Dive Brief:
- The former business development head at Medivation, a mid-cap oncology-focused biopharma, was charged with trading on confidential information for buying stock in a rival company after learning his company would be acquired by industry giant Pfizer, the Securities and Exchange Commission said.
- Matthew Panuwat purchased short-term, out-of-the-money stock options in Incyte Corporation, another mid-cap oncology-focused biopharma, just days before an announcement that Pfizer would acquire Medivation at a significant premium.
- According to the SEC, Panuwat, who reported to the company’s CFO, knew that investment bankers had cited Incyte as a comparable company in discussions with Medivation and he anticipated the acquisition would lead to an increase in Incyte's stock price.
Dive Insight:
"Biopharmaceutical industry insiders frequently have access to material nonpublic information about mergers, drug trials, or regulatory approvals that impacts the stock price of not only their company, but also other companies in the industry," said Gurbir Grewal, director of the SEC's enforcement division.
Panuwat allegedly purchased the options within minutes of learning highly confidential information concerning Pfizer’s acquisition of Medivation, the SEC said.
Panuwat made the stock purchase despite Medivation's insider trading policy expressly forbidding employees from using confidential information to trade in the securities of any other publicly traded company.
“Panuwat owed Medivation a duty of trust and confidence, including a duty to refrain from using Medivation’s proprietary information for his own personal gain,” the complaint said.
Following the announcement of Medivation's acquisition, Incyte's stock price increased by approximately 8%, generating $107,066 in profit for Panuwat.
The SEC charged Panuwat with violating antifraud provisions of federal securities laws, and seeks a permanent injunction, civil penalty, and an officer and director bar.
