Business & Tech

Second Cambridge biotech worker faces insider trading charge

Federal prosecutors have charged a former Merrimack Pharmaceuticals Inc. employee with conspiracy, part of a larger case alleging that another local biotech worker used confidential information about drug studies to buy stock.

Songjiang Wang of Westford was arrested Tuesday on a charge of conspiracy, according to court records. His attorney did not respond to a message seeking comment Tuesday afternoon.

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Wang’s case is tied to an earlier federal lawsuit against Jason Chan, a Newton resident who has been charged with insider trading, allegedly for illegally using knowledge about key clinical trial results at his then-employer, Cambridge’s Akebia Therapeutics.

Court documents allege Chan and Wang tipped each other off with confidential information about drug study results at their companies, allowing them buy stock in the other’s employer before share prices rose.

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In a motion to dismiss the charges against him, Chan — who has pleaded not guilty — argues that he didn’t purchase any shares of Akebia after gaining insider information, and that there’s no proof he actually passed on information to other people.

Akebia declined to comment on the case, except to say that Chan is no longer employed by the company.

In court documents for Wang’s case, an FBI agent alleges the insider trades happened on multiple occasions between 2013 and 2015. They appear to be relatively small: the largest single dollar amount mentioned in court documents detailing various transactions in Wang’s case is $19,800.

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In a statement, Cambridge-based Merrimack said it was “aware of this isolated matter involving a single, non-executive level employee,” and that Wang no longer works at the company. Merrimack said it is “cooperating with the appropriate authorities.”

Although an FBI affidavit in the case lists Wang’s employer under the pseudonym Pharm Co. 1, his arrest warrant lists Merrimack as his last known employer. A timeline of drug-study announcements listed in the court documents for Wang’s employer also mirrors Merrimack’s own press releases, including the code names of specific drug candidates.

Unrelated to the insider trading case, Merrimack has been going through a tumultuous period. In October, chief executive Robert Mulroy resigned and 22 percent of the company’s staff was laid off as part of a restructuring aimed at saving $200 million.

In December, Merrimack halted a clinical trial of an experimental treatment for breast cancer after an independent monitoring panel found it wasn’t likely to improve on drugs already on the market. Last month, Merrimack agreed to sell its pancreatic cancer medicine and other assets to French drug maker Ipsen SA for $575 million.

This week, veteran health care and biotech executive Richard Peters took the helm as the company’s new chief executive.

Curt Woodward can be reached at curt.woodward@globe.com. Follow him on Twitter @curtwoodward.
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