After Rep. Chris Collins, R-N.Y., was arrested last week on insider trading charges, the Australian Securities Exchange came calling on the small biotech involved in the case with a few questions.

Specifically, the Australian Securities Exchange, or ASX, wanted to know why it took Innate Immunotherapeutics Ltd. several hours to seek a halt in the trading of its shares after the heads of the company had been informed that the biotech's key clinical trial of its multiple sclerosis drug had failed.

Collins, who was a member of Innate's board and its largest shareholder, was indicted Aug. 8 for allegedly tipping off his son about the trial results days ahead of Innate making the information public.

The New York lawmaker's son then started a "tipping chain," in which his girlfriend and her family members and some other friends were given a forewarning about the confidential information, according to U.S. law enforcement officials. All those accused by U.S. prosecutors in the case, except for the congressman — who knew he was under investigation by a Capitol Hill ethics committee — quickly dumped their shares in Innate.

Collins, who pleaded not guilty to the insider trading charges, has since decided not to seek re-election in November, though he plans to remain in Congress until the end of his term in January. Democrats have called for Collins to immediately resign.

The congressman's name, however, remains on the New York ballot as a candidate for the state's 27th district. There is an effort to get it removed or have Collins run for another office, such as an open clerkship seat.

U.S. prosecutors and the FBI said Collins first became aware that the Australian biotech's study had failed while he was attending the annual congressional dinner at the White House — the location from which the New York congressman is accused of phoning his son.

Innate acknowledged that its CEO compiled a brief summary of the study's preliminary analysis and emailed it to its board at 8:55 a.m. Australian Eastern Standard Time, or AEST, on June 23, 2017, which was 6:55 p.m. ET the night before in the U.S.

About 15 minutes later, Collins responded to the email, "Wow. Makes no sense. How are these results even possible???" according to the U.S. Securities and Exchange Commission.

The FBI and the SEC clocked the congressman speaking on the phone with his son at about 7:16 p.m. ET on June 22, 2017, after six failed attempts by the elder Collins to reach the younger.

In an Aug. 9 statement, Innate said it was cooperating fully with the SEC with requests for information. The company said it considered the ongoing investigation into Collins to be a private matter to him.

Why the delay?

The ASX, however, asked Innate why it took until 12:26 p.m. AEST on June 23, 2017, before the company requested a trading halt after hearing the bad news about its multiple sclerosis trial — at least four hours.

The exchange also wanted to know if Collins' "relevant interest" in Innate's securities changed during the relevant closed period, in which trading of the company's shares was prohibited until the clinical study results had been released to the market.

Under ASX rules, a company is expected to consider requesting a halt in the trading of its securities whenever it has become aware of information that a reasonable person would expect to have a material effect on the price or value of its shares but is not in a position to make an announcement about the information to the market promptly and without delay.

It's complicated

In defending Innate's four-hour delay, Andrew Cooke, nonexecutive director and company secretary at the biotech, told the ASX that the clinical trial involved an "immense amount of blinded data," which "required a significant amount of independent analysis" and that interpreting the results was a "complicated matter."

It was "additionally complicated" by the large number of separate measures used as trial endpoints to determine if the drug was effective in secondary progressive multiple sclerosis, Cooke said, calling the disease "difficult" to study.

He also said it would not be unexpected for such a late-stage trial to provide "multiple insights into future drug development strategy, beyond the primary endpoint."

"This also needed to be understood, both for the market and patients," Cooke said.

Given the trial's negative data, which Cooke said was "highly unexpected," the company wanted its directors to hear from the study's independent experts to "get a better understanding of their analysis of the trial results."

But the company concluded that it would not be possible to convene a full board meeting until the following day, June 24.

In discussing a market announcement, Innate's chairman and CEO considered whether it would be possible to prepare something meaningful and meet the proper standards within a short time frame, "particularly given the complexity of the trial," Cooke said.

He said Innate was also concerned that revealing the failed study would have a negative impact on patients still receiving the drug on a compassionate-use basis, whom he said were "extremely vulnerable."

"It was decided that an accurate and fulsome announcement could not be responsibly released in a timely fashion that day," Cooke said.

Four hours after first hearing about the negative results, the CEO contacted the company secretary at 12:15 p.m. AEST on June 23, 2017, and told him to immediately contact the ASX to seek a trading halt — a request Cooke said was fulfilled within minutes.

The ASX paused the trading in the company's shares at 12:36 p.m. AEST.

That action, however, did not halt trading on the U.S. OTC Pink open market, where Collins' son and his friends sold their shares of Innate, the SEC noted in its complaint. Innate revealed the trial's failure on June 26, 2017, after the U.S. markets closed.

Cooke said Innate had acted "diligently and appropriately" in seeking the trading halt on the ASX in the face of the "extremely challenging circumstances" and the "complexities" the company was confronting.

He also told the ASX that Collins' relevant interest in Innate's securities did not change during the relevant closed period nor did the congressman sell his shares.

Any trading by Collins' son also did not affect the lawmaker's relevant interests because the congressman did not have any control over his adult child's shares, so he was free to buy and sell at his own discretion, Cooke added.