Shares of Innate Immunotherapeutics tanked 92 percent to less than 5 Australian cents on Tuesday after the pharmaceutical company reported that a midstage trial for a drug to treat multiple sclerosis had failed.
Rep. Chris Collins, R-N.Y., a member of a subcommittee overseeing health policy, is its biggest shareholder and suffered a paper loss of $16.7 million (A$22 million).
The Office of Congressional Ethics is investigating Collins' role as an Innate investor and his impact in attracting investors, according to the Buffalo News. Investigators reportedly received complaints about whether Collins engaged in insider trading due to his influence in pharmaceutical legislation.
According to a source close to the company, Collins lost more than $5 million throughout his 15-year association with Innate and never sold a share.
Collins said in a statement on Tuesday that the failed clinical trial was "disappointing" but he knew the risks of investing in Innate.
"For those that invested in Innate including me, we all were sophisticated investors who were aware of the inherent risk," Collins said. "For every successful drug, there are [countless] numbers that fail. That's how today's system works."
However, Collins still holds out hope for the pharmaceutical company to develop a treatment for multiple sclerosis.
"I am hopeful that Innate's work will continue to help the individuals and families who suffer from this dreadful disease where, right now, there is no hope," Collins said.
In an Innate statement released Tuesday, the company's new multiple sclerosis drug , MIS416, "did not show clinically meaningful or statistically significant differences" in clinical trials, the company said.
"These results are a shock and definitely not what we were expecting based on our previous clinical experience with MIS416 and the reporting of treatment benefits we have received from many compassionate use patients over an extensive eight-year period," said Innate's chief executive officer, Simon Wilkinson.
The biotech stock was once valued as high as $1.77 a share in January, around the same time four other Republican House members — Reps. Markwayne Mullin of Oklahoma, Billy Long of Missouri, Mike Conaway of Texas, and Doug Lamborn of Colorado — bought stocks.