A Connecticut cardiologist who was helping to conduct a clinical trial of a heart drug for Regado Biosciences has been charged with insider trading in the biotech firm’s shares.
The U.S. Securities and Exchange Commission said Edward Kosinski, 68, traded on his advance notice of announcements relating to the trial of Regado’s REG-1 drug, which regulates clotting in patients undergoing coronary angioplasty.
He had been hired as a principal investigator for the trial in December 2013 but allegedly never disclosed to Regado that he owned some of its shares. In June 2014, the SEC said in a civil complaint, he sold all of his stock after learning Regado had suspended enrollment in the trial, avoiding about $160,000 in losses when the news became public.
A federal grand jury has also indicted Kosinski on parallel criminal charges of securities fraud. He pleaded not guilty on Thursday.
According to the SEC, Kosinski, the president of Connecticut Clinical Research in Bridgeport, initially acquired Regado shares in October 2013 after CCR was invited to serve as a clinical site for the trial. By the end of May 2014, his holdings were worth about $250,800, the SEC said, but he did not report any of his purchases to Regado, as required by his investigator protocol agreements.
On June 29, 2014, a project manager alerted Kosinski and other investigators that patient enrollment in the trial was being suspended because patients had experienced severe allergic reactions. The next morning, he allegedly sold his shares for a profit of about $18,826.
After Regado publicly announced the news on July 2, 2014, the stock fell by about 58%. “By selling prior to Regado’s announcement, Kosinski avoided a loss of approximately $160,000,” the SEC said.
The regulator also alleges that a month later, Kosinski acquired Regado put options based on his advance knowledge that enrollment would be permanently halted because a patient had died. He allegedly made more than $3,000 when he exercised the options after the company’s stock fell by 60% percent on the bad news.