Drug fuels bonanza for firm’s executives

As shares of biotech firm Moderna soared in May to record highs on news that its novel coronavirus vaccine showed promise in a clinical trial, top executives had been selling their stock in the company.

Jay Clayton, chairman of the Securities and Exchange Commission, has asked: “Why would you want to even raise the question that you were doing something that was inappropriate?”

Now, corporate governance experts and some lawmakers say the trades could cast a shadow over Moderna.

In total, seven executives and board members as well as a venture capital fund run by Moderna’s board chairman collectively sold almost $101 million following Clayton’s comment. The trades were part of more than $200 million in sales by insiders since Moderna announced Jan. 21 that it was pursuing a vaccine in partnership with the National Institutes of Health. That’s according to an analysis of SEC filings that the national executive compensation research firm Equilar performed at the request of the Washington Post.

Insiders selling included Moderna Chief Executive Officer Stéphane Bancel, Chief Financial Officer Lorence Kim and Chief Medical Officer Tal Zaks. The trades were preprogrammed, according to the company’s required public disclosure filings, meaning they were made in accordance with a predetermined schedule or triggering event.

On May 21 and 22, the co-founder and chairman of the company, Noubar Afeyan, reported selling $68 million worth of stock held by Flagship Pioneering, the venture capital fund he founded that is Moderna’s largest shareholder. These trades were not preprogrammed, according to the company’s public disclosures.

Moderna’s stock rose by 200 percent from January to June — as company news releases and news reports described early progress in its quest for a vaccine. In May, it was up as high as 300 percent after the release of the results of the clinical trial. The company made a public offering of stock on May 18 at the very peak of its share value.

Companies typically prohibit sales of stock by executives for 180 days after the initial public offering, specialists said.

“All of the activity in the days leading up to the announcement and the offering, and the days following the announcement, are ripe fodder for SEC investigation,” said Jacob Frenkel, a former top SEC investigator now in private practice.