Oncologist Leading Test of Kendall Square Company’s Cancer Drug to Pay $3 Million

An oncology professor at the University of California, Irvine recently agreed to pay back $1.52 million in profits he made from stock trades in Nuvalent. This happened before the company shared positive news about a lung-cancer drug involved in clinical trials he was overseeing, leading to a spike in the stock’s price. Alongside this payment, Dr. Sai-Hong Ignatius Ou also accepted a $1.52 million fine, as per documents filed by the Securities and Exchange Commission in US District Court in Boston.

While the settlement still requires approval from a judge, Ou clarified that he will hand over more than $3 million in total, which is a combination of the fine and what the SEC terms as “disgorgement of ill-gotten gains.” Despite this agreement, he isn’t admitting wrongdoing, as per his statement.

The SEC investigation revealed that Ou was supervising the trial of Nuvalent’s NVL-520, which targets specific cancer types, such as brain and lung cancers, that use a specific enzyme to fuel their growth. The drug is designed to inhibit both the enzyme and any new variants that rapidly dividing cancer cells might create through mutation. It is also meant to penetrate the blood-brain barrier that often hinders drugs from reaching cancer cells in the brain.

Ou had been overseeing the trials from 2022 until earlier this year. The issue arose when Nuvalent made an announcement on Oct. 28, 2022, stating that safety tests of the drug showed no adverse effects in patients, a critical requirement before assessing the drug’s effectiveness in combating cancer.

The SEC claimed that Ou, with over two decades of experience as principal investigator in various drug trials, learned about the impending positive news months in advance and began amassing Nuvalent stock. The $1.52 million profit he secured came from the appreciating stock value after the public disclosure of the encouraging drug trial data.

Apart from profiting from the stocks, the SEC noted that Ou failed to declare his ownership of Nuvalent stock in financial-disclosure forms mandated by the University of California for its professors. This omission occurred despite the fact that he held over $150,000 worth of Nuvalent stock, a lapse identified in a form filed on June 1, 2022.

At this point, the SEC is also requesting that a judge bar Ou from “acting as an officer or director” of any publicly held pharmaceutical firm for a minimum of five years, in addition to the hefty financial penalties.