Questions are being asked about the trading in shares of a US pharmaceutical company ahead of good news about a possible coronavirus treatment.
It announced promising results in early stages of its trials on 17 April, sending its share price up by nearly 10%.
But the previous day, when shares hovered around $75, four large blocks of options were purchased for about $1.5m each, according to a report by Reuters.
In one of the trades, 3,143 calls betting Gilead’s shares would rise above $85 by 21 August were purchased for $1.6m.
During 17 April, the value of those contracts jumped to $3.02m. The other three trades also did well.
A few weeks later, the US Food and Drug Administration gave remdesivir authorisation for emergency use to treat COVID-19 patients.
Henry Schwartz, president of options analytics firm Trade Alert, described the trades as “pretty big”, adding that the timing “stands out”.
“It does look like somebody had some sort of reason to pick that time of day to put a lot of capital to work on Gilead,” said Mr Schwartz.
Howard Fischer, a partner with law firm Moses & Singer and former senior trial counsel at the US Securities and Exchange Commission, said the trades “look problematic”.
He added: “When there is a specific spike in the firm’s trading activity – right before a finding is announced – it can become a red flag to regulators.”
Gilead spokesman Chris Ridley said the company has not heard from regulators about the trades and he declined to comment further.
The US Securities and Exchange Commission routinely examines trading data looking for anything unusual ahead of company announcements, but the commission declined to comment.
Meanwhile, on Monday, Gilead reported that the latest study showed remdesivir provided modest benefits for patients with moderate COVID-19 over five days.
However, those who received the drug for 10 days did not do as well.
Shares fell about 3% on the news.
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