A former Pfizer employee who bought options in the pharmaceutical giant’s stock just prior to its announcement of positive Covid-19 drug data—and then tipped a friend about it who did the same—has been convicted of insider trading.
After a two-week trial in New York, a jury found Amit Dagar guilty of one count of securities fraud, carrying a maximum sentence of 20 years, federal prosecutors announced Thursday. He was also convicted of one count of conspiracy to commit securities fraud, which carries a maximum five-year sentence. Dagar’s sentencing will be determined by the judge.
Dagar was a senior statistical program lead for the clinical trial of Paxlovid, a drug that Pfizer developed to treat Covid-19. Paxlovid is now well known as the antiviral that work by blocking an enzyme key to the replication of SARS-CoV-2 novel. Last year, the FDA approved Paxlovid, making it the first oral Covid-19 antiviral to pass that regulatory bar. But in early 2021, this Pfizer pill was one of many experimental product candidates in development to treat the novel coronavirus.
The interim results from Paxlovid’s key clinical trial showed that treatment led to an 89% reduction in hospitalization or death from any cause compared to a placebo. According to the Securities and Exchange Commission complaint, Dagar’s supervisor informed him about the success of the clinical trial on Nov. 4, 2021, adding that a press release would be coming the following day. After that exchange, Dagar allegedly purchased options to buy Pfizer stock. He also told his friend, Atul Bhiwapurkar, who made similar transactions, the complaint said.
In Pfizer’s Nov. 5, 2021 announcement of the Paxlovid trial data, CEO Albert Bourla referred to the development as “a real game-changer in the global efforts to halt the devastation of this pandemic.” The company’s stock responded accordingly, with an 11% rise that was its largest single-day price move since 2009. In the weeks afterward, Dagar sold his stock options. The complaint states Dagar’s profit was $214,395 while Bhiwapurkar made about $60,300.
Dagar’s case originated within an SEC unit that uses data analysis tools to detect suspicious trading patterns. Last June, the securities regulator charged Dagar and Bhiwapurkar with violations of the Securities Exchange Act of 1934. The case is case is U.S. Securities and Exchange Commission v. Dagar et al, case number 1:23-cv-05564. The U.S. Attorney’s Office for the Southern District of New York followed with its own charges, case number 1:23-cr-00319. Bhiwapurkar
pled guilty to securities fraud last October.
“As the jury’s swift verdict shows, the proof at trial was overwhelming that Amit Dagar stole information about Paxlovid from his employer, Pfizer, and used that illegal edge to profit in the stock market,” U.S. Attorney Damien Williams said in a prepared statement. “Combatting the corruption of our financial markets continues to be a top priority of this office. Would-be insider traders tempted by the prospect of easy money should know that the Southern District of New York is watching, we’ll catch you, and we’ll make sure you pay the price for violating the law.”
Photo: fstop123, Getty Images
