Rouzbeh Haghighat was serving on the board of Chinook Therapeutics at the time of the Novartis acquisition and, according to the DOJ’s allegations, used confidential information to conduct insider trading.
The Department of Justice last week charged five people for allegedly participating in securities fraud in connection with Novartis’ $3.2 billion acquisition of Chinook Therapeutics in June 2023.
Among those indicted is Rouzbeh “Ross” Haghighat, who was on Chinook’s board of directors at the time of the buyout. Haghighat had also been previously charged with conspiracy to commit insider trading, according to the DOJ’s Friday release. Earlier this week, Haghighat resigned from his post as chairperson of Sernova Biotherapeutics’ board of directors.
The DOJ has alleged that in May 2023, Haghighat received confidential, nonpublic information, including “sensitive deal terms,” regarding Novartis’ plan to acquire Chinook. He then used this information to buy securities, while also tipping others off to the impending acquisition—including his co-defendants Bruce Haghighat, Kristyn Pearl, Fabio Sabzevari and James Roberge.
The scheme, the DOJ asserts, was for their “personal benefit.” All told, they made more than $600,000 from the fraud, as per the DOJ’s release.
Ross Haghighat is charged with one count of securities fraud, 16 counts of insider trading and two counts of conspiracy. If convicted, the securities fraud charge carries a maximum of 25 years in prison, while each count of insider trading could mean up to 20 years in prison. Conspiracy could put Haghighat behind bars for up to 25 years.
“Securities fraud and insider trading distort our financial markets and disadvantage Americans who play by the rules,” Matthew Galeotti, head of the DOJ’s Criminal Division, said in a statement, adding that by “allegedly trading on inside information,” Haghighat and his co-defendants reaped “hundreds of thousands in illicit profits.”
Novartis bought Chinook in June 2023—at the time paying an 83% premium to the biotech’s 60-day volume-weighted average stock price—with an eye toward expanding its kidney business. The transaction, which closed in August of that year, centered on atrasentan, an endothelin A receptor antagonist for IgA nephropathy (IgAN).
In October 2023, Novartis released topline findings from the Phase III ALIGN study, noting that atrasentan significantly lowered urinary protein levels in IgAN patients. Interim data from ALIGN became the basis for atrasentan’s accelerated approval in April this year, giving it the brand name Vanrafia. Full data from ALIGN will also help support full approval.
