The case also led authorities to investigate the activities of one of the nations wealthiest hedge fund managers, Steven A Cohen.
The portfolio manager, Mathew Martoma, was accused in US District Court in Manhattan with using the information to advise other investment professionals to buy shares in the companies developing the drug, then later to dump those investments and place financial bets against the companies when the tests returned disappointing results.
The charges unsealed today describe cheating coming and going, US attorney Preet Bharara said at a news conference. The scheme unfolded on a scale that has no historical precedent.
Martomas trades helped reap a hefty profit from 2006 through July 2008, while he worked for CR Intrinsic Investors LLC of Stamford, Connecticut, an affiliate of SAC Capital Advisors, a firm owned by Cohen.
Cohen is not referred to by name in court papers but is frequently alluded to for his dealings with the defendant in the weeks leading up to an announcement about the drug trial.
The government has been scrutinising SAC since at least November 2010, when the FBI subpoenaed SAC and other influential hedge funds.
Martoma is the fourth person associated with SAC Capital to be arrested on insider trading charges in the last four years.
SAC spokesman Jonathan Gasthalter said that the company and Cohen are confident that they have acted appropriately and will continue to cooperate with the governments inquiry.