Prosecutors looking into OBI Pharma controversy

03/25/2016 11:28 PM
To activate the text-to-speech service, please first agree to the privacy policy below.

Taipei, March 25 (CNA) Prosecutors looking into potential insider trading of OBI Pharma shares said Friday that the daughter of Academia Sinica President Wong Chi-huey (翁啟惠) sold some of her stocks in the company three months before it announced a failed trial of its new cancer drug, which sent its stock price plunging.

The Shihlin Prosecutors Office said, however, that the exact number of shares sold by Wong Yu-shioh (翁郁琇) and the flow of the funds still have to be checked.

Prosecutors have screened data supplied by the Financial Supervisory Commission (FSC) on the 50 biggest traders of OBI Pharma shares prior to when the failed test was announced on Feb. 21, and Wong's daughter was not among that group, the Shihlin office said.

The office said it would expand the list to check the top 100 traders of OBI Pharma shares during the period, without specifying how long of a period before the announcement is covered by the data.

Prosecutors summoned OBI Pharma General Manager Amy Huang (黃秀美) on Friday for questioning to learn about the process of the clinical trial of its breast cancer drug, OBI-822.

They also were interested in the events leading up to the company reporting that the Phase 2/3 study did not meet its originally designed primary endpoint of progression-free survival at a statistically significant level.

Prosecutors said they hoped to shed light on the timing of the sale of OBI Pharma shares by Wong Yu-shioh and other shareholders before the trial failure was made public to see if there was a possibility of insider trading.

The stock plunged sharply for four straight trading sessions in the week following the Feb. 21 announcement to NT$447.50 per share on Feb. 25 after closing at NT$681 per share on Feb. 19.

Wong Chi-huey, a biochemist considered to be an expert on the theory behind OBI Pharma's drug, has been one of the key figures in the OBI Pharma controversy for endorsing the cancer drug after the failed trial.

Wong was criticized for endorsing the drug, as the head of Taiwan's most prestigious research institution, in part because it may have had an impact on the price of OBI Pharma shares.

Wong defended his actions in a statement on March 3 and said he did not hold any shares in Taiwan's biotech companies.

But Next Magazine reported Wednesday that Wong's daughter obtained 3 million OBI shares in 2012 at the price of NT$31 per share before it was listed on the emerging stock market.

The company was listed on the over-the-counter market at NT$310 per share the following year.

The revelation fueled accusations against Wong of a conflict of interest and possible insider trading.

Wong, who is currently in the United States, issued a statement Thursday to apologize for commenting on OBI Pharma and not considering the expectations people have of him as the head of Academia Sinica.

In the statement, he also said that his daughter used money given to her by her parents and her own savings to purchase the OBI Pharma shares because of the pain she felt in seeing her aunt on her mother's side die of breast cancer.

Wong said he was willing to explain the situation at the Legislature after returning to Taiwan next week. The Legislature has set March 31 as the date for the hearing.

Meanwhile, Tseng Ming-chung (曾銘宗), the former FSC head and now a legislator who has led the charge in questioning Wong's actions, responded to charges that he should have taken action while heading the FSC if there indeed had been manipulation of OBI Pharma shares.

Tseng said there were no suspicions of insider trading or stock price manipulation of OBI Pharma while he still held the post and that the suspicions only cropped up after he left his position to take his seat in the Legislature at the beginning of February.

When asked whether he thought it was reasonable that OBI Pharma's share price surged to more than NT$700 during his term as FSC head last year, Tseng said such a rise was typical of biotech companies.

He also shot back, "how do you know we were not checking?"

He pointed out that the FSC has a strict monitoring system for listed and over-the-counter companies, and it checks fund flow in cases of abnormal surges in share prices.

(By Liu Shih-yi, Wang Cheng-chung, Wen Kuei-hsiang and Lilian Wu)

Enditem/ls

    We value your privacy.
    Focus Taiwan (CNA) uses tracking technologies to provide better reading experiences, but it also respects readers' privacy. Click here to find out more about Focus Taiwan's privacy policy. When you close this window, it means you agree with this policy.