March 17, 2017
Four more members of Congress purchased stock in Innate Immunotherapeutics, the small Australian biomedical firm connected to a fellow congressman, Rep. Chris Collins (R-NY), according to periodic transaction reports reviewed by CREW. The purchases were made at a time of intense scrutiny of Innate’s stock following revelations that then-Rep. Tom Price (R-GA), now the Secretary of Health and Human Services, had purchased between $50,001 and $100,000 in Innate stock last August in what has been called a “sweetheart deal.”
Each of the congressmen — Reps. Mike Conaway (R-TX), Doug Lamborn (R-CO), Billy Long (R-MO), and Markwayne Mullin (R-OK) – purchased the stock in January 2017. Two of the new stockholders, Reps. Mullin and Long, are members of the Subcommittee on Health of the House Energy and Commerce Committee along with Rep. Collins. The trades in Innate stock by Reps. Conaway, Lamborn and Long have not been previously reported while Political MoneyLine first identified Rep. Mullin’s Innate purchase.
It is unknown whether the congressmen purchased Innate stock with Rep. Collins’ encouragement. Rep. Collins, who is Innate’s largest shareholder and sits on the company’s board of directors, has been overheard by reporters speaking loudly into his cellphone in the House lobby, bragging about how many “millionaires” he had made in his hometown of Buffalo in recent months.
Democrats have raised questions about whether Secretary Price has used non-public information to trade health-related stocks, a potential violation of the STOCK Act if true. During his confirmation hearings, Senate Democrats “grilled” Secretary Price about his Innate purchase and he admitted he invested in the company after Rep. Collins told him about it, though he denied he was given any non-public information about the stock. Rep. Collins has said Secretary Price chose to invest in Innate after discussing the company with him and doing independent research.
The four additional congressmen all invested in Innate after Sec. Price’s purchase garnered scrutiny following his nomination. Rep. Mullin purchased 110 shares on January 12 while Rep. Long bought between $15,001 and $50,000 worth of shares on January 25. Rep. Conaway reported that the Merrill Lynch account he owns jointly with a family member purchased between $1,001 and $15,000 in a security titled “INNATE IMMUNOTHERAPEUTIC AUD PAR ORDINARY” on January 26. Rep. Conaway reported making another purchase in the same dollar range on February 3. Similarly, Rep. Lamborn disclosed that both his and his wife’s IRA accounts bought between $15,001 and $50,000 in Innate Immunotherapeutics on January 24. None of the congressmen appear to have previously invested in the company since it completed an initial public offering in 2013.
Rep. Mullin’s purchase is particularly interesting because it appears his investment account purchased the stock through an “over the counter” or “OTC” market rather than the Australian Stock Exchange. OTC markets are decentralized trading markets in which buyers and sellers trade directly with one another rather than through a typical stock exchange. Compared to traditional exchanges, there is less transparency and fewer regulations with OTC transactions. It also appears he may not have accurately disclosed the value of his shares. On January 12, he reported purchasing 110 shares of INNMF, the OTC symbol for Innate Immunotherapeutics, reportedly valued between $100,001 and $250,000. But INNMF shares on the OTC markets were trading at $1.01 on the date Rep. Mullin reported the transaction, so a purchase of 110 shares should have cost roughly $111. As a result, it is unclear how much Innate stock Rep. Mullin actually owns.
All four, along with Rep. Collins and Secretary Price, supported the 21st Century Cures Act, which contained provisions to speed the drug approval process, a potential benefit to Innate if the company were to seek approval of its multiple sclerosis treatment from the Food and Drug Administration. Rep. Collins, who authored the section of the bill accelerating drug trials, argues his stake in Innate does not represent a conflict of interest.