How biotech's miracle 'cure' became a poison pill for Chris Collins - The Buffalo News

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How biotech's miracle 'cure' became a poison pill for Chris Collins

WASHINGTON – Chris Collins' pet Australian biotech firm found itself starving to death in December 2013, so the Republican lawmaker from Clarence fed it $1.3 million of his own money.

That's no surprise, given the passion Collins showered on Innate Immunotherapeutics.

It was a passion so deep that that Collins often said he talked about Innate as if it were one of his children. He touted the company to colleagues on the House floor and to employees in his congressional office.

Several lawmakers and Collins staffers ended up investing.

Collins' passion for Innate – which eventually cost him at least $5 million – went too far for congressional ethics investigators in two ways.

He asked a National Institutes of Health staffer to help the company with clinical trials of the drug it makes, which may have violated House rules prohibiting lawmakers from seeking government help for their own businesses.

And he emailed Innate investors details of the company's clinical trials and an upcoming stock offering, which may have violated insider trading laws as a result.

The Office of Congressional Ethics spelled out those two possible violations in its 29-page report to the House Ethics Committee, which is now investigating Collins and perhaps considering punishment for him.

But the full depth of Collins' commitment to Innate comes clearer in the 60-page transcript of the interview he gave to lawyers from the ethics office.

In that interview, Collins portrays Innate's only product, an experimental multiple sclerosis drug, as a lifesaver. He even told them he would be remembered for that supposed miracle cure more than any other accomplishment in his life.

Collins also noted that again and again, he saved Innate's life.

"Without me, it would have gone down," he said of Innate.

Collins' efforts for Innate raise an obvious question: Should a member of Congress be spending so much time boosting a business in which he's the largest investor?

Cecily Molak, a Republican from Honeoye Falls who filed one of several ethics complaints against Collins, doesn't think so.

"I voted for Rep. Collins to represent my interests and those of his constituents," she said. "I did not vote for him so he could use his position to enrich himself and his Republican pals."

An Innate struggle

Collins' success as a businessman launched him into politics, but Innate isn't one of his successes.

He got involved with the company about 15 years ago, back when it was called Virionyx. At that time, the company hoped its product could cure AIDS.

One of Collins' companies at that time, Cellular Products, supplied AIDS viruses to companies, such as Virionyx, that were trying to end an epidemic that had killed half a million Americans by 2004.

Not long after the two companies started collaborating, Virionyx ran into trouble. According to the transcript of Collins' interview with investigators, he came to its rescue. This was before he was a congressman.

The company's CEO, Simon Wilkinson, told Collins in December 2005 that the company needed at least $6 million to stay afloat. Convinced that Wilkinson's company was on the verge of finding the cure for AIDS, Collins volunteered to help.

“Would you have any interest in maybe looking at a proposal from me? If I could get some investors together in Buffalo?" Collins asked.

Sure enough, Wilkinson did. Collins told investigators that he got about 20 of his friends from Clarence to invest in that biotech from down under, including then-Buffalo Sabres coach Lindy Ruff.

Collins raised $8 million, including about $1 million of his own money, and joined the Virionyx board.

But the company's supposed cure for HIV didn't work, and attempts to use it on other viruses went nowhere, too, leaving Virionyx and its investors cash-poor. By 2008 – the year after Collins rode his business success into public office as Erie County executive – Virionyx had scorched its investors so badly it had to change its name.

"They burned through an incredible amount of money back then," Collins told congressional investigators, "and so it was toxic, a toxic name."

So Virionyx became Innate Immunotherapeutics, just as company leaders decided to see if the drug that failed to cure AIDS could do anything about secondary progressive multiple sclerosis.

To find out, the company needed more money. Innate tried to sell $10 million in stock in December 2013, but came up $1.3 million short.

Wilkinson called Collins – who had been elected to Congress a year earlier – with the bad news. If the company couldn't find that extra $1.3 million, it would have to return the money it got from investors and close its doors.

Collins went home to talk it over with his wife, Mary Sue.

"Not a good day at my family table, again," he told investigators. "I go home to my wife and I said: 'We don’t have any choice.' So I put in $1.3 million – luckily I had it in the bank – wired it to Australia in the 24-hour time frame. It was there when they opened at 9 a.m. Australian time on Monday."

Innate's evangelist

By the time Collins arrived in Congress, Collins believed that Innate's drug, which had failed to stimulate the immune system to fight HIV, would stimulate the immune system to fight an irreversible, deadly form of multiple sclerosis.

"Of all the things I will accomplish in my life, this will be No. 1 on my tombstone: if, because of my involvement, we have cured secondary progressive multiple sclerosis, the most debilitating disease known to mankind," Collins told investigators in early June.

Collins was proud to talk about that possibility.

He told investigators he recalled being asked: "Who in Congress have you talked with about Innate?"

His reply: “The bigger question would be: 'Who haven’t I talked to?' ”

He talked up Innate to his colleagues, sometimes on the House floor. Five of them – including former Rep. Tom Price, a Georgia Republican who recently resigned as President Trump's health secretary – ended up investing.

"When we’re sitting on the House floor, killing time ... we talk about our kids, and we talk about our vacations, and we talk about the New York Yankees (or) in my case, my companies," Collins said. "It could’ve been elsewhere, it could’ve been at a dinner, but primarily Tom and I, you know, we’d sit down next to each other on the House floor and chat."

