The CEO of an Alpharetta biopharmaceutical company might need to start watching what he says around relatives.
After Alimera Sciences' Dan Myers confided in his wife and brother-in-law about his travails in obtaining Food and Drug Administration approval for a new diabetes drug, several of his in-laws made some lucrative decisions about dumping and acquiring company stock, according to the federal Securities and Exchange Commission.
The SEC accused Myers’ wife, Jo Ann, and her brother, Hollis W. Pickett Jr., of insider trading. The two agreed this month to pay the federal government more than $100,000 in penalties, interest and illegal gains, according to a cease-and-desist order issued this month.
Neither of them is admitting or denying wrongdoing, the order says, and both declined to comment when contacted by The Atlanta Journal-Constitution.
Myers, a former Georgia Tech quarterback who co-founded Alimera in 2003, declined to comment through a company spokesman.
According to the SEC's order, the trouble started in October 2013, when Myers told his wife that the FDA probably wouldn’t approve the company’s new drug application for Iluvien, an implant injected into eyes to treat a diabetic condition that can cause blindness.
Jo Ann Myers passed a tip along to her son and father, who sold a combined 24,440 shares of Alimera stock, the order says.
Eleven days later, Alimera publicly announced that the drug would not be approved in its then-current form. The company's share price dropped 8.49 percent. Jo Ann Myers' son and father had avoided losing nearly $32,000.
Things were going better with the FDA by the following December. A meeting between the agency and the company had gone so well that the FDA had canceled a Dermatologic and Ophthalmic Drugs Advisory Committee meeting about the drug.
According to the SEC, Dan Myers asked his wife to put together a dinner party that night to celebrate, inviting friends that he trusted, including his wife’s brother, Pickett. He told Pickett the good news, making clear that the information was confidential. Pickett told him he wouldn’t do any trading based on the conversation, the order says.
But he did, buying 3,500 shares of company stock, according to the SEC. He also told his son to buy 1,525 shares.
The next day, Alimera issued a press release about its progress with the FDA. Alimera’s share price closed up 62.75 percent. Pickett and his son made $8,657. Jo Ann Myers’ son and father made $8,744.
Under the cease-and-desist order, Jo Ann Myers will pay the federal government nearly $83,600, and her brother will pay about $17,900.
The SEC did not accuse any other relatives of wrongdoing, and the order treats Dan Myers as an unwitting pawn, calling his wife's tips to family members a breach of trust. Jo Ann Myers "owed a duty of trust or confidence to her husband based on their spousal relationship and their history, pattern, and practice of sharing and keeping confidences,” the order said.
According to a spokesman, Alimera Sciences generated $22.4 million in revenue in 2015 and anticipates 2016 revenue to reach $33.5 million. Iluvien is the company's flagship product.
Long before he headed Alimera, Dan Myers played for Georgia Tech in the famous 1975 game against Notre Dame depicted in the movie "Rudy." He also played one season with the St. Louis Cardinals.