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Former Celator (CPXX) CPA Connived With Two Friends, Father on Insider-Trading Scheme



9/1/2017 5:29:57 AM

Former Celator CPA Connived With Two Friends, Father on Insider-Trading Scheme September 1, 2017
By Alex Keown, BioSpace.com Breaking News Staff

WASINGTON – It was a little more than a year ago when Jazz Pharmaceuticals (JAZZ) acquired New Jersey-based Celator Pharmaceuticals (CPXX). Share prices of Celator skyrocketed 70 percent on news of the deal and made many investors wealthy—including a former Celator accountant who had confidential information about the pending deal.


On Thursday, the U.S. Securities and Exchange Commission charged Evan Kita, a CPA and former accountant at Celator Pharmaceuticals and two of his friends, Daniel Perez and Richard Yu, with insider trading related to the acquisition and clinical trial results that prompted Jazz to make the M&A move. The SEC said Perez and Yu purchased blocks of Celator stock based on Phase III clinical trial results from Celator’s leukemia drug, Vyxeos. The SEC said the two men, on information provided by Kita, acquired the stock prior to the March news about the Phase III trial. After the company made its announcement regarding Vyxeos in March 2016, share prices rose about 400 percent.

Kita left the company in April 2016, shortly after the Vyxeos trial data was announced, according to the Department of Justice. He later learned about the Jazz acquisition from friends who still worked at the company. According to the DOJ, Kita made more than $250,000 on the stock deal. Yu, who shared information with his father Chiang Yu, according to reports, told the authorities he earned $200,070.29 from his part in the insider trading scheme. Chiang Yu told authorities he earned more than $95,000, but less than $150,000 off the deal.
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The SEC said the U.S. Attorney’s Office of New Jersey filed criminal charges against Kita, Perez, Richard Yu, and Chiang Yu. They were charged with violating antifraud provisions of the federal securities laws and related SEC antifraud rules.

Kita, 27, and the two Yus, 27 and 55 respectively, pleaded guilty to the charges. Sentencing for the three is set for Dec. 5, 2017. Perez has not pleaded guilty, the DOJ noted.

In May 2016, Jazz acquired Celator for $1.5 billion. Jazz said the acquisition of Celator and its lead drug Vyxeos will advance the company’s growth strategy and broaden its hematology and oncology portfolios. Earlier this month, the U.S. Food and Drug Administration approved Vyxeos for the treatment of adults with two types of acute myeloid leukemia (AML): newly diagnosed therapy-related AML (t-AML) or AML with myelodysplasia-related changes (AML-MRC). Vyxeos is a fixed-combination of chemotherapy drugs daunorubicin and cytarabine.


Read at BioSpace.com


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