Innate head defends Trump health nominee’s share buy

The head of drug developer Innate has denied US health nominee Tom Price was given a ‘sweetheart’ share purchase deal.

Innate chief executive Simon Wilkinson. Picture: Martin Hunter

The head of a small listed Australian drug developer at the centre of Senate confirmation hearings for US President Donald Trump’s new health secretary has denied the representative was given a “sweetheart” share purchase deal.

Innate Immunotherapeutics, which is developing a drug to treat advanced multiple sclerosis, has been the focus of the US hearings this week, a move that has supported its share price. The company’s shares have been on a stellar run since ­Nov­ember 4 last year, when it was trading at 56c. It jumped 58.9 per cent yesterday to close at $1.24.

Innate has come into the US spotlight because Mr Trump’s nomination for secretary of health and human services, representative Tom Price of Georgia, is a shareholder in the Sydney-based ­company. Mr Price’s purchase of Innate’s stock has been questioned during Senate hearings to confirm his nomination.

According to a report in The Wall Street Journal, Mr Price was one of fewer than 20 US investors­ ­invited last year to buy shares of Innate at a 12 per cent discount.

The details of Mr Price’s share purchase have drawn questions during his hearings, according to the WSJ, because they could indicate whether he received preferential treatment based on a con­gressional connection, and thus was not the average investor he had portrayed himself to be.

Testifying before the Senate Health, Education, Labour & Pension Committee, Mr Price said his arrangement was not a “sweetheart deal”.

Innate chief executive Simon Wilkinson supported that view, saying it was wrong to paint a ­picture that Mr Price was privileged and got something almost no other investor was offered.

“That is complete baloney,” he told The Australian yesterday.

He said Innate’s capital raising program last year included a rights issue to Australian and New Zealand shareholders, also offered at a 12 per cent discount.

In total, Innate raised $6.63 million from investors mid-last year, including $2.4m through a US private placement, according to company filings.

Mr Wilkinson added an Australian company raising funds in the US had to use the private placement instrument unless it was looking to do a full market listing.

He said the US private placement was offered to all US shareholders and Innate met the criteria of being credited investors under SEC regulations in America.

“It is wrong to only focus on the US leg of that capital raising program,” Mr Wilkinson said.

“The amount we raised out of the US was 40 per cent of the total amount we raised at that time, which is right because about 40 per cent of the company is owned by US shareholders.”

Mr Price is expected to be confirmed as health secretary despite the questions around his share portfolio. He has told ethics officials that if appointed to the role of secretary of health and human services he would divest the Innate stock.

Mr Price has traded more than $300,000 in shares of health-­related companies since 2012, while on the House Ways and Means Committee’s subcommittee on health and while writing and voting on healthcare legislation that could affect the shares of those stocks, according to an analysis by the WSJ.

Innate also lists New York congressman Chris Collins — who was the congressional liaison to Mr Trump’s transition team — as its largest shareholder and a ­director.

It was reported in the US that Mr Collins and Mr Price had both been active in shaping ­health­care legislation and both voted in favour of the 21st Century Cures Act, which would allow the US ­regulator, the Food and Drug Administration, to approve drugs more quickly.

Mr Wilkinson said it was wrong to assume that because Innate had “lawmakers” on the share register it must be an unfair advantage for the company. “When we were raising money, Hillary Clinton was meant to the be the next president,” he said.

“Innate isn’t asking the US government for anything, we aren’t seeking a drug approval, we aren’t even running a trial in the US. If our drug produces a good result in an upcoming trial, it is highly likely the company will be sold to a big pharma, and it will be big pharma in years to come needing to approach the FDA for drug approval.”