Upbeat vaccine news fueled stock surge, uproar
When biotech company Moderna announced early Monday positive results from a small, preliminary trial of its coronavirus vaccine, the company’s chief medical officer described the news as a “triumphant day for us.”
Moderna’s stock price jumped as much as 30%. Its announcement helped lift the stock market and was widely reported by news organizations, including The New York Times.
Nine hours after its initial news release — and after the markets closed — the company announced a stock offering with the aim of raising more than $1 billion to help bankroll vaccine development. That offering had not been mentioned in Moderna’s briefings of investors and journalists that morning, and the company chairman later said it was decided on only that afternoon.
By Tuesday, a backlash was underway. The company had not released any more data, so scientists could not evaluate its claim. The government agency leading the trial, the National Institute of Allergy and Infectious Diseases, had made no comment on the results. And the stock sale stirred concerns about whether the company had sought to jack up the price of its stock offering with the news.
The Moderna episode is a case study in how the coronavirus pandemic and the desperate hunt for treatments and vaccines are shaking up the financial markets and the way researchers, regulators, drug companies, biotech investors and journalists do their jobs.
Drug companies accustomed to releasing early data to attract investors and satisfy regulators suddenly find themselves accused of revealing too much, or not enough, by a new, broader audience. Journalists may be scolded for hyping early findings, while those who ignore sketchy data may be blamed for missing the news.
Scientists who take the traditional time to gather and analyze their data for publication in mainstream journals are criticized for sitting on lifesaving information. Upstart websites beat the journals and break the usual rules by publishing unvetted studies, some of dubious quality. And President Donald Trump uses his bully pulpit to promote unproven treatments.
“You have these wild swings based on incomplete information,” said David Maris, managing director of Phalanx Investment Partners and a longtime analyst covering the pharmaceutical industry. “It’s a crazy, speculative environment because the pandemic has caused people to want to believe that there’s going to be a miracle cure in a miracle time frame.”
Moderna’s chairman, Noubar Afeyan, defended the decision to open a stock sale hours after releasing limited data. He said the company’s board had been considering an offering before Monday’s announcement but finalized the decision only late in the day.
Maris said he would leave it to regulators to decide if the company had acted inappropriately in not announcing the stock sale sooner and added that investors should have been told earlier that the company was considering a stock offering.
“There’s something wrong with that,” he said.
Moderna, based in Cambridge, Massachusetts, went public in 2018 and has been a favorite of biotech investors, given its focus on the hot area of immuno-oncology and its partnerships with companies like Merck and AstraZeneca, and with the Vaccine Research Center at the National Institute of Allergy and Infectious Diseases.
Its technology, based on genetic material called messenger RNA, or mRNA, is considered highly promising.
“Messenger RNA is one of the hot new platforms,” Dr. Anthony Fauci, director of the infectious disease institute, said in an interview Thursday, adding it can be adapted quickly to produce new vaccines and scaled up easily.
Although Moderna has other vaccines in its pipeline, none have come to market, and the viability of its mRNA vaccine-making platform — the basis of the company — is on the line. It is a front-runner in the coronavirus vaccine race, and its stock has risen more than 250% since the beginning of the year. It closed at $69 a share Friday afternoon, down 26% from a high Monday of $87.
Moderna is not the only company that has failed to release detailed scientific data. Little has been known about another closely watched product, remdesivir, an experimental treatment for COVID-19 developed by drugmaker Gilead.
On April 29, Gilead announced it was “aware of positive data” about remdesivir’s performance in a federal trial. A few hours later, from the Oval Office, Fauci said the drug could modestly speed recovery in patients. Although he said it was not a “knockout,” Fauci — his agency ran that trial, too — said the drug could become the standard of care. A few days afterward, the Food and Drug Administration granted emergency authorization to use remdesivir to treat COVID-19. Weeks passed with no detailed data about the clinical trial being published, even though doctors were administering the drug with little information to guide them. “It was a highly conflicted statement from a highly respected and deservedly respected scientist,” said Gary Schwitzer, publisher of HealthNewsReview.Org, a watchdog publication that argues for more accurate science journalism. “So it brings you back to, what do we believe? Whom do we believe?” Fauci said he and his research team decided to report some results when the study was stopped after an independent safety board found the treated patients were recovering faster than those receiving placebos. For ethical reasons, all patients had to be offered the drug. The information would likely have leaked out — especially given that, two weeks earlier, information from another remdesivir trial had been disclosed to the news site STAT, sending Gilead’s stock up. Fauci announced that patients treated with remdesivir recovered in 11 days, compared with 15 days for those getting placebos. “That was all the data we had,” he said. The full results were published Friday in The New England Journal of Medicine. “Engage in whether it’s good science or not,” he said. “Let’s engage in the consequences of this.”