(Reuters) - A former employee of Pfizer Inc. was arrested on insider trading charges on Thursday for allegedly trading the drugmaker's stock before it announced positive results from clinical trials of its COVID antiviral drug Paxlovid, federal prosecutors said.
Prosecutors in New York allege Amit Dagar, 44, of Hillsborough, New Jersey, learned Paxlovid had performed favorably on Nov. 4, 2021, the day before the drug trial results were announced. He then tipped off a friend and purchased short-dated Pfizer stock options, making the pair a total of $350,000 in illicit profits, prosecutors said.
Dagar was a senior statistical program lead for the Paxlovid drug trial, according to the U.S. Securities and Exchange Commission's parallel civil case.
A Pfizer spokesperson said the charges "relate to the personal conduct of a former Pfizer employee in violation of the company's policies," adding that the company is cooperating with the investigation.
Patrick Smith, an attorney who represents Dagar, said his client denies the allegations.
"Nobody at Pfizer ever told Mr. Dagar, who was on the 'blinded' side, the results of the Paxlovid trial," he said, referring to the practice of running clinical trials without informing researchers which treatment is being administered.
The friend, Atul Bhiwapurkar, 45, of Milpitas, California, was also arrested on criminal charges and sued by the SEC on Thursday.
Michael Bachner, an attorney for Bhiwarpukar, said his client denies trading on inside information and based his decisions on publicly available information about the efficacy of the drug.
Dagar faces four counts of securities fraud and Bhiwapurkar two counts of securities fraud. Both are also charged with conspiracy.
The fraud charges carry maximum sentences of 20 years. The average sentence in federal fraud, theft and embezzlement cases in the U.S. last year was 22 months in prison.
The case was one of several announced by U.S. Attorney Damian Williams on Thursday.
Prosecutors in another case charged three men with trading shares of a special-purpose acquisition company ahead of its merger with a media and technology company founded by former U.S. President Donald Trump.
(Reporting by Jody Godoy in New York, editing by Deepa Babington)
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