As pharmaceutical executives sell shares worth millions, questions arise


NEW YORK – Pfizer, Moderna, Novavax: Executives of several US labs developing COVID-19 vaccines recently pocketed millions of dollars by selling shares in their companies, raising doubts about the appropriateness of such a move in the midst of a global health crisis.

On the same day that pharmaceutical giant Pfizer announced preliminary data showing its vaccine was 90 percent effective against the coronavirus, its CEO Albert Bourla sold $ 5.6 million worth of shares.

There was nothing illegal about this, Pfizer said: the sale took place under rules that allow company executives to sell shares according to predetermined criteria, on a date or for a price set in advance, to avoid any suspicion of formation. internal.

Under the same rules, several Moderna officials have sold more than $ 100 million worth of shares in recent months.

That company hasn’t put a single product on the market since its creation in 2010, but the federal government has pledged to pay up to $ 2.5 billion for it if its vaccine proves effective.

Moderna stock rose 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 he announced he would receive $ 1.6 billion in government funding.

Accountable US, a non-partisan taxpayer advocacy group, has calculated that since the beginning of the federally coordinated effort to develop vaccines on May 15 through August 31, officials of five pharmaceutical companies have earned more than $ 145 million by selling shares. .


Pfizer and Moderna executives operated under a rule put in place by the Securities and Exchange Commission in 2000 to allow company employees to sell stock without incurring insider trading costs.

It allows them to set up a plan that determines the trading of their shares at a specified price, amount or dates in advance, but only when they do not have inside information that could affect the share prices.

Once such a sale is planned, it cannot be changed at the last minute, although its timing may ultimately raise doubts.

However, this use of the rule by Pfizer and Moderna seems “legally questionable,” according to Daniel Taylor, an associate professor at the University of Pennsylvania’s Wharton business school who has studied large pharmaceutical companies since the beginning of the pandemic.

“The question is, what did the executives know when they planned the exchange in advance?” churches.

Bourla, according to Pfizer, had simply reactivated on August 19 a plan to sell shares originally authorized in February, “with the same terms of price and volume.”

But the next day, the company released a statement describing its preliminary clinical test results as “positive.”


Of course, it’s not only normal but desirable for lab leaders to be encouraged to develop a safe and reliable vaccine as quickly as possible, Taylor said.

But “when they are about to sell their shares, they have to make sure they are trading on the same level playing field, not taking advantage of other investors by having more information,” he said.

Taylor added a word of caution: “I don’t think companies have internalized the reputational risk for these deals” by selling shares even as cases of COVID-19 have spiraled around the world.

When a senior executive needs to sell stock to pay for a yacht, a new home, or his children’s education, the public is rarely aware of it. But with the pandemic raging, labs are under scrutiny.


For Sanjai Bhagat, a professor at the University of Colorado-Boulder who specializes in corporate governance, executives should simply not be allowed to sell stock in the company until a year or two after leaving the company.

“If they have a lot of acquired shares and stock options, then they have an incentive to get the share price as high as possible, even if they are not totally honest with the investing public,” he said.

Bhagat believes that boardrooms should eliminate any possibility of temptation.

“Not doing 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 want to say if it was investigating any of the lab executives.

But in a May interview on CNBC, SEC Chairman Jay Clayton urged executives to abide by best practices.

“Why would you even want to raise the question that you were doing something inappropriate?” churches.


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