A Weston doctor has been convicted of insider trading after selling pharmaceutical stock before its value sharply declined on news about a clinical drug trial he oversaw.
Edward J. Kosinski, a former cardiologist at St. Vincent’s Medical Center in Bridgeport, was convicted by a jury Tuesday in Hartford federal court on two counts of securities fraud-insider trading, according to Connecticut U.S. Attorney John H. Durham and Patricia M. Ferrick, special agent in charge of the FBI’s New Haven Division.
Durham and Ferrick said that in January 2014, Kosinski joined Regado Biosciences as a principal investigator and authorized agent, agreeing to keep all Regado research and other information confidential.
By May 2014, Kosinski owned 40,000 Regado shares, the authorities said. On June 29, 2014, he and other principal investigators received an email from the firm’s clinical trial team stating that there had been several allergic reactions during the clinical trial, that the acceptance of new subjects was put on hold and that the Data and Safety Monitoring Board would be reviewing the recent events.
On June 30, while in possession of that nonpublic information, Kosinski sold his 40,000 shares for between $6.59 and $7 per share. On July 2, 2014, after the close of the market, Regado publicly announced that the monitoring board initiated an unplanned review of the clinical trial and patient enrollment had been suspended until it completed its review. On July 3, the stock fell $3.95 from the day’s previous closing price, to close at $2.81.
By selling his shares of Regado stock, Kosinski avoided a loss of approximately $160,000, the authorities said.
On July 29, 2014, Kosinski and other principal investigators received an email from the clinical trial team stating that a death occurred in the clinical trial and that the trial was on hold. On July 31, while in possession of that non-public information, Kosinski purchased 50 Regado common stock put option contracts with a strike price of $2.50.
On Aug. 25, before the market opened, Regado publicly announced that it had permanently halted the clinical trial and the price of Regado common stock fell approximately 60 percent. Kosinski then bought 5,000 shares of Regado common stock for approximately $1.13 per share and exercised his put options, netting more than $3,000, the authorities said.
Kosinski, 70, who was released on a $500,000 bond pending sentencing, faces a maximum term of imprisonment of 20 years on each count. A sentencing date has yet to be scheduled.
Regado merged in May 2015 with California biopharma Tobira Therapeutics.