Did this congressman benefit from a stock buy just before FDA approval?

On October 3, Representative Josh Gottheimer of New Jersey’s 5th district disclosed a September 25 investment in Crinetics Pharmaceuticals (NASDAQ: CRNX), a mid-cap stock that no U.S. politician had previously traded. 

At that time, the CRNX share price was $50.58, and the representative’s total purchase ranged from $1,001 to $15,000.

Since then, CRNX stock has been on a sustained upward trend — at press time, trading at $56.48, an increase of 11.66% since Gottheimer’s purchase. Depending on the amount invested, the representative could be up anywhere from $116 to $1,749, according to the latest data from the US Senator Stock Trading Radar by Finbold.

Suspicious Senator trade timing

The trades and investments of U.S. politicians have come under increased scrutiny as of late, particularly as members of Congress regularly outperform their constituents in terms of financial investments.

While the recent STOCK Act and the yet-to-be-passed ETHICS Act are attempts to remedy the issue, so far, they have had limited success, with numerous breaches throughout 2024.

However, Gottheimer’s trade stands out — for one, he has been an acting member of the Committee on Financial Services since 2017, as well as a member of the Subcommittee on Capital Markets and the Subcommittee on Digital Assets, Financial Technology, and Inclusion.

More importantly, the representative’s stock purchase came a day before CRNX announced a novel treatment for acromegaly, a severe hormonal disorder, in a new drug application (NDA) submitted to the U.S. Food and Drug Administration (FDA).

Paltusotine, the drug in question, is set to be the first daily oral treatment for acromegaly — currently, most treatments require inconvenient monthly injections, which often cause discomfort or issues with patient compliance. This is not the first instance of Gottheimer investing in a pharma stock that would soon see an increase in price.

CRNX price targets and forecasts

While the company is relatively low-profile, Wall Street is unanimously bullish on CRNX. All of the 10 equity analysts who issue ratings for the stock rate it a ‘Buy’ — with three of those ratings being reiterated in the days following the Paltusotine announcement.

The average price target for CRNX is $71.50 — which would represent a 34.55% increase from the stock’s current price. Some price targets are as high as $97 — while the lowest price target, $54, comes from a rating dated December 20, 2023, which hasn’t been updated since.

This amount of confidence is a rare sight — particularly given that CRNX is up 50.16% year-to-date (YTD). 

As is always the case, the ethics of Gottheimer’s investments in a single stock (as opposed to a broad, diversified fund) raises questions of impropriety. Still, traders looking to emulate the successes of their representatives could have a very promising opportunity on their hands with CRNX — particularly if the company’s next earnings call, slated for November 5, turns out well.