August 8, 2016
By Alex Keown, BioSpace.com Breaking News Staff
SOUTH SAN FRANCISCO – A cardiologist running a clinical trial for Bay Area’s Regado Biosciences has been indicted by a grand jury on two charges of alleged securities fraud, StatNews reported this morning.
Edward Kosinski pled not guilty to the charges. If he is found guilty during a trial, he could spend up to 20 years in prison. Not only does Kosinski face criminal charges, the U.S. Securities and Exchange Commission has also filed civil charges against the doctor.
According to reports, Kosinski sold shares of Regado Biosciences after he received bad news of a clinical trial in which he was the lead investigator. Kosinski sold his shares before the information was made public and was able to avoid $160,000 in losses, StatNews said. That clinical trial was conducted in 2014. At the time, Regado was investigating a blood-clotting drug for patients undergoing coronary angioplasty, but the trial was suspended due to some patients experiencing “severe allergic reactions” to the treatment. The next day Kosinski allegedly sold all his shares of Regado.
At the time he agreed to be the lead investigator for the trial, Kosinksi failed to disclose he held shares in that company, according to reports. Kosinski currently serves as a cardiologist at St. Vincent’s Medical Center in Bridgeport, Conn. He is also president of Connecticut Clinical Research, StatNews said.
The second charge stems from what happened a few months later. The trial was permanently halted due to the death of a patient. Citing the lawsuit, StatNews said Kosinski profited an additional $3,000 by making option trades, betting that shares of Regado would drop in price. The SEC said shares of Regado dropped nearly 60 percent, according to the lawsuit. Shares dropped from $6.76 to $2.81 following the public revelation of the trial’s halt, according to the lawsuit.
Following the halting of the trial, Regado slashed 60 percent of its workforce and then entered into a merger agreement with Tobira Therapeutics.
Kosinski is certainly not the first in the pharma industry to face charges of securities fraud. In June, a former U.S. Food and Drug Administration official and two hedge fund managers were charged with securities fraud to take pending information about generic drug approval that was not publically available and buy stocks based off that information.
Perhaps most notoriously, former pharma CEO and hedge fund manager Martin Shkreli was charged with seven counts of securities fraud last year. The seven count indictment included multiple charges of securities fraud, securities fraud conspiracy and wire fraud conspiracy. According to the indictment, Shkreli and his partners, including attorney Evan Greebel, orchestrated three interrelated fraudulent schemes—a scheme to defraud investors and potential investors in MSMB Capital; a scheme to defraud investors and potential investors in MSMB Healthcare; and a scheme to defraud Retrophin , the company Shkreli founded. The indictment said Shkreli’s scheme, which caused his investors to suffer a loss of more than $11 million, was carried out over a five-year period, from 2009 to 2014.
