BOSTON, Nov 2 (Reuters) - A former Puma Biotechnology Inc executive pleaded guilty on Thursday to U.S. charges that he traded on inside information ahead of announcements by the biopharmaceutical company about a drug it was developing to treat breast cancer.
Robert Gadimian, the Los Angeles-based company’s former senior director of regulatory affairs, pleaded guilty in federal court in Boston to seven counts of securities fraud over illicit trades that prosecutors say allowed him to earn over $1 million.
Under a plea deal, Gadimian, 47, of Burbank, California, agreed not to appeal any prison sentence of more than 37 months. He also agreed to the entry of a judgment against him that would require the payment of more than $1.16 million.
“Mr. Gadimian has fully accepted responsibility for his conduct,” his lawyer, Christopher Bruno, said. “He looks forward to putting this matter behind him.”
Gadimian is scheduled to be sentenced on Jan. 25.
According to prosecutors, Gadimian secretly traded Puma stock from 2013 to 2014 based on confidential information he learned about positive developments in two clinical trials for a drug called “neratinib.”
The U.S. Food and Drug Administration in July approved the drug, which is marketed under the name Nerlynx and is geared toward lowering the risk of early-stage breast cancer in patients with the HER2 genetic mutation returning after initial treatment.
Prosecutors said Puma at the time had been involved in several drug trials for neratinib, including one that a Massachusetts-based consulting firm was conducting for the company.
In 2013, Gadimian learned that neratinib was performing well in one of the trials and bought $261,500 worth of Puma shares, the indictment said.
After Puma announced the trial results that December, its stock jumped 68 percent and Gadiamian sold his shares, earning a $95,000 profit in the process, the indictment said.
Prosecutors said that in 2014 Gadimian bought Puma stock and call options before the company in July that year announced positive results involving one of the trials, news that drove its stock price up 295 percent the next day.
Gadimian subsequently sold the call options and stock, allowing him to make more than $1 million, according to the indictment.
The case is U.S. v. Gadimian, U.S. District Court, District of Massachusetts, no. 16-cr-10285. (Reporting by Nate Raymond in Boston; Editing by Leslie Adler)