Former Rep. Chris Collins is sentenced to prison

Insider Trading at Innate

Chris Collins, who represented a largely suburban district in upstate New York as a member of Congress from 2013 until his resignation in October 2019, was sentenced to 26 months in prison because of a biotech insider trading scheme. The former Congressman is said to have leaked confidential information about a failed drug trial to his son and other associates. His actions implicated family members, at least four fellow congressmen and President Trump’s former health secretary, all of whom purchased or sold shares of Innate Immunotherapeutics, reported Damian Garde in STAT.

Collins’ case made an example of the lax ethics standards for members of Congress, who can use private money to invest in companies the public pays them to regulate, Garde said. While Collins committed insider trading, he sat on Innate’s board and owned about 17 percent of the company. He lost more than $40 million on paper. His alleged crimes took place on White House grounds, at a picnic gathering of Republican lawmakers, and were captured on film by network news cameras. He was calling his son, Cameron, relaying the not-yet-public news that Innate’s multiple sclerosis drug had not made it through a clinical trial and telling his son to sell his shares before the stock price plummeted.

Recently, federal prosecutors asked a judge to impose the maximum sentence of nearly five years on Collins. They said that Collins’s status as a congressman should be emphasized to “assure the public that those in power do not stand above the law.”

Collins was employed as a mechanical engineer at Innate before becoming an ebelxecutive there. While the company was unknown, he believed that it “had a future blockbuster on its hands. “ He said that company’s only drug, a multiple sclerosis treatment, would convince big drug companies to buy Innate at a high price. Collins urged Tom Price, the former GOP congressman and health secretary, to buy almost a half-million Innate shares at a 12 percent markdown available to only a few U.S. investors. Price sold the shares at a profit of at least $225,000 when he was confirmed as health secretary.

In June 2017, Innate’s drug, MIS416, did not outperform placebo in a 93-patient study. Its stock price plummeted by more than 90 percent. Collins and other members of Innate’s board heard about MIS416’s failure four days before the public got the news. Collins then called his son, Cameron, who sold his entire stake in Innate, enabling him to avoid $570,900 in losses. Cameron told a few other people, who sold more than 1 million shares of Innate and avoided a collective loss of $768,000.

Since that time, Innate has changed its name to Amplia Therapeutics and hopes to get its lead drug, a treatment for cancer, into human trials in 2020. Shares recently closed at 8 cents.