WASHINGTON – Some investors mysteriously bailed out on an Australian drug company three days before its stock price collapsed, but Rep. Chris Collins, his son, his daughter and his chief of staff didn't do that, Collins' office said.
Asked whether Collins' son Cameron, his daughter Caitlin or chief of staff Michael Hook sold any of their Innate Immunotherapeutics stock last Friday – when an unusually large number of shares were traded in the United States – or in the preceding weeks, Collins spokeswoman Sarah Minkel said they had not.
"Neither Chris Collins, Caitlin Collins nor Michael Hook have sold shares prior, during or after Innate's recent stock halt," Minkel said, referring to a halt in trading that was called on the Australian Securities Exchange on Friday. "Cameron Collins has liquidated all his shares after the stock halt was lifted, suffering a substantial financial loss."
Caitlin Collins and Michael Hook – like the congressman and his son – likely will take a severe financial loss, too, now that the value of Innate's stock has collapsed.
After reaching a peak of $1.53 in over-the-counter trading in the United States in January, Innate's share price fell to 55 cents as of last Friday, when 1.8 million shares were traded in U.S. over-the-counter stock sales while trading in the stock was suspended in Australia. That's more Innate shares than were traded in the previous 27 trading days combined.
Trading in the stock remained suspended in Australia on Monday, but it continued in the United States, with another 1.4 million shares changing hands.
Then on Monday night – Tuesday morning Australia time – Innate announced that MIS416, its promising new drug for multiple sclerosis, failed in clinical trials. That prompted U.S. shareholders to dump 8.8 million shares in a day, driving the stock's price down to a measly 3.5 cents a share in American trading on Tuesday, the day Cameron Collins sold his shares.
The stock rebounded a bit in U.S. trading Wednesday, finishing at 6 cents a share.
Cameron Collins, now 24, acquired the shares as a gift from his father in 2005, as did Caitlin, who is now 26.
"It was purchased with the children's money at Chris' direction," Minkel said.
Collins, R-Clarence, owns 16.8 percent of the company's stock.
Sources close to the congressman said he lost about $5 million that he invested in the company over the years, but on paper, his losses appear much greater.
Comparing the value of Collins' stock on Tuesday to what it was just before its price crash, Bloomberg News estimated Collins was out $16.7 million. And Statnews, another business news site, calculated his loss as if he had sold his shares when it had reached its peak price – and said he was out $44 million.
Meanwhile, Caitlin and Cameron Collins each owned a 2.3 percent share the last time the company updated the list of its top 20 investors on its website. Hook was listed as owning 0.61 percent of the company's stock.
On June 21, Innate issued an optimistic press release saying it had received clearance to begin clinical trials in the United States. The stock sell-0ff began only two days later, three days before the company announced the failure of its drug.
That unusual chain of events has led some investors to question whether Innate was part of an illegal "pump and dump" scheme, whereby a company touts good news to boost its stock price before delivering far worse news a few days later, allowing some investors to cut their losses.
It's still unclear whether some of Innate's investors may have done that, or who they were.
Five Republican members of the House – Reps. Markwayne Mullin of Oklahoma, Billy Long of Missouri, Doug Lamborn of Colorado and Mike Conaway and John Culberson of Texas – bought Innate stock earlier this year nearer its peak price and may have lost much of their investment.
Then again, they may have sold before the stock collapsed. Press secretaries for those congressmen failed to return emails seeking answers about their Innate investments on Wednesday.
If those lawmakers sold their Innate stock, that information will become public eventually. Under a 2012 law written by Rep. Louise M. Slaughter, D-Fairport, all members of Congress have to publicly report their stock transactions within 45 days.