Biotechnology firms and pharmaceutical giants have been one of the major beneficiaries of the coronavirus pandemic, thanks to the race for finding a vaccine to treat the deadly virus. While most sectors have been taking a beating, stocks of biotech companies have been surging over the past few months. However, the picture may not be all that rosy.
According to a report in Albany Herald, two spokesperson of the pro-vaccine motion, Dr Peter Hotez and Dr Paul Offit, have shown concern about how pharmaceutical executives have been minting money following the announcement of vaccines by their respective companies. Although the integrity of the employees of many companies has been questioned, the one that has come in the spotlight is biotech firm Moderna.
Moderna's shares have skyrocketed in the past couple of months, thanks to the progress it has made in developing a vaccine for the deadly coronavirus. Hotez and Offit in the report have criticized executives of Moderna for allegedly raking in millions of dollars within days of the vaccine announcement, with some even selling off their shares in the company as the stock price surged on the "vaccine optimism".
Cashing in on a Crisis
Moderna till sometime time back was a relatively unknown name outside the biotechnology sector. However, the company came into prominence after it announced that it was developing a vaccine candidate to treat Covid-19. According to a CNN report, Moderna's shares rallied over the next few days, as investors started parking their money in the company's stock.
Not surprisingly, this increased the greed of many of the company executives who started selling off their shares. So much so, that some executives, as reported by the Daily Mail, quietly sold nearly $30m of stock days after the company unveiled its vaccine candidate.
Is Moderna Skipping Security Checks?
Two executives reportedly pocketed around $25m in profits in just a day before experts started casting doubts on the vaccine's success and the stock started tumbling. In recent times, several financial experts have suggested that the timing of the equity sales is problematic and warrants an investigation.
In May, Moderna's chief financial officer Lorence Kim and chief medical officer Tal Zaks sold off their shares when the company's stock skyrocketed following the announcement that its vaccine candidate had achieved "positive" results from its clinical trial. Kim reportedly exercised 241,000 options for $3m on one day and then sold them for $19.8m the very next day, while Zaks exercised $1.5m stock options and made a profit of $8.2m after selling them for a hefty $9.77m the next day.
Hotez and Offit not only raise questions on the company's management but also say that in a bid to get wealthy it is also rushing toward things and maybe in the process skipping essential security checks. And all these are happening when there is still no assurance that a vaccine, if at all developed, will be successful in treating the deadly virus.
Moreover, everything about Moderna somewhat seems to be hyped although it has raised tremendous hopes among millions about the possible discovery of a Covid-19 vaccine. Moderna's Phase I trial of its vaccine candidate mRna-1273 involved a relatively small sample of 45 adults, which is too small to bolster hopes of a successful vaccine. Besides, the company today has a market capitalization of over $21bn despite not having a single marketed product. That said, Moderna has started its Phase 2 trial that will involve hundreds of volunteers and the results may give a clearer picture of the company's potential.