Prosecutors looking into allegations of insider trading involving OBI Pharma Inc (台灣浩鼎) shares said on Friday that the daughter of Academia Sinica president Wong Chi-huey (翁啟惠) sold some of her shares in the company three months before it announced a failed trial of a new cancer drug, an announcement that sent its stock price plunging.
The Shihlin Prosecutors’ Office in Taipei said that the exact number of shares sold by Wong Yu-shioh (翁郁秀) and the flow of the funds still have to be checked.
Prosecutors have screened data supplied by the Financial Supervisory Commission (FSC) on the 50 biggest traders of OBI Pharma shares prior to when the failed test was announced on Feb. 21, and Wong’s daughter was not among that group, the office said.
The office said it would expand the list to check the top 100 traders of OBI Pharma shares during the period, without specifying how long before the announcement the data cover.
Prosecutors summoned OBI Pharma general manager Amy Huang (黃秀美) for questioning to learn about the process of the clinical trial of its breast cancer drug OBI-822.
They also asked about events leading up to the company reporting that the phase 2.3 study did not meet its designed primary endpoint of progression-free survival at a statistically significant level.
Prosecutors said they hope to shed light on the timing of the sale of OBI Pharma shares by Wong Yu-shioh and other shareholders before the trial failure was made public to see if there was a possibility of insider trading.
The stock plunged sharply for four straight trading sessions in the week following the Feb. 21 announcement, reaching NT$447.5 per share on Feb. 25 after closing at NT$681 per share on Feb. 19.
Wong Chi-huey, a biochemist considered to be an expert on the theory behind OBI Pharma’s drug, has been one of the key figures in the OBI Pharma controversy after endorsing the cancer drug after the failed trial.
Wong Chi-huey was criticized for endorsing the drug, in part because his opinion might have affected OBI Pharma’s share price.
Wong Chi-huey on March 3 defended his actions in a statement, saying he did not hold any shares in Taiwanese biotech companies.
However, Next magazine on Wednesday reported that Wong’s daughter obtained 3 million OBI shares in 2012 at a price of NT$31 per share before it was listed on the emerging stock market.
The company was listed on the over-the-counter market at NT$310 per share the following year.
The revelation fueled accusations against Wong Chi-huey of a conflict of interest and possible insider trading.
Wong Chi-huey, who is in the US, issued a statement on Thursday to apologize for commenting on OBI Pharma and not considering the expectations people have of him as the head of Academia Sinica.
In the statement, he also said that his daughter used money given to her by her parents and her own savings to purchase the OBI Pharma shares because of pain she felt after her aunt on her mother’s side died of breast cancer.
Wong Chi-huey said he was willing to explain the situation at the legislature after returning to Taiwan next week. The legislature has set Thursday next week as the date for a hearing.
Separately, Chinese Nationalist Party (KMT) Legislator William Tseng (曾銘宗), a former FSC chairman who has led the charge in questioning Wong Chi-huey’s actions, responded to accusations that he should have taken action while heading the FSC if there was manipulation of OBI Pharma shares.
Tseng said there were no suspicions of insider trading or stock price manipulation of OBI Pharma when he headed the commission, adding that suspicions only arose after he left the post to take his seat in the legislature at the beginning of last month.
When asked whether he thought it was reasonable that OBI Pharma’s share price last year surged to more than NT$700, Tseng said such a rise was typical of biotech companies.
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