Photo: Elizabeth Pudwill / Jeremy Carter / Houston Chronicle Photo: U.S. House Of Representatives

WASHINGTON – Ten days before the crash of an obscure Australian biotech stock at the center of Wednesday's federal indictment of New York Republican Rep. Chris Collins, Houston Republican John Culberson quietly sold all his shares.

Though the congressman lost $9,194 on the deal last year, the transaction would prove to be a fortuitous financial move, something he said he did "simply to cut my losses."

The Innate Immunotherapeutics stock, which Culberson sold on June 12, 2017, for about AU$7.35 a share, was worth less than 5 cents a share two weeks later on news of a failed clinical test for an experimental drug to treat multiple sclerosis.

OTHERS ALSO INVESTED: Culberson defends biotech stock buy touted by another lawmaker

Culberson and fellow Texas Republican Mike Conaway were among a half dozen House members who bought stock in the company in early 2017, some reportedly at the behest of Collins, Innate's biggest shareholder and a company director.

Also among those who bought in: Former Health and Human Services Secretary Tom Price, who also reportedly sold before the crash.

None of the lawmakers have been implicated in the insider trading scheme alleged by the Justice Department. But Collins, among the first members of Congress to back Donald Trump's 2016 presidential campaign, is alleged to have passed inside information to his son, helping him and several other friends and family members avoid an estimated $768,000 in losses.

Attorneys for Collins, who was arrested Wednesday morning, denied the allegations. While the case goes to federal court, House Speaker Paul Ryan removed Collins from the powerful Energy and Commerce Committee.

A timeline of the indictment shows that the crucial events transpired on June 22, just before Innate's stock price tanked to pennies on the dollar. That was also ten days after Culberson bailed. The results of the clinical test were made public four days later on June 26, prosecutors allege.

According to the indictment, Collins was attending a White House Congressional picnic on June 22 when he got an email from Innate's CEO about the negative test on its much-anticipated drug.

"Wow," Collins replied. "Makes no sense. How are these results even possible???"

Collins, whose role in Innate was already under investigation by the Office of Congressional Ethics, did not unload any of the shares himself, according to the indictment. However his son Cameron and at least six other people allegedly did.

VOLATILE WORLD: Culberson stock asset may prove political liability

Culberson and Conaway, who bought Innate stock on the same day in January 2017, have been on the periphery of the congressional inquiries into Collins' alleged insider trading. Collins' indictment served to intensify the glare for the nine-term Republican from Houston, who faces a spirited Democratic challenge from Lizzie Pannill Fletcher in a district that narrowly fell to Hillary Clinton in the 2016 presidential election.

"Today's indictment raises serious questions," Fletcher said in a statement Wednesday. "Congressman Culberson must explain why he, along with a small group of Republican lawmakers, bought stock in an obscure Australian biopharmaceutical company that is at the center of an insider trading scandal. If Congressman Culberson used his position of power, along with access to material non-public information, in an effort to benefit himself personally then Congressman Culberson will have confirmed he is exactly what is wrong with Washington."

Culberson's campaign had no comment Wednesday. Though Collins has been accused by Democrats of pitching Innate stock to House colleagues, Culberson has long maintained that he did his own research on the internet before buying Innate stock and did not use any non-public information.

In previous statements, Culberson has acknowledged that while he is not generally an active trader, he read a New York Times story about the company's efforts to develop a groundbreaking drug to cure multiple sclerosis, which had taken the life of one of his father's best friends.

Conaway, a former chairman of the House Ethics Committee, also cited personal reasons for making two Innate stock purchases worth as much as $30,000.

"Mr. Conaway initially invested in Innate Immunotheraputics because it was a promising breakthrough to treat Multiple Sclerosis (MS), which impacts a close friend of his," said his spokeswoman, Emily Hytha. "Strict ethics laws and reporting requirements regulate investments made by Members of Congress, which Mr. Conaway follows without exception."

Conaway sold all his shares in November 2017 for an undetermined loss. At the time, Innate shares were trading for less than 3 cents.

Culberson said he bought $13,982 worth of shares and lost $9,194 when he sold them. At the time of the sale, however, Innate's stock price, though less than half of what he'd paid, was relatively stable.

Culberson bought near a temporary spike of $18 a share on Jan. 26, 2017, just as the stock price was on a falling back down to $7.80 four days later, according to Australian Stock Exchange data.

The unusual January spike, which coincided with the purchases by Culberson and the other U.S. lawmakers, triggered a formal price query by the Australian Stock Exchange. The company, in its response, cited "a number of media articles in the USA that may have brought the company to the attention of new U.S. investors."

For the next five months, with the clinical tests underway, Innate stock remained comparatively flat, trading between $10.80 and $5.90, with $7.35 about the midpoint. That was the price at which Culberson sold on June 12, as he said, "to cut my losses."

The email bearing what Innate's CEO termed "extremely bad news" on the multiple sclerosis tests was still 10 days away, triggering a fall that has left the remnants of the shattered Australian company trading for less than 3 cents a share.