Biotech firm Moderna Inc could reap tens of billions of dollars in sales and stock appreciation if it wins the race for a COVID-19 vaccine. If it loses, the early-stage company’s value could crash.
In the meantime, the firm’s chief executive is pocketing millions of dollars every month by selling shares that have tripled in price on news of Moderna’s development progress, a Reuters analysis of corporate filings shows. The sales – by CEO Stéphane Bancel, his childrens’ trust and companies he owns – amount to about $21 million (£17 million) between January 1 and June 26, including $6 million in May.
The company’s chief medical officer, Tal Zaks, has cashed out the majority of his available stock and options, netting over $35 million since January, the filings show.
The lucrative liquidations highlight the unusually powerful incentives for biotech executives to highlight development milestones for drugs that often never get approved or sold, according to interviews with seven executive-compensation experts. Optimistic corporate statements on coronavirus vaccines, they said, could cause investors to overpay for company shares or create false hope among the public and health officials seeking new weapons to fight the pandemic.
Bancel set a fixed schedule for his share sales – known as a 10b5-1 plan – long before the pandemic hit. Such executive share-sale plans are meant to guard against insider trading, avoiding the potential for executives to sell in advance of bad news they know is coming, or to put off selling until after a positive announcement.
Zaks sharply increased the pace of his sales with a new plan he put in place on March 13. That was three days before Moderna announced it had dosed the first human with a vaccine candidate, news that sent its stock price up 24% and signaled that future development milestones might push the shares higher.
The sales give the firm’s executives an unusual opportunity to lock in big profits on what could be fleeting market optimism, said Jesse Fried, a Harvard Law School professor who wrote a book about executive compensation.