WASHINGTON, Dec 23 (Reuters) - An indictment unsealed on

Monday charged the former chief scientific officer of

biopharmaceutical company Humanigen with engaging in

an insider trading scheme involving the firm's stock, the U.S.

Justice Department said.

Between June and August of 2021, Dale Chappell, 54, avoided

more than $38 million in losses by selling millions of shares of

Humanigen stock while in possession of material non-public

information about Humanigen's application to the Food and Drug

Administration for approval of a drug to treat COVID-19 called

Lenzilumab, the Justice Department said.

Chappell sold the Humanigen shares through funds he

controlled and is alleged to have engaged in an insider trading

scheme, according to the Justice Department.

He is a former U.S. citizen and current resident of

Switzerland, the Justice Department said in a statement, adding

the U.S. was going to seek his extradition.

In March 2021, Humanigen announced it planned to seek

emergency-use authorization (EUA) for Lenzilumab.

However, between April and May of 2021, FDA staff

allegedly informed Humanigen it was unlikely to meet the

criteria for issuance of an EUA, the Justice Department said.

Knowing that Humanigen had not disclosed this information

publicly, Chappell sold the funds' Humanigen stock, the

department added.

After Humanigen made public that the FDA declined EUA

approval for Lenzilumab, the company's stock price reduced by

about 50%, the Justice Department said.

Chappell, who could not immediately be contacted, is

charged with one count of engaging in a securities fraud scheme

and four counts of securities fraud for insider trading.

If convicted, he faces a maximum penalty of 25 years in

prison on the securities fraud charge and 20 years in prison on

each of the insider trading charges.