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Trump's HHS Nominee Got A Sweetheart Deal From A Foreign Biotech Firm

By Kaiser Health News  
   January 13, 2017

When tiny Australian biotech firm Innate Immunotherapeutics needed to raise money last summer, it didn't issue stock on the open market. Instead, it offered a sweetheart deal to "sophisticated U.S. investors," company documents show.

This article first appeared January 13, 2017 on Kaiser Health News.

By Jay Hancock and Rachel Bluth

When tiny Australian biotech firm Innate Immunotherapeutics needed to raise money last summer, it didn't issue stock on the open market. Instead, it offered a sweetheart deal to "sophisticated U.S. investors," company documents show.

It sold nearly $1 million in discounted shares to two American congressmen sitting on House committees with the potential power to advance the company's interests, according to company records and congressional filings. They paid 18 cents a share for a stake in a company that was rapidly escalating in value, rising to more than 90 cents as the company promoted an aggressive plan to sell to a major pharmaceutical company. Analysts said the stock price could go to $2.

One of the beneficiaries was Rep. Tom Price, a Georgia Republican poised to become secretary of the Department of Health and Human Services, which regulates pharmaceuticals. Price told HHS ethics officials Thursday that if appointed, he will divest himself of the Australian stock as well as stock in about 40 other companies that could pose conflicts. He said he would sell within 90 days of appointment and abstain from any decision-making about companies in which he or his family has had an interest.

He has already seen about a 400 percent paper gain in his investment in Innate Immuno, stock trading records show.

The other and more substantial August investor was Rep. Chris Collins, a Republican from upstate New York, who along with family members owns about 20 percent of the foreign company. A key supporter of the president-elect, Collins sits on a key health subcommittee.

Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.


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