Scientists charged with insider trading

November 21, 1997

NORTH AMERICA. Two American university scientists are among seven people who face criminal charges that they used secret information about a new drug they were testing to make insider stock trades.

Government investigators allege that Dale J. Lange, a Columbia University medical school neurologist, and Philip S. Portoghese, a chemistry professor at the University of Minnesota, took advantage of their knowledge of successful clinical trials of the drug to trade in the manufacturer's stock before the information was made public.

Dr Portoghese's two sons and Dr Lange admit they bought stock, but deny they violated insider trading laws.

The scientists were involved in confidential clinical trials of the experimental drug Myotrophin, a potential treatment for the degenerative muscle disease amyotrophic lateral sclerosis.

In early 1995, trials showed the drug could slow the progress and severity of the disease, news of which caused the stock of manufacturer Cephalon Inc. to nearly triple when it was announced in June of that year.

Dr Lange bought stock weeks before that announcement and made an illegal profit of $26,500, securities investigators say.

Dr Portoghese, a member of the company's scientific advisory board, earned a smaller but undetermined sum, according to criminal charges filed in federal court in Philadelphia.

The scientists had signed confidentiality agreements prohibiting them from disclosing or profiting from the clinical test results before they were made public.

Three other people accused of securities violations in the case have reached a settlement to avoid a trial.

They include a biochemist and a father-and-son team of graphic artists hired by Cephalon to prepare charts and graphs describing the success of Myotrophin in its early trials, and who earned $40,000 on the stock. No court date has been set for Dr Lange or Dr Portoghese.

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