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How Chris Collins made it rain for Innate Immunotherapeutics

Collins talked about Innate “all the time” and was overheard bragging about the “many millionaires I've made.”

The tiny Australian drug company at the center of Rep. Chris Collins’ charge of insider trading has teetered on the edge of insolvency more than once over the past several years, and Collins, a Republican from upstate New York, was often the one throwing out the lifeline.

Collins’ involvement with Innate’s CEO Simon Wilkinson goes back to 2005, when Wilkinson ran Virionyx, a drug company trying to cure HIV, that bought material for its experiments from a company Collins owned named ZeptoMetrix.

In an interview with the Office of Congressional Ethics last year, Collins said he was intrigued by the medical potential of Wilkinson’s efforts and partnered with him even though the hypothetical HIV drug was eventually beaten to the market by antiretroviral treatments. The two formed a new company called Buckler Biodefense in a bid to develop an anthrax treatment they hoped would be purchased by the U.S. government.

When that didn’t pan out, Collins stepped in as Virionyx’s de facto fundraiser. As a sort of informal salesman-slash-cheerleader and as a member of the company’s board of directors, Collins brought in millions of dollars from upstate New York and, eventually, Washington investors to keep it afloat.

After both the anthrax deal and the HIV treatment failed to materialize, the company pivoted, changing its name to Innate Immunotherapeutics and reorienting its would-be blockbuster drug, provisionally named MIS416, as a potential treatment for multiple sclerosis. Through this process, along with Innate becoming a public company in Australia in 2013, Collins remained on the board of directors. He also was the company’s single biggest investor, holding roughly 20 percent of the company’s stock, along with his son and daughter, Cameron and Caitlin. (Cameron Collins was also included in the insider-trading charges against his father.)

In his ethics-office interview, Collins said Innate was a frequent topic of conversation, and his boosting of the company appeared to prop up Innate in two key ways: A near-constant running commentary — Collins said in his ethics office interview he talked about Innate “all the time” and a Washington Post reporter tweeted last year about hearing him brag about the “many millionaires I've made” — apparently induced several fellow GOP House members to purchase Innate stock (which can be purchased via a less-regulated open market by U.S. buyers even though the stock is Australian).

Congressional disclosure filings show that Mike Conaway, R-Texas, Doug Lamborn, R-Colo., Billy Long, R-Mo., and Markwayne Mullin, R-Okla., all bought Innate stock. (Lamborn’s and Long’s disclosures also show sales of the stock.) In his interview, Collins also said “most of” his staff had bought stock in Innate.

Separately, Collins also spearheaded “private placement” funding rounds for American investors who got to buy the stock at a discount. Watchdog group found that members of the Buffalo-area business elite who were part of a 2016 “private placement” subsequently gave a collective $188,000 to Collins’ campaign.

This group of investors also included Collins’ chief of staff Michael Hook, former New York Rep. Bill Paxon and, most notably, former Health and Human Services Secretary Tom Price.

Although both the Buffalo News and The New York Times reported last year that Wilkinson claimed to have no knowledge that Price was an investor in his firm, “Thomas Edmunds Price” turns up on the 2016 private placement list of “sophisticated U.S. investors.”

By Collins’ account, Price purchased Innate stock on the open market in 2015 after hearing about it from his then-fellow Congressman and researching the company. Subsequently, Price participated in the private placement, which went largely unnoticed until Price was tapped by President Donald Trump to run the Health and Human Services department.

Innate’s stock lost more than 90 percent of its value after the news broke last June that its MIS416 multiple sclerosis trial had failed, but the company might have one more reboot left in it: Its newest reincarnation took place this spring, when it acquired another, smaller Australian pharma company in a bid to reposition MIS416 as part of a combination therapy to treat certain cancers.

The statement announcing the purchase also said that Collins would end his 12-year run as a director on Innate’s board. Calling Collins a "stalwart supporter” of Innate, Wilkinson said, “The Company would never have been able to progress the clinical development of our previous drug candidates without his encouragement and backing.”

CORRECTION (Aug. 13, 2018, 6:07 p.m. ET): A previous version of this article incorrectly listed Rep. Billy Long, R-Mo., as having sold stock in Innate Immunotherapeutics. As his congressional disclosure filings show, Long did not sell any of the company's stock.

CORRECTION (Aug. 10, 2018, 11:48 a.m. ET): An earlier version of this article misstated the last name of a former New York congressman. He is Bill Paxon, not Paxton.