Ex-Pfizer Employee Convicted of Insider Trading on Covid Pill

A former Pfizer Inc. employee was convicted of using confidential information about the company’s Covid-19 treatment to make illegal options trades, giving federal prosecutors yet another victory in their attempts to clamp down on insider trading.

Amit Dagar was found guilty on securities fraud and conspiracy following a one-week trial in federal court in New York before US District Judge Andrew Carter. He faces as much as 20 years in prison on the securities fraud charge at sentencing.

Dagar, of Hillsborough, New Jersey, was charged in June with four counts of securities fraud and one count of conspiracy for trading on confidential news about positive clinical trials for the drug, Paxlovid, and passing it on to a friend, Atul Bhiwapurkar, a day before the results were announced in November 2021.

Read more: What Defines Insider Trading and When Is It Illegal?: QuickTake

The government alleges they traded at significant profits, with Dagar making more than $214,000 and Bhiwapurkar more than $60,000.

Dagar’s lawyer, Patrick Smith, had no comment after the verdict.

Pfizer said on Nov. 5, 2021, that Paxlovid had reduced hospitalizations and deaths in high-risk patients by 89%, sending shares surging by almost 11% in premarket trading. They closed 11% higher that day. The drug was cleared for emergency use in the US the following month, becoming the first at-home therapy for Covid-19 to win clearance from the US Food and Drug Administration.

Prosecutors said Dagar was a senior statistical program lead for the randomized, double-blind Paxlovid trial, which began in July 2021, when he learned from his supervisor via a chat that the company had “got the outcome” and that a press release was scheduled for the following day.

The government alleged that Dagar then bought short-dated, out-of-the-money call options in Pfizer stock later that day, while Bhiwapurkar bought similar options that expired two weeks later and tipped another friend that also bought options that expired in three weeks.

Bhiwapurkar, of Milpitas, California, pleaded guilty in October to one count of securities fraud. He faces as much as 20 years in prison at sentencing, which is scheduled for Feb. 27.

Pfizer slashed its revenue and earnings forecast for the 2023 year after it agreed to take back doses of Paxlovid from the US government amid waning demand, and the company in December issued a forecast for 2024 that showed the purchase of a leading cancer drugmaker isn’t enough to fill the growing hole from its Covid franchise.

--With assistance from Divya Balji.

To contact the reporter on this story:
Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Peter Jeffrey

© 2024 Bloomberg L.P. All rights reserved. Used with permission.