Collins, who leaked confidential information about a failed drug trial to his son and other associates, resigned his seat in Congress in October after entering a guilty plea. His sentencing caps a three-year saga that also implicated his family, at least four fellow congressmen, and Trump’s onetime health secretary. All have been dogged by allegations that they acted unethically, and in some cases illegally, when they purchased or sold shares of Innate Immunotherapeutics.
Collins, 69, represented a largely suburban district in upstate New York from 2013 until his resignation. He was the first member of Congress to endorse Trump’s presidential campaign. advertisement
His case highlighted the lax ethics standards for members of Congress and drew widespread attention in Washington. Despite intense scrutiny, it is still common for members of Congress to use private money to invest in companies the public pays them to regulate. At the time he committed insider trading, Collins sat on Innate’s board and owned roughly 17% of the company. On paper, he lost more than $40 million as Innate’s share value collapsed. Microglia: a new target in the brain for depression, Alzheimer’s, and more?
Making Collins’ crimes all the more startling: They occurred on White House grounds, at a picnic gathering of Republican lawmakers, and were captured on film by network news cameras.
Collins, clad in gray slacks and a white polo shirt, is pictured pacing the White House’s south lawn on the evening of June 22, 2017 — talking animatedly on his cellphone, back turned to Trump’s smiling son-in-law and policy aide, Jared Kushner.
Federal prosecutors later explained: Collins was on the phone with his son, Cameron, relaying the not-yet-public news that Innate’s highly touted multiple sclerosis drug had failed a clinical trial. In a six-minute call, Collins urged his son to sell his shares before the stock price cratered.
Collins, however, did not issue the same warning to his daughter, Caitlin. At the time, according to prosecutors, shares owned by Chris Collins and his daughter were held in Australia and therefore could not be sold — costing her $1.3 million but potentially saving her from a federal criminal investigation.
On Monday, federal prosecutors recommended that a judge impose the maximum sentence of nearly five years on Collins, arguing the court should bear in mind Collins’s status as a congressman to “assure the public that those in power do not stand above the law.”
But that didn’t dissuade Collins from believing Innate had a future blockbuster on its hands, a case he’d make loudly and frequently to colleagues, likening his boasts to how “you talk about your kids hitting a home run and your daughter getting into law school.” He often bragged about how many millionaires he’d minted by promoting the company’s stock and insisted the multiple sclerosis treatment, the company’s sole drug, was a winner and that its eventual success would convince major drug companies to buy Innate at a lucrative premium.
Tom Price, the former GOP congressman and health secretary, was among the colleagues whom Collins helped to enrich. In mid-2016, at Collins’s urging, Price purchased nearly a half-million Innate shares at a 12% markdown offered only to a small handful of U.S. investors. He sold the shares at a profit of at least $225,000 the same month he was confirmed as health secretary, insisting later he had acted ethically. (He later resigned amid revelations he had spent over $1 million in public funds to travel almost exclusively on private jets.)
Collins’ voluble support of Innate backfired in June 2017, when the company’s drug, MIS416, failed to outperform placebo in a 93-patient study. The firm’s stock price fell by more than 90%.
That’s also when Collins ran afoul of the law, according to prosecutors. Collins and the rest of Innate’s board heard the news of MIS416’s failure four days before it became public knowledge. But instead of keeping the information confidential, Collins dialed his son.
Cameron Collins sold his entire stake in Innate in the ensuing days, allowing him to avoid $570,900 in losses when the public got word of the trial results, according to a federal indictment.
In the days afterward, Cameron told his fiancee, her parents, and a friend that their shares of Innate were about to be decimated, prosecutors said. By June 26, when Innate told the world about its clinical trial misfortune, the group had already dumped more than 1 million shares of the company, according to prosecutors. The group’s illegal trades helped avoid a collective loss of $768,000, prosecutors said.
Innate has since changed its name to Amplia Therapeutics, and it hopes to get its lead drug, a treatment for cancer, into human trials this year. Shares closed at 8 cents on Friday. About the Authors
Also in Industry News
How to decide whether or not to start treatment for prostate cancer?
Analysis of the SARS-CoV-2 proteome via visual tools
$65m investment increases British Patient Capital’s exposure to life sciences and health technology