Friday, July 03, 2020

The Vaccine Share Gamble

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 news agency analysis of corporate filings shows. 

The sales - by CEO Stephane Bancel, his children's trust and companies he owns - amount to about $21m between January 1 and June 26, including $6m in May.

The company's chief medical officer, Tal Zaks, has cashed out the majority of his available stock and options, netting more than $35m since January, the filings show.

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 .
"This may be their one shot at making a boatload of money if the vaccine doesn't work out," Fried said. Executives have wide discretion in releasing information, he said, and Moderna's chiefs have a powerful motivation to "keep the stock price up".
Reuters is the first to report that Bancel and affiliated entities are selling 90,000 shares every month and that Zaks moved to sharply increase his sales in March, three days before Moderna released market-moving news.
The high frequency, volume and profits of Bancel's transactions - at about 90,000 shares monthly - are unique among the CEOs of 26 companies identified by Reuters as developing COVID-19 vaccines or treatments and that regularly publish information on executive trades of company shares.
Twenty-one of the firms have seen their stock rise since the end of January, just before coronavirus spread globally, and 10 of those, including Moderna, have seen share prices at least double. But just four of the CEOs of those firms, including Bancel, have sold company stock.
The firm's stock has soared from $18 in late February - just before it announced it had shipped its vaccine candidate to the US government for trials - to close at $56.57 on July 2, down 5 percent, after a report that the start of its large vaccine trial would be delayed. That gives the company a market capitalisation of nearly $23bn. The stock hit a high of $80 in May. If Moderna successfully launches its coronavirus vaccine and a dozen other of its most promising trial medicines, its stock price could rise to $279.

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