65,000 he had given her in December 2019 to buy Immunomedics shares. Malik was terminated on Thursday as CEO of Fore Biotherapeutics.
Gilead Sciences acquired Immunomedics for $21 billion in October 2020.