Possible vaccine gives investors optimism 0:44
(CNN Business) – The Moderna company’s share price soared nearly 30% on Monday, after the biotech company announced promising results in initial trials of its coronavirus vaccine. As common investors piled up, two Moderna members quietly made their way toward the sale.
Moderna’s chief financial officer and chief medical officer executed options and sold nearly $ 30 million in combined stock on Monday and Tuesday, according to revised Securities and Exchange Commission (SEC) records. by CNN Business.
The sales came after Moderna excited Wall Street on Monday before markets opened, announcing promising results in trials of the vaccine it develops against the coronavirus. Moderna’s market value increased to 29,000 million, despite the fact that the company has no commercialized products.
After soaring to $ 87 on Monday, Moderna’s share price dropped to less than $ 70, as medical experts debated the importance of the first findings.
The securities transactions were carried out through automatic plans for cases that include inside information, known as 10b5-1 plans, which establish future share transactions at specific prices or on specific dates.
Lorence Kim, chief financial officer of Moderna, exercised 241,000 options for $ 3 million on Monday, the documents show. Then he immediately sold them for $ 19.8 million, creating a profit of $ 16.8 million.
The next day, Tal Zaks, Moderna’s medical director, spent $ 1.5 million to put his options into effect. He immediately sold the shares for $ 9.77 million, generating a profit of $ 8.2 million.
Moderna noted that sales were executed under 10b5-1 transaction plans, which were previously established. “These transactions are automatically executed in accordance with these plans,” the company noted.
Moderna vaccine would be ready by 2021 2:10
Although the fortuitous timing of the transactions may draw attention, Charles Whitehead, a professor at Cornell Law School, explained that the sale of the shares did not appear to generate any legal red flags.
“At first glance, there is nothing wrong with these transactions,” Whitehead said. “For that a 10b5-1 plan is created, assuming the requirements are met,” he added.
These plans regulate when and how many shares the members of the company, including directors and executives, can sell. Transactions generally run automatically, without members taking any action.
Kim, the chief financial officer, also made stock sales ahead of the vaccine news. On May 15, just days before the results were announced, Kim sold 20,000 shares worth $ 1.3 million.
Moderna shares have declined since then
Andrew Gordon, director of research services at Equilar, noted that there would only be a “legal problem if they created or modified their 10b5-1 plan while they had inside information.”
And he added in an email: “It is not unusual for insiders to sell the shares they own, nor is it bad for them to capitalize on the current share price.”
Moderna’s share price fell 10% to $ 71.67 on Tuesday, after the health website STAT reported that vaccine experts concluded that the company did not disclose enough information to know how significant the Phase 1 findings in the vaccine trial.
For this Thursday, Moderna finished at $ 67.05, 16% less than the close on Monday.
Report positive results of vaccine against covid-19 0:37
“It will look bad from a public relations point of view if Moderna’s stock price starts to drop dramatically after all these transactions,” Gordon said.
Moderna’s stock rebounded 2% to $ 68 on Friday after Dr. Anthony Fauci, the leading infectious disease expert in the United States, applauded the vaccine trial findings.
“Although the numbers were limited, it was very good news because they reached and exceeded a major hurdle in vaccine development,” Fauci noted during a CNN global forum. “That is why I am cautiously optimistic about it,” he added.
“The optics is terrible”
Moderna is one of the first companies to start developing a vaccine for covid-19, which has claimed the lives of more than 95,000 people in the United States. This biotech company’s vaccine produces neutralizing antibodies that bind to the virus and prevent it from attacking human cells.
Moderna said her clinical trial vaccinated dozens of participants and measured antibodies in eight of them. All eight developed neutralizing antibodies to the virus at levels that reach or exceed those seen in people who have naturally recovered from covid-19, the company said.
If future studies turn out well, Moderna has said its vaccine could be available to the public in January.
Charles Elson, a corporate governance expert at the University of Delaware, said Moderna’s stock sales underscore why he always believed that executives should not sell stocks while at the company.
“Even if it can be done legally, the lens is terrible because it shows you have a better place to put your money,” Elson said. “Show a lack of confidence in your company for the future.”