Moderna’s chief financial officer and medical director exercised options and sold nearly $ 30 million worth of shares combined Monday and Tuesday, according to documents filed by the CNN Business Show.
After hitting a high of $ 87 on Monday, Moderna’s share price fell back below $ 70 as medical experts debated the importance of the initial findings.

Securities transactions were carried out using automated insider trading plans, called 10b5-1 plans, which define future trading in stocks at fixed prices or on fixed dates.

Lorence Kim, CFO of Moderna, exercised 241,000 options for $ 3 million on Monday, according to documents filed. He then immediately sold them for $ 19.8 million, creating a profit of $ 16.8 million.

In search of vaccine, the United States makes a big bet on the company with an unproven technology

The next day, Tal Zaks, chief medical officer of Moderna, spent $ 1.5 million exercising options. He immediately sold the shares for $ 9.77 million, generating a profit of $ 8.2 million.

Moderna stated that the sales were made under 10b5-1 trading plans established in advance. “These transactions are executed automatically in accordance with these business plans,” said the company.

Although the fortuitous moment in transactions may raise eyebrows, Charles Whitehead, a professor at Cornell Law School, said that the stock sales did not seem to raise any red flags.

“At first glance, there is nothing wrong with these trades,” said Whitehead. “This is what a 10b5-1 plan is for, assuming the requirements are met.”

These plans regulate the time and number of shares that insiders of companies, including directors and officers, are allowed to sell. Transactions are generally executed automatically, without insiders taking action.

Kim, the chief financial officer, also made stock sales before the vaccine announcement. On May 15, just days before the results were announced, Kim sold 20,000 shares worth $ 1.3 million.

Moderna’s stock has since declined

Andrew Gordon, director of research services at Equilar, said there would be “a legal problem only if they created or modified their 10b5-1 plan while they were in possession of material inside information”.

“It’s not uncommon for insiders to sell stocks they own, and it’s not bad either that they capitalize on current stock prices,” Gordon said in an email.

Moderna’s share price fell 10% to $ 71.67 on Tuesday after health website STAT reported that vaccine experts had concluded that the company had not published enough information to know how important the Phase 1 results were.

Moderna finished Thursday at $ 67.05, down 16% from Monday’s close.

“It will look bad from a public relations perspective if Moderna’s stock price starts to drop dramatically after all of these exchanges,” said Gordon.

Moderna shares rebounded 2% to $ 68.60 on Friday after Dr. Anthony Fauci, the country’s leading infectious disease expert, applauded the results of the vaccine trials.

“Although the numbers are limited, it was very good news because it has reached and passed a major hurdle in vaccine development,” said Fauci at a CNN town hall. That is why I am cautiously optimistic about this. ”

“The optics are terrible”

Moderna is one of the first to develop a vaccine against Covid-19, which has killed more than 90,000 Americans. The biotechnology company’s vaccine produces neutralizing antibodies that bind to the virus and prevent it from attacking human cells.

Moderna said her trial had vaccinated dozens of participants and measured antibodies in eight of them. All eight have developed neutralizing antibodies to the virus at levels up to or above levels seen in people who have naturally recovered from Covid-19, the company said.

If future studies go well, Moderna said its vaccine could be made available to the public in January.

Charles Elson, a corporate governance expert at the University of Delaware, said that Moderna’s stock sales underscore why he always believed that executives shouldn’t sell stocks while they are in the business .

“Even if it can be done legally, the optics are terrible because it shows that you have a better place to put your money,” said Elson. “It shows a lack of confidence in your business in the future.”

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