Amid the COVID-19 crisis, the U.S. government has committed billions of taxpayer dollars to companies working on tests, therapeutics and vaccines. One unlikely company to receive a hefty financial boost—Kodak—is slated to create an active pharmaceutical ingredient outfit by repurposing sites in New York and Minnesota.
But now Democratic Sen. Elizabeth Warren is asking the Securities and Exchange Commission to investigate stock trades made before the announcement was public. In a letter to SEC Chairman Jay Clayton, she highlights transactions made by company leaders and others, questioning whether any of the them were based on knowledge of the confidential talks.
Kodak and the Trump administration unveiled the $765 million loan last week. CQ Roll Call reported on the Massachusetts senator’s letter ahead of its release.
Midday Tuesday, the Wall Street Journal reported the SEC has started an investigation.
Kodak shares soared on the deal announcement last week, from $2.62 on July 27 to briefly top $33 per share on July 30. They’ve fallen significantly to $16.45 since the surge.
Under the deal, Kodak is set to repurpose existing U.S. sites to manufacture active pharmaceutical ingredients. The COVID-19 pandemic highlighted weaknesses in the global supply chain, and Trump has pledged to increase U.S. manufacturing.
But the Wall Street Journal reported that the deal includes a focus on hydroxychloroquine, a controversial medicine that Trump and his allies have touted as a COVID-19 treatment. Controlled trials have shown the medicine is not effective against the novel coronavirus, and experts have advised against its use.
In response to the Kodak deal, some industry watchers said the former photography giant was a bizarre choice for a drug manufacturing partner and that existing domestic drugmakers would have been a better fit.