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CORRECTED-UPDATE 1-Merrimack Pharma employee arrested on U.S. insider trading charge
February 7, 2017 / 10:22 PM / 9 months ago

CORRECTED-UPDATE 1-Merrimack Pharma employee arrested on U.S. insider trading charge

(Corrects 9th paragraph to say that Schultz Chan was accused of tipping Songjiang Wang before the September 2015 announcement)

By Nate Raymond

Feb 7 (Reuters) - A Merrimack Pharmaceuticals Inc employee was arrested on Tuesday on charges that he engaged in an insider trading scheme with a former employee of a rival biopharmaceutical company.

Songjiang Wang, who Cambridge, Massachusetts-based Merrimack has employed as director of statistical programming since 2011, was charged in a criminal complaint filed in federal court in Boston with conspiring to commit securities fraud.

The 52-year-old was arrested after prosecutors brought related charges in June against Schultz Chan, who had been the director of biostatistics at another Cambridge-based company, Akebia Therapeutics Inc.

Wang, of Westford, Massachusetts, was released on a $750,000 bond after a court hearing on Tuesday, a spokeswoman for Acting U.S. Attorney William Weinreb in Boston said.

Wang’s lawyer did not respond to a request for comment. A lawyer for Chan, who has pleaded not guilty, declined to comment.

Merrimack said in a statement that the case was an “isolated matter involving a single, non-executive level employee” and the company was cooperating with authorities.

“Merrimack takes seriously compliance and is committed to the highest standards of ethical conduct as we work to develop treatments for cancer patients around the world,” the statement said.

According to the complaint, Wang provided Chan inside information in 2013 and 2014, ahead of announcements by Merrimack about positive results in three different drug studies. This allowed Chan to place trades based on those tips.

Chan, in turn, tipped Wang in advance of positive clinical study results for a new drug being developed by Akebia, which allowed him to place trades ahead of the company’s announcement in September 2015, the complaint said.

Based on that tip, Wang made $105,000 in illegal trading profits, according to an earlier lawsuit against Chan by the U.S. Securities and Exchange Commission.

That lawsuit referred to Wang, without using his name, as friend of Chan’s who had previously loaned him $80,000.

The case is U.S. v. Wang, U.S. District Court, District of Massachusetts, No. 17-mj-1005. (Reporting by Nate Raymond in New York; Editing by Lisa Von Ahn, Grant McCool and Dan Grebler)

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