The government charged Chicago-based Daniel V.T. Catenacci, a medical school professor who served as the lead investigator of the company’s cancer drug bemarituzumab.
A clinical drug trial investigator working with Five Prime Therapeutics on an investigational cancer therapy has been charged with insider trading by the U.S. Securities and Exchange Commission.
The government charged Chicago-based Daniel V.T. Catenacci, a medical school professor who served as the lead investigator of the company’s cancer drug bemarituzumab, which earned Breakthrough Therapy designation from the U.S. Food and Drug Administration earlier this year.
According to the government charges, prior to the Nov. 10, 2020 announcement of positive clinical data from the Phase II FIGHT study, Catenacci began acquiring shares of Five Prime Therapeutics, which was acquired by Amgen for $1.9 billion earlier this year. The government said Catenacci purchased 8,743 shares of Five Prime, which shot up more than 300% after the company announced data from the Phase II study. One day later, the government said Catenacci, a gastrointestinal medical oncologist, allegedly sold all of his shares, earning $134,142 from the transaction.
Bemarituzumab is being positioned as a potential therapy in frontline advanced gastric or gastroesophageal junction (GEJ) cancer. The experimental asset is designed to target FGFR2b, which is overexpressed in around 30% of patients with non-HER2 positive gastric cancer, and other solid tumors. Bemarituzumab was a keystone asset for Amgen, which has suggested interest in exploring bemarituzumab in other epithelial cancers, including lung, breast, ovarian and other cancers.
The federal complaint filed by the SEC charges Catenacci with violating the antifraud provisions of the federal securities laws. The medical school professor agreed to be permanently enjoined from violations of these provisions and pay a civil penalty in an amount to be determined by the court later.
Erin E. Schneider, regional director of the SEC’s San Francisco Regional Office, noted that clinical drug trials typically involve sensitive and valuable information about the viability of an experimental drug.
“As alleged in our complaint, Catenacci was required to safeguard the material nonpublic information he learned about Five Prime’s clinical trial, and not trade on it,” Schneider said in a statement.
While Catenacci appears to be on his way to settle the charges brought against him by the SEC, the U.S. Attorney’s Office for the Northern District of Illinois announced criminal charges against Catenacci. John R. Lausch, Jr., United States Attorney for the Northern District of Illinois, charged the 45-year-old Catenacci with one count of securities fraud. That charge is punishable by up to 20 years in federal prison. Catenacci has not yet been arraigned on this charge.
