A Chicago-based medical oncologist has been charged with insider trading by the US Securities and Exchange Commission, according to a December 20 press release issued by the US Department of Justice.
Daniel V.T. Catenacci, MD, PhD, a gastrointestinal medical oncologist and associate professor of medicine at the University of Chicago, is alleged to have used confidential information to purchase shares of California-based biotechnology company Five Prime Therapeutics before it publicly announced positive results from a clinical trial of bemarituzumab, an experimental cancer drug.
Catenacci served as the lead investigator of the clinical trial that evaluated bemarituzumab. The drug, which earned Breakthrough Therapy designation from the US Food and Drug Administration (FDA) earlier this year, is designed to target fibroblast growth factor receptor 2b (FGFR2b), overexpressed in about 30% of patients with HER2-negative gastric cancer and other solid tumors.
Bemarituzumab is being positioned as a potential frontline therapy for advanced gastric or gastroesophageal junction cancer. A recent phase 2 trial found that adding bemarituzumab to chemotherapy in this patient population improved survival over chemotherapy alone.
According to the criminal information, filed on December 17 in US District Court in Chicago, the charges state that, in November 2020, Catenacci “used material, non-public information about the trial results to make more than $134,000 in illegal profits from the purchase and sale of securities in the company.”
More specifically, the SEC’s complaint alleges that Catenacci received confidential information about the company and its positive clinical trial results through his position as principal investigator. Catenacci then purchased almost 8800 shares of Five Prime Therapeutics before the company announced the positive results. Catenacci subsequently sold those shares shortly after the trial results were announced. In the interim, the shares tripled or quadrupled in value.
He has been charged with one count of securities fraud, punishable by up to 20 years in federal prison. Arraignment in federal court in Chicago has yet to be scheduled.
In addition, the federal complaint alleges that Catenacci violated the antifraud provisions of the federal securities laws. According to a press release, “Cantenacci has agreed to be permanently enjoined from violations of these provisions, and to 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, stated in the press release 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,” said Schneider.
Content Source: https://www.medscape.com/viewarticle/965590?src=rss