SEC Charges Insider with Trading in Advance of Positive Announcement About Experimental Drug

ADMINISTRATIVE PROCEEDING
File No. 3-22086

September 9, 2024 - The Securities and Exchange Commission today announced settled insider trading charges against James M. Phillips of San Diego, CA for purchasing his employer’s securities in advance of Inhibrx, Inc.’s (“Inhibrx”) October 4, 2022 announcement regarding the potential for the U.S. Food and Drug Administration (“FDA”) to grant accelerated approval of INBRX-101, Inhibrx’s experimental therapy for alpha-1 antitrypsin deficiency (the “Announcement”).

According to the SEC’s order, during the period leading up to the Announcement, Phillips worked on the finance team of Inhibrx. On September 16, 2022, one of the company’s senior officers told Phillips that the officer expected the FDA to give favorable regulatory treatment to INBRX-101, explaining this expectation was based on his impressions from a recent meeting with FDA officials and a subsequent email from a senior FDA official. On September 20, 2022, in violation of the duties he owed his employer and its shareholders, Phillips bought Inhibrx stock while aware and on the basis of this material nonpublic information. When Inhibrx’s stock price rose by approximately 47.5% following the Announcement, Phillips’s unlawful trading generated a profit of $42,151.02. Phillips’s trading on September 20, 2022, was the most recent of four instances in which Phillips traded Inhibrx securities during one of the company’s trading blackout periods.

The SEC’s order finds that Phillips violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC’s findings, Phillips consented to the issuance of a cease-and-desist order and a five-year bar from acting as an officer or director of a public company, and he agreed to pay disgorgement of $42,151.02, prejudgment interest of $5,432.93, and a civil penalty of $63,226.53.

The SEC’s investigation was conducted by Timothy Work with the assistance of Patrick McCluskey of the Enforcement Division’s Market Abuse Unit. This matter was supervised by Paul Kim and Market Abuse Unit Chief Joseph G. Sansone. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.