WASHINGTON – Rep. Chris Collins and his aides have said time and again in recent years that it’s not a conflict of interest for him to work on legislation affecting drug companies because the Australian biotech firm he’s intimately tied to didn’t have any business before federal regulators.
But last week, that company – which counts the Clarence Republican as its largest shareholder – spun a much different story.
"Innate Immunotherapeutics Limited is pleased to confirm it has received clearance from the U.S. Food and Drug Administration for the Company’s Investigational New Drug (IND) application lodged last month," the company said in the first paragraph of a news release issued on Wednesday.
In other words, Innate won approval for clinical trials to move forward in the United States on its new drug aimed at treating multiple sclerosis.
Those last-round trials are unlikely to happen now, as the company announced this Tuesday morning that its second-round tests in Australia had failed.
Upon the release of that news, Innate's stock lost 92 percent of its value. Shares that were bought at a peak of $1.77 cents a share in January were worth about 5 cents each at the close of business on the Australian Stock Exchange Tuesday.
All of this could provide more information for the Office of Congressional Ethics, which has been investigating Collins’ investment in Innate. Complaints filed with that office questioned whether, by working on legislation that could benefit a company he invested in, Collins might have violated a law barring insider trading by members of Congress.
Collins has been a major investor in Innate for 15 years, and owned 16.8 percent of the company’s stock before its value collapsed on Tuesday.
And after Collins joined Congress in 2013, he began working on the 21st Century Cures Act. That bill, which became law last year, includes a provision Collins authored that speeds the drug approval process for companies like Innate.
As far back as 2015, Collins told reporters there was no conflict between his investment and his work on that bill because Innate didn’t have any business before the federal government.
This January, his spokesman at the time, Michael McAdams, told The Buffalo News: "Innate Immunotherapeutics is governed by regulations in New Zealand and Australia and has never been in front of U.S. regulators."
Collins also told the Rochester Democrat and Chronicle in February that it was "absurd" to think that he wrote the provision to speed up clinical trials to benefit Innate. He noted in that interview that Innate is a foreign company that’s not regulated by the FDA and that was not seeking any approvals from the agency.
But Innate said something different last week.
In the news release, Innate said the FDA had given its clearance for the company to begin clinical tests on its "Investigational New Drug" (IND) for secondary progressive multiple sclerosis.
"Opening an IND in the U.S. at this time is particularly important for the Company and the culmination of years of work," said Simon Wilkinson, the company’s CEO.
The ruling allows the company to meet with the FDA after the release of final results for the second round of its clinical trials for its new multiple sclerosis drug.
The 21st Century Cures Act, the law that Collins helped write, had no impact on the FDA’s decision last week to let Innate’s clinical trial process move forward. The agency routinely lets such Investigational New Drug applications move forward after 30 days unless it determines that it would be dangerous for clinical trials to start, the FDA said on its website.
Collins had no contact with the FDA about Innate, said the congressman’s spokeswoman, Sarah Minkel.
Asked about the comments Collins and his staff made starting in 2015 regarding how Innate had no business before the U.S. government, Minkel insisted there was no contradiction between those comments and Innate’s announcement last week about its dealings with the FDA.
"We are unaware of any business between Innate and the FDA back in 2015," Minkel said. "Nor are we aware of any business in January. And, as of today, we would not characterize Innate as being in front of ‘U.S. regulators.’ "
Innate’s announcement only serves as recognition that the company has been conducting clinical trials, that its multiple sclerosis treatment has been classified as an Investigational New Drug, and that information has been exchanged between the company and the agency, Minkel said.
That’s not how Rep. Louise M. Slaughter, D-Fairport, sees things.
"This development contradicts Congressman Collins’ claims that Innate will not be seeking FDA approval while he is still involved in the company," she said.
That being the case, "I’m urging the appropriate entities to take this development into consideration as they continue their investigations into Congressman Collins’ questionable trades," Slaughter said.
Slaughter previously complained about Collins’ investment in Innate in letters to the Securities and Exchange Commission, the acting U.S. attorney for the Southern District of New York, the House Committee on Ethics and the Office of Congressional Ethics.
And The News reported last month that the Office of Congressional Ethics had launched an inquiry into those investments.
Slaughter is the author of the Stop Trading on Congressional Knowledge (STOCK) Act, a 2012 law that aims to bar lawmakers from trading in stocks that could benefit from inside information that members of Congress come to know about through their work.
And if Innate’s current clinical trials in Australia and New Zealand had turned out, it’s conceivable the company could have benefited from the provisions Collins authored to speed up clinical trials in the United States for MIS416, its experimental multiple sclerosis treatment
Wilkinson, Innate’s CEO, said that as part of the FDA’s action last week, "we can also establish whether MIS416 would qualify for one of the FDA’s expedited approval programmes which exist to help drugs for serious conditions get to market faster."
There are huge questions, though, both about that drug and Innate’s future.
The company reported a $7 million loss last week, on revenue of $1.83 million, for the fiscal year ending March 31. That comes after a $5.1 million loss a year earlier.
Such losses are common for small biotech firms that are working on what may or may not turn out to be miracle treatments. And in the report accompanying its financial results, Innate indicated that its multiple sclerosis treatment could indeed be either boom or bust.
If the drug fails, "it may be unlikely that the group could continue as a growing concern," the company’s report said.
Tuesday's announcement makes clear that the drug had failed. The second-round tests in Australia and New Zealand "did not show clinically meaningful or statistically significant differences" in the treatment of multiple sclerosis patients, Innate said in a press release.
Innate had estimated its multiple sclerosis drug could generate profits in the billions in the United States alone, meaning Collins, the other lawmakers who invested in Innate, and Price would have all gotten much richer if the drug had worked. It's unclear how much he and the other investors lost as Innate's stock tumbled Tuesday, as it is not yet clear if any of them had sold their holdings before the stock crashed.
Collins has long insisted, though, that his investment in Innate is all about saving the lives of people with multiple sclerosis, not making money.
"What we’ve done and what we are doing is life changing and life-saving for potentially millions," he told the Democrat and Chronicle. "I’m so proud of what this company is doing and without me, it wouldn’t exist. When they write my epitaph, it’s going to say Innate Immunotherapeutics, saving millions of lives. It’s not going to be member of Congress."
Collins has also denied any wrongdoing in his Innate stock purchases.
"Despite the continued partisan attacks insinuating otherwise, Congressman Collins has followed all ethical guidelines related to his personal finances during his time in the House and will continue to do so," a Collins spokesman, Michael Kracker, said last month.
But Richard W. Painter, a law professor at the University of Minnesota and the former chief ethics lawyer in the George W. Bush White House, isn’t quite so confident in Collins’ actions.
Told of Collins’ statements about Innate having no business before the FDA and about Innate’s announcement of its FDA approval last week, Painter said: "Something’s not right here. He appears not to be telling the truth."
And that could be the least of Collins’ problems, Painter said.
Given that Collins bought more Innate stock after working on legislation that could help companies like Innate, the Office of Congressional Ethics and perhaps the Securities and Exchange Commission will likely look at whether Collins engaged in insider trading, he said.
At the very minimum, "the appearances are awful," Painter added.