Pfizer, Moderna, Novavax: executives from several US laboratories developing COVID-19
Vaccines have recently raked in millions of dollars by selling shares in their companies, raising questions about the advisability of such a move amid a national health crisis.
On the same day that pharmaceutical giant Pfizer announced preliminary data showing its vaccine was 90 percent effective against coronavirus, its CEO, Albert Bourla, sold shares worth $ 5.6 million.
There was nothing illegal about this, Pfizer said: the sale was carried out according to rules that allowed company directors to sell shares under predetermined criteria, on a date or for a price set in advance, to avoid any suspicion of training. internal.
Under the same rules, several Moderna officials have sold shares worth more than $ 100 million in recent months. That company hasn’t put a single product on the market since its inception in 2010, but the federal government has promised to pay it up to $ 2.5 billion if its vaccine proves effective.
Moderna’s shares have soared from $ 19 at the beginning of the year to a current level of $ 90.
The Novavax boss, for his part, sold $ 4.2 million in shares on August 18, just over a month after the announcement that he would receive $ 1.6 billion in public funding.
Accountable US, a nonpartisan taxpayer advocacy group, has calculated that from the beginning of the federally coordinated effort to develop vaccines on May 15 through August 31, officials from five pharmaceutical companies have made more than $ 145 million selling Actions.
‘Legally questionable’
Executives at Pfizer and Moderna operated under a rule established by the Securities and Exchange Commission in 2000 to allow company employees to sell shares without facing insider trading charges.
It allows them to set up a plan by determining the trading of their shares at a price, amount or dates specified in advance, but only when they are not in possession of inside information that could affect the price of the shares.
Once such a sale is planned, it cannot be altered at the last minute, even if its timing might raise questions.
Still, this use of the rule by Pfizer and Moderna seems “legally questionable,” according to Daniel Taylor, an associate professor at the Wharton School of Business at the University of Pennsylvania, who has been studying Big Pharma since the inception of the pandemic.
“The question is, what did the executives know at the time they pre-scheduled the exchange?” I ask.
Bourla, according to Pfizer, had simply reauthorized on Aug. 19 a plan for a share sale originally authorized in February, “with the same price and volume terms.”
But a day after that, the company issued a statement describing the preliminary results of its clinical trials as “positive.”
‘Level playing field’
Of course, it is not only normal, but desirable, that laboratory managers be encouraged to develop a safe and reliable vaccine as quickly as possible, Taylor said.
But “when they are going to sell their shares, they have to make sure that they are operating on the same playing field, that they are not taking advantage of other investors by having more information,” he said.
Taylor added a caveat: “I don’t think companies have internalized the reputational risk of these deals” by selling shares even when COVID-19 cases have spiraled around the world.
When a top executive needs to sell shares to pay for a yacht, a new home, or their children’s education, the public rarely notices. But with the pandemic raging, labs are under intense scrutiny.
Honesty with investors
For Sanjai Bhagat, a professor at the University of Colorado-Boulder who specializes in corporate governance, top executives simply shouldn’t be able to sell stock in the company until a year or two after they leave the company.
“If they have a lot of stocks and stock options purchased, then they have an incentive to make the share price as high as possible, even without being totally honest with the investing public,” he said.
Bhagat believes that corporate boards should eliminate any possibility of temptation.
“Not having done anything illegal is not the standard by which they should be judged,” he said. “Especially in these times, people expect them to act responsibly.”
Contacted by AFP, the SEC did not say if it was investigating any of the laboratory executives.
But in a May interview on CNBC, SEC Chairman Jay Clayton urged executives to uphold best practices.
“Why would you even want to ask the question that you were doing something inappropriate?” I ask.
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