Rep. Chris Collins (R-NY) schooled CNN’s Wolf Blitzer on ethical standards in business investment late Monday.
Appearing on Blitzer’s The Situation Room, Collins easily turned the tables on Blitzer, who was attempting to advance Sen. Patty Murray’s (D-WA) unsubstantiated claim, made last week at Rep. Tom Price’s confirmation hearings to become Secretary of Health and Human Services, that the Secretary-designate’s investment in an Australian company called Innate Immunotherapeutics constituted “insider trading.”
The second round of confirmation hearings on Price’s nomination to head HHS will be held by the Senate Finance Committee on Tuesday.
“Did you encourage him [Rep. Price] to buy stock in this company called Innate Immunotherapeutics?” Blitzer asked.
“No, absolutely not, there was nothing done that was insider trading or unethical,” Collins responded.
“I’ve been involved with Innate Immunotherapeutics in New Zealand and Australia for almost fifteen years. I’m the largest shareholder and I talk about it all the time, just like you would talk about your children,” Collins said, adding:
We’re bringing to market at some point the only drug that could treat secondary progressive multiple sclerosis, the most debilitating disease there is with no treatment today.
It is probably what I am most proud of.
I talk about it at breakfast lunch and dinner like I do my kids and my wife. Certainly many folks I’ve talked [to] about it.
He was one of the few who, because it’s a public company in Australia, researched it, liked what he saw, and decided on his own to make an investment.
Collins serves on the Board of Directors of Innate Immunotherapeutics, and has a long business history as an executive and investor in similar early stage companies.
“The Company has designed and manufactured a unique immunomodulator microparticle technology,” according to its website:
This technology can be used to induce the human immune system to fight certain cancers and infections, or modulate certain immune mechanisms implicated in autoimmune diseases such as Multiple Sclerosis. The same technology can be used in the design of better vaccines to potentially treat or prevent diseases such as influenza, cancer, malaria, or tuberculosis.
The company has spent years developing drugs based on its unique technology, and is still in the testing phases with its first drug, which it hopes to bring to market soon.
“The first drug candidate developed using this technology, MIS416, combines two well described immunostimulatory ligands or triggers – NOD2 & TLR9. MIS416, has demonstrated safety and efficacy in a number of different disease or injury models,” it says:
Due to the significant degree of unmet medical need, Secondary Progressive Multiple Sclerosis has been selected as the initial clinical target for MIS416.
A Phase 1B human study in patients with primary progressive or secondary progressive MS (SPMS) was completed in October 2011 and a follow on ‘dose confirmation’ Phase 2A study in patients with secondary progressive MS was completed in July 2012. The results from these studies met or exceeded expectations and the Company is now conducting a larger-longer Phase 2B trial in patients with SPMS. This study commenced in Australia in late 2014.
Blitzer persisted in his questioning of Collins.
“Did he [Rep. Price] buy the stock at what was available to everybody or did he get special access discount? ” he asked of Collins.
“That was the allegation heard during the committee hearing,” Blitzer said.
Collins then explained that Price participated in stock purchases in the same way everyone else did.
“Because the stock was offered to every shareholder at a ten percent discount of the average closing price of the prior thirty days, that’s what you do with a major fundrasing round. It was made to every shareholder in Australia and New Zealand; 600 out of 850 took advantage of that, he said.
“But was he a shareholder eligible for that kind of ten percent discount?” Blitzer asked.
“We also did a private placement that was open to current US shareholders and new investors. He was a new investor. Several joined in,” Collins said.
Innate Immunotherapeutics is publicly traded on the Australian Securities Exchange, but it is not a public company traded in any American stock exchange, such as the New York Stock Exchange or NASDAQ.
Americans can purchase public stock in the company in transactions in the Australian Securities Exchange.
In the major fundraising round for the company mentioned by Collins, the company was able to make a public offer to those Australian and New Zealand shareholders, but because of American securities laws, it could not use that same investment vehicle to Americans.
Companies that are not publicly traded on American stock exchanges can raise money from American citizens, but must do so under strict rules imposed at both the federal and state level.
Those investments are called “private placements” and, by law, only “qualified investors” are allowed to participate as investors. Typically, a “qualified investor” must meet a certain standard of net worth, in most cases around $500,000.
In a private place memorandum offered to potential investors, the company raising the funds must disclose its financial performance to date as well as the risks associated with the investment.
In his interview with Blitzer, Collins clearly explained that Rep. Price’s purchases of stock in Innate Immunotherapeutics was made at the same price point that was available to other Americans.
Though CNN typically posts video of Blitzer’s The Situation Room interviews along with stories that appear on the network’s website based on those interviews, it did not follow that pattern in the case of Monday’s interview of Collins.
Instead, the accompanying video was a clip of Sen. Patty Murray’s questioning of Rep. Price at his first round of confirmation hearings last week before the Senate Committee on Health, Education, Labor and Pensions.
At Tuesday’s second round of confirmation hearings, Democratic senators are again expected to attempt to claim that Price engaged in insider trading.
If those hearings are anything like the earlier hearings, you can expect the Democrat senators to accuse Price of misconduct rather than question him, then interrupt him as he delivers his responses.
Another line of attack on Price – that an investment in a company called Zimmer Biomet – may have constituted a violation of the STOCK Act of 2012, launched at those confirmation hearings also failed, despite CNN’s best efforts to promote it.
Late Monday, CNN published another story that criticized Price, noting, among other things, that he had been late in paying $1,600 in taxes once.