Usama Malik, the former chief financial officer of Immunomedics, has been indicted for insider trading, five months after the U.S. Securities and Exchange Commission leveled charges.
Courtesy of Josh Edelson/AFP via Getty
Usama Malik, the former chief financial officer of Immunomedics, has been indicted for insider trading, five months after the U.S. Securities and Exchange Commission leveled charges at the C-suite executive.
This morning, U.S. Attorney Philip R. Sellinger announced the three-count indictment against Malik. In all, Malik has been charged with insider trading, securities fraud and securities fraud conspiracy.
As BioSpace previously reported, when Malik served as CFO of New Jersey-based Immunomedics, which has since been acquired by Gilead Sciences, he informed his live-in girlfriend, as well as three other family members about compelling data from a breast cancer study he was prohibited from revealing. In April 2020, the unidentified breast cancer drug, which is presumably Trodelvy (sacituzumab govitecan-hziy), a first-in-class Trop-2 directed antibody-drug conjugate (ADC), was granted accelerated approval by the U.S. Food and Drug Administration.
The approval of Trodelvy sparked the $21 billion acquisition of Immunomedics by Gilead Sciences that same year. Trodelvy has been expected to become a cornerstone of Gilead’s oncology business, alongside CAR-T drug Yescarta, which the company gained from its acquisition of Kite Pharma.
Prior to that approval, Malik was privy to the, at the time, unannounced clinical data that led to the accelerated approval.
“Malik was among the first, and one of the few, employees who received the material non-public information about the breast cancer drug before the public announcement,” the government said in its indictment.
According to the government, within minutes of obtaining the clinical data, Malik reached out to his girlfriend, identified as Lauren S. Wood, who was also employed by Immunomedics. Wood, in turn, purchased approximately 7,000 shares of the company’s stock, despite the fact that during the same time period the company’s stock was downgraded by financial experts, the government said. Once the data for the cancer drug was announced, share prices at Immunomedics skyrocketed. The government said Wood more than doubled her investment, realizing gross profits of $213,618.
The indictment makes no mention of the others that Malik allegedly informed about the clinical data.
Following the trades made by Wood, Malik was questioned by the Financial Industry Regulatory Authority (FINRA), the SEC said in its allegations last year. Malik did not identify Wood as his live-in girlfriend, FINRA said. Malik had been subjected to a blackout trading period due to his insider knowledge of the clinical data. That blackout period extended to family members, the SEC said.
After Gilead Sciences acquired Immunomedics, Malik took a position as chief executive officer of the recently-launched Fore Biotherapeutics. Once the charges against Malik were made public in December 2021, he was terminated from the role.
Attorneys representing Malik told BioSpace in an emailed statement that Malik has been wrongly charged by the government.
“Among his many achievements, he helped develop a breakthrough drug to treat advanced breast cancer as a senior executive at Immunomedics. The prosecution presents a false and speculative narrative in seeking to wrongly hold Mr. Malik responsible for the independent and modest trading of others in Immunomedics unrelated to his own substantial stock holdings in the company. Mr. Malik looks forward to the truth coming out and being vindicated at trial,” attorneys Barry Berke and Mike Martinez of Kramer Levin and Rodney Villazor of Smith Villazor said in the statement.
Since the acquisition of Immunomedics, Gilead Sciences announced plans to terminate 114 employees who had been based at the former manufacturing facility in New Jersey. Trodelvy generated $146 million in revenue during the first quarter of 2022.
