Lawmaker loses $17M on pharma stock pitched to colleagues

Lawmaker loses $17M on pharma stock pitched to colleagues
© Greg Nash

A Republican congressman lost close to $17 million on Tuesday when stock in an Australian pharmaceutical company he allegedly promoted to other lawmakers plunged to pennies per share.

Shares of Innate Immunotherapeutics fell more than 90 percent in Sydney after a multiple sclerosis drug being tested by the pharma company showed no signs of working.

Rep. Chris Collins (R-N.Y.), the largest stockholder in the company, lost roughly $17 million as Innate’s stock price sunk after the news broke Tuesday morning, according to Bloomberg. Collins sits on the company’s board of directors.

ADVERTISEMENT

In a statement Tuesday, Collins called the failed clinical trial and subsequent drop in the stock price "disappointing," but said he and other investors knew they were taking a risk.

"For those that invested in Innate, including me, we all were sophisticated investors who were aware of the inherent risk," Collins said. "For every successful drug, there are countess numbers that fail. That’s how today’s system works."

Collins said he's still hopeful Innate can help find a treatment for secondary progressive multiple sclerosis, of which there currently is no cure.

"I am hopeful that Innate’s work will continue to help the individuals and families who suffer from this dreadful disease where, right now, there is no hope," he said. "After 14 years of hard work, substantial investment and dramatic progress, it is obvious that we have more to do."

A source close to Collins said the congressman has never sold a share of Innate and lost more than $5 million of his own money in the sell-off.

Several GOP lawmakers told The Hill this month that Collins had pitched stock in the company to Republican colleagues, and had bragged during a dinner party that he’d help fellow lawmakers make money on the tip.

“If you get in early, you’ll make a big profit,” Collins told a group of House Republicans last summer.

Collins denied to The Hill earlier this month that he ever recruited members to buy Innate stock, nor bragged about making anyone richer. Collins, reportedly worth as much as $66 million, is one of the wealthier members of Congress.

“I never once talked about that. … I’ve never encouraged anyone to buy the stock. Ever,” Collins said. “I’ve presented opportunities in Buffalo. I’ve said, ‘Here’s an opportunity. Listen. Read. Study. Make a decision.’ That’s the only thing I ever did, and that was in Buffalo.”

Five other Republican lawmakers — Reps. Mike Conaway and John Culberson (Texas), Doug Lamborn (Colo.), Billy Long (Mo.) and Markwayne Mullin (Okla.) — have also purchased shares of Innate this year. Most said they found out about the stock through media reports, rather than from Collins.

House ethics investigators had been looking into whether Collins violated insider trading laws by pitching the stock to colleagues. Rep. Louise Slaughter (D-N.Y.), also called on the Securities and Exchange Commission to probe Collins, who represents a neighboring district near Buffalo.

"Innate plummeted in value by more than 90 percent literally overnight. This follows the company previously suggesting a great response to its drug and touting that it stood to generate as much as $3 billion in profits in this country alone," Slaughter said in a statement Tuesday.

"This raises very serious questions as to when Congressman Collins knew about the drug’s performance and who is responsible for the suspicious trading before the drug’s failure was publicly known. Did Congressman Collins come here to make money for himself or to represent his constituents? This development only raises more questions, and we need to get the answers. It cries out for an investigation."

The Food and Drug Administration last week allowed Innate to test its multiple sclerosis drug in the United States.

Collins told The Hill that Innate hoped to sell the drug to a larger pharma company in the near future.

“I think this drug could be on the market in two years, potentially, which is life-saving and family-saving,” Collins said. “In all the things that I’ve done in my business career, I’m most proud of this.”

- This story was updated at 4:07 p.m.