Ex-Akebia Director Re-arrested After Insider Trading Prosecutors Call Him 'Unhinged'
Published: Sep 26, 2017
September 25, 2017
By Alex Keown, BioSpace.com Breaking News Staff
BOSTON – Schultz Chan, the former director of biostatistics at Cambridge-based Akebia Therapeutics, Inc., was back in police custody this weekend following charges he had violated his bail conditions.
Chan was charged on three counts of securities fraud in June 2016. Since those charges were filed against him, Chan has been free on $250,000 bail, Reuters reported. Part of Chan’s bail condition is that he maintain twice-weekly appointments with his probation officer, Chan’s attorney Peter Horstmann told Reuters.
The prosecution is seeking to keep Chan detained while he awaits his trial, according to reports. There are some questions as to whether or not Chan and his family planned to flee the country for China. Reuters noted that in July, Chan’s wife had purchased airline tickets for herself, Chan and their daughter. It was unclear if Chan and his family attempted to actually board the flight for China or were stopped prior to leaving for the airport.
It was after those tickets were purchased that a judge ordered Chan to have the twice-weekly visits with his probation officer. There were also other unstated concerns about Chan not complying with his conditions for release, Reuters said.
Chan and Songjiang Wang, a director of statistical programming at Merrimack Pharmaceuticals, were both charged with insider trading in February. According to the U.S. Department of Justice, Wang and Chan conspired to commit securities fraud by trading insider information regarding successful clinical drug trials at their respective companies. Wang allegedly traded on inside information Chan provided regarding a clinical study conducted by Chan’s employer. Although the U.S. attorney did not specify the study in the statement, a September 2016 article on Law 360 reported the two used information regarding a Phase II trial for Vadadustat, a drug used to treat dialysis patients with anemia.
Wang, the government alleged in its charges, said he reciprocated with inside information about trials being conducted at Merrimack. According to the charges, the two directors conspired from November 2013 to September 2015, which was one month after Chan became director of biostatistics at Akebia. In September 2015, Akebia announced positive results from the Phase II trial of Vadadustat and company stock jumped 45 percent. With prior information in hand, Wang acquired shares of Akebia before the announcement and made approximately $105,000 off the deal, according to the government charges.
Additionally, Wang provided Chan with positive information about three different trials conducted by Merrimack, the government said. Both men have pled not guilty.