Just a spoonful of sugar made this biotech stock sale so sweet.
The Republican congressman tapped by President-elect Donald Trump to head the U.S. Health and Human Services Department received a "sweetheart deal" last year to invest in a small Australian drug company along with another GOP lawmaker, a new report Friday says.
Rep. Tom Price of Georgia, who is scheduled to begin Senate confirmation hearings for his nomination for HHS secretary next week, and Rep. Chris Collins, R-N.Y., bought a total of nearly $1 million in discounted shares of Innate Immunotherapeutics last summer in a private placement offering by the company to "sophisticated U.S. investors," according to the Kaiser Health News report.
Price already has seen a paper gain on his investment in the company of about 400 percent, according to the report, which noted that Price himself bought between $50,000 and $100,000 in the private placement.
Collins, who along with Price sits on House committees that oversee issues that could affect Innate Immunotherapeutics' fortunes in the U.S., invested $720,000 in that placement. Collins also sits on the company's board.
The report, citing company documents, said that Price and Collins, "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," according to Kaiser Health News' story, which noted that such a scenario would make Price's share of stock in the company worth up to between $550,000 and $1.1 million.
Their separate stock purchases in the company last summer were made at a 12 percent discount to the company's market price at that time, according to the story.
Innate Immunotherapeutics chose doing a private placement to supposedly sophisticated investors, as opposed to raising money from the open market, for the purposes of helping finance efforts to win approval from HHS' Food and Drug Administration for a medication used to treat multiple sclerosis.
The details of the stock purchase emerged a day after Price announced that he will sell off his stock holdings in more than 40 companies that would present potential conflicts if he is approved, as is likely, as secretary of HHS.
A spokesman for Trump's transition told Kaiser Health News that "Dr. Price takes his obligation to uphold the public trust very seriously" and that Price has "complied fully with all applicable laws and ethics rules governing his personal finances."
Collins' spokesman told Kaiser Health News, "Congressman Collins has followed all ethical guidelines related to his personal finances during his time in the House and will continue to do so."