Collins said he never had any conversations with staffers about Innate, but he conceded: "I talked about it all the time. They know."

Under questioning from investigators, Collins listed six current and former staffers, ranging from Chief of Staff Michael Hook to Christopher Catt, manager of his Geneseo office, who have invested in Innate.

Asked by The Buffalo News if Collins had ever asked them or forced them to invest in Innate as a condition of employment, two former Collins staffers who asked not to be identified said no.

And Collins' political adviser and former chief of Staff, Christopher M. Grant, told The News that Collins never forced staffers to invest.

"Chris would talk about it, so they all bought it on their own," Grant said.

A talk at NIH

Collins traveled 11 miles out of his way of his congressional office, to the National Institutes of Health in Bethesda, Md., in his first year in Congress at least in part to talk about Innate.

And that fact led to one of the two charges the Office of Congressional Ethics lodged against him: that he violated a House rule barring members from meeting with a federal agency to boost one of their own businesses.

An NIH employee, whom the ethics report didn't name, said Collins discussed Innate at that November 2013 meeting.

“They need some help with the design of the next Phase 2 trial, and he asked me whether I would be willing to help them, and I said yes,” that NIH employee told investigators.

That prompted the ethics investigators to say: "There is a substantial reason to believe that Representative Collins took official actions or requested official actions that would assist a single entity in which he had a significant financial interest, in violation of House rules and standards of conduct."

[PDF: Read through the body of evidence collection by Office of Congressional Ethics]

Questioned by ethics investigators, Collins at first tried to paint a much more innocuous picture of his visit to NIH.

"It was just a very informative field trip," Collins said. He also dismissed it as "just nosy fun."

But then an investigator showed him the agenda from the meeting, which featured an NIH scientist discussing research on the form of MS that Innate was trying to treat.

That prompted Collins to change his story.

"It makes perfect sense that these would’ve been topics I would’ve wanted to discuss because they’re certainly important topics to me in my role at Innate," he said.

Then, when asked if he discussed Innate with any of the NIH scientists listed on the agenda, Collins said: "Oh, I’m sure I did. Oh, yeah. I – based on this, I would’ve of course, mentioned Innate."

The email evidence

Collins wouldn't just talk about Innate. He also emailed about it, too.

The 155-page packet of evidence released by the Office of Congressional Ethics includes six detailed emails that Collins sent to Innate investors from his private email account between May 4, 2015, and July 13, 2016.

Three resulted in the Ethics Office accusing Collins of a form of insider trading.

"We have 93 patients now identified to complete our patient recruitment" for a clinical trial in New Zealand, Collins said in a Dec. 16, 2015, email.

Congressional investigators said Collins sent that information to the investors  before Innate announced that news publicly.

"We have been urged by big pharma to move forward with a plan for large scale manufacturing" of Innate's multiple sclerosis drug, Collins wrote on Jan. 28, 2016.

But Innate hadn't announced that publicly, congressional investigators said.

And in a June 1, 2016, email, Collins told investors that Innate was planning another stock sale.

Again, that occurred before the company had announced it.

Those three emails might be read as examples of "tipping," an illegal practice of sharing insider information in hopes of persuading investors to lay down more cash on a company.

For that reason, the Office of Congressional Ethics said: "There is a substantial reason to believe that Representative Collins shared material nonpublic information in the purchase of Innate stock, in violation of House rules, standards of conduct, and federal law."

Collins, through his lawyer, denied that charge.

The ethics office "combs through the emails and nit-picks sentences or words in a tortured attempt to conclude that non-public information was contained therein," Collins' lawyer, E. Mark Braden, wrote in a response to the House Ethics Committee.

A dream turned bad

Collins' June 5 interview with the congressional ethics investigators marked the beginning of the end of his dream that Innate could cure an incurable disease and make him and his friends richer in the process.

Three weeks later, Innate announced that the clinical trials of its multiple sclerosis drug had failed.

"These results are a shock," said Wilkinson, the CEO.

The company's stock then lost 94 percent of its value overnight. Collins lost at least $5 million, and other investors lost their money, too. The stock now trades at a 3 cents a share.

Two months after that, in late August, the House Ethics Committee acted on complaints from Rep. Louise M. Slaughter, a Fairport Democrat, and others. The committee said it had received a referral from the Office of Congressional Ethics and would pursue an investigation of Collins and his involvement in Innate.

Then last Thursday, the Ethics Committee released the ethics office report – and Collins' political opponents pounced.

"The peoples' trust has been betrayed. If elected, I will restore that trust and always put my constituents before myself," tweeted Frank C Smierciak II, a medical payment administrator from Lancaster who is waging a Republican primary challenge to Collins.

"It’s time for good governance that works for the people," tweeted Nicholas Stankevich, a business owner from Mumford, in Monroe County, who is contemplating a Democratic challenge to Collins.

All of this represents a harsh turn of events for Collins, who only four months ago still clung to his dream of glory for Innate – which, he told investigators, made for quite a story.

"We could make a movie out of this, truly," Collins said.

That prompted Braden, Collins' attorney, to reply: "I hope it has a happy ending that actually cures people."

To which Collins replied: "I'm confident that it does."

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