The Shilin District Court yesterday found OBI Pharma chairman Michael Chang (張念慈) and four other company executives not guilty of insider trading.
The acquittal was based on a lack of clear evidence that Chang, general manager Amy Huang (黃秀美), vice president Hsu Yo-gung (許友恭), research and development director Yu Cheng-te (游丞德) and administration division manager Liao Tsung-chih (廖宗智) committed insider trading, the court said in a statement.
It was the first ruling in the case related to the company’s development of the OBI-822 breast cancer drug and can still be appealed.
Chang was not present for the verdict and was represented by his lawyer, who said: “We always had confidence in the case and so the acquittal was the expected result.”
Prosecutors said that they would examine the ruling to decide whether to file for an appeal.
Insider trading charges were filed against the five in January 2017 under provisions of the Securities and Exchange Act (證券交易法).
Prosecutors had alleged that the executives in an August 2015 meeting learned that a double-blind clinical trial for OBI-822 had produced unsatisfactory results and from September 2015 to January 2016 sold their shares in the firm.
By selling the shares before the trial’s results were officially announced in February 2016, Chang avoided financial losses of NT$24.2 million (US$776,886 at the current exchange rate) and the others each avoided losses of more than NT$10 million, the prosecutors had said.
Although the five had learned about aspects of the trial’s results, at the time they did not know which set of patients was receiving the treatment and which was receiving a placebo, the ruling said, adding that there are always uncertainties associated with drug trials.
An investigation failed to provide clear evidence of insider trading, which Article 157-1 of the act defines as using “information that will have a material impact on the price of securities,” it said.
In December last year, the court acquitted former Academia Sinica president Wong Chi-huey (翁啟惠) in a related case of insider trading, as he was found to have acted on advice by his stock broker to sell part of his stake in the firm when prices were rising in February 2016.
Taipei-based OBI Pharma was founded by Chang and Wong in April 2002 as a wholly owned subsidiary of US-based Optimer Pharmaceuticals Inc.
Wong was reportedly the main consultant for the company in the development of OBI-822 and other biotechnology products.
Prosecutors had said that Wong in 2012 received 3 million OBI Pharma shares from Chang that were priced at NT$31 each when the firm was listed on the emerging stock market.
In 2013, the company’s stock was listed on the over-the-counter market at NT$310 per share.
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