Prosecutors heap more woe on OBI Pharma as 'insider trader' investigation deepens

The bad news just keeps coming for Taiwan's biotech firm OBI Pharma as a prosecutor has released new information alleging that the daughter of the head of Taiwan's lead science research agency did in fact sell some of her company stock just three months before the company announced the failed trial of its lead cancer drug.

Wong Chi-huey

The Academia Sinica President, Wong Chi-huey--a world-renowned chemist who has been touted as a potential future Nobel Prize winner--is under pressure to explain how his daughter was able to afford 3 million OBI Pharma shares, priced at NT$31 ($0.95) per share at the time of purchase (according to the Next Magazine), and why she sold a number of shares so close to the announcement.

The Taipei-based firm's lead drug--the breast cancer candidate OBI-822/82--posted disappointing results from a late-stage trial in February. The company said on Feb. 21 that the candidate did not meet the primary efficacy endpoint in a Phase II/III study, but that it showed improvement in progression-free survival and the secondary endpoint of overall survival "is trending towards statistical significance."

The China Post reported that shares in OBI have lost NT$37.2 billion ($1.12 billion) in market capitalization from late February to early March.

Wong, who is currently living in the U.S., has also been criticized for endorsing the drug--something that carries much weight, given that he is the head of Taiwan's most prestigious research institution, and therefore can have a major impact on the price of OBI Pharma shares.

The Shihlin District Prosecutors Office said that the exact number of shares sold by his daughter, Wong Yu-shioh, and the flow of the funds "still have to be checked," according to a Focus Taiwan news report.

The prosecutors have already screened data supplied by the Financial Supervisory Commission on the 50 biggest traders of OBI Pharma shares before the failed trial was announced--it said Wong's daughter was not however among that group.

The office said it would now expand the list to check the top 100 traders of OBI Pharma shares during the period, while also looking in more detail on the timing of the sale of OBI Pharma shares by Wong Yu-shioh--and other shareholders--to see if there was a possibility of insider trading.

They have also summoned OBI Pharma General Manager Amy Huang for questioning to learn about the process of the clinical trial of its breast cancer drug, OBI-822, and the circumstances leading to its failure.

Wong has recently released a statement denying any wrongdoing on his or his daughter's part, and said he will cooperate with the investigation.

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