Moderna CEO Stéphane Bancel more than tripled the number of his company shares to be sold through an executive stock plan that was changed just days after the biotech in May announced positive early results for its coronavirus vaccine. Moderna’s shares spiked on the May news, rising 30% in just one day, and have been trading in a historically high price range ever since.
After seeking the executive stock plan change in May, Bancel sold more than 72,000 Moderna shares in the first 16 days of July, generating nearly $4.8 million for the executive. That was more than triple the 22,000 shares he had previously scheduled to sell during the same period through the company’s executive trading plan.
Another top Moderna executive, President Stephen Hoge, also had his pre-programmed executive trading plan reset around the same time. The change allowed him to sell $1.9 million worth of Moderna stock in the first two weeks of July. Hoge hadn’t had any previously planned sale of shares for that time period, company filings show.
Board member Elizabeth Nabel set up a similar stock plan in May following Moderna’s release of the promising preliminary results. Nabel, a Harvard University medical school professor and head of Harvard’s Brigham and Women’s Hospital, sold nearly 74,000 shares of Moderna on July 15 under the new plan and netted as much as $5.6 million, based on information in a filing with the U.S. Securities and Exchange Commission. Nabel has sold nearly half of her stake in the company since mid-May.
The executives’ and Nabel’s sales were made through what are known as 10b5-1 stock plans. These arrangements must be set up or amended at least 30 days before any transactions are executed; they are commonly used at publicly traded companies to help shield executives from potential claims of insider trading. At Moderna, like at other companies, any changes executives seek to make to their trading plans must be approved by the company.
There is no allegation of insider trading connected to the Moderna stock sales. And the most recent stock sales represent less than 1% of both Bancel’s and Hoge’s holdings of company shares, although each has sold thousands of additional Moderna shares this year.
But the fact that the plans were changed during the pandemic as news was emerging about the company’s closely watched coronavirus vaccine raises new questions about how Moderna executives have pocketed millions of dollars in recent months.
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“Once again, drug company executives have been caught playing games with their stock options,” Kyle Herrig, who heads the government watchdog group Accountable.US, said in an email to CBS MoneyWatch.
The group last month urged the SEC to investigate top executives at Moderna for allegedly manipulating the stock market. “The SEC needs to investigate these stock-plan changes,” Herrig said.
SEC chairman cautions against exec stock sales
SEC Chairman Jay Clayton, in response to a question during an appearance on CNBC in May, warned executives of all public companies against selling stock during the coronavirus pandemic, saying it could raise questions that they are doing “something inappropriate.”
Moderna is working with the National Institute of Allergy and Infectious Diseases to develop among the first experimental coronavirus vaccines. Moderna’s vaccine is the first to be tested in the U.S. and has shown in a small study what have been called positive results. The U.S. government has pledged as much as $500 million to Moderna to help it develop its coronavirus vaccine.
Moderna shares jumped again on July 15 following the publication in the New England Journal of Medicine of the vaccine’s positive Phase 1 trial results. “No matter how you slice this, this is good news,” Dr. Anthony Fauci, the U.S. government’s top infectious disease expert, told the Associated Press last week. The vaccine’s Phase 3 trial is expected to begin July 27.
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Moderna disclosed the changes to Bancel’s and Hoge’s stock trading plans this week in a footnote in filings with the SEC. The stock plans were originally set up in December 2018, shortly after the company’s initial public offering. CBS MoneyWatch is the first to report that the executive stock trading plans had recently been changed to increase the amount of shares to be sold.
Earlier this month, The Washington Post reported that Moderna executives, board members and a venture capital fund run by Moderna’s chairman have sold more than $200 million worth of the company’s stock since the middle of January. That was before the most recent sales.
Shares of Moderna — which has never brought a product to market over its 10-year existence — have soared as much as 380% since the start of the year as news emerged of its promising potential for producing a coronavirus vaccine. The stock price was less than $20 in early January and around $95 on Friday, after shares spiked 15% in mere hours when analysts at Goldman Sachs predicted an approved Moderna vaccine by the end of the year.
On Monday, Moderna’s stock sunk nearly 12% to $84, after JPMorgan Chase stock analysts downgraded the company, saying its share price had risen too far.
CEO’s stake worth about $3 billion
The company’s stock runup has made Bancel, 48 next week, a billionaire. The French executive’s roughly 10% stake in Moderna is now worth about $3 billion, up from $600 million at the beginning of the year.
The Moderna executives declined to comment about why the changes in their stock trading plans were made. A spokesman for the company said in a statement the stock sales were made “under pre-planned 10b5-1 plans” and that those plans “were entered into or amended during open trading windows in accordance with the company’s insider trading policy.”
Any amendments made to the plans were “reviewed and approved by the company and consistent with board approved policies and SEC rules,” he added.
Both Bancel and Hoge have sold only a small fraction of their Moderna stock holdings, the spokesman emphasized. The two executives were granted more shares and stock options this year, he added. As a result, the spokesman explained, Bancel and Hoge both have more invested in the company than they did at the beginning of 2020.
The Moderna spokesperson on Monday declined to comment about Nabel’s stock sales, which were revealed in a filing late Friday. A spokesperson for Nabel said she had previously sold Moderna shares through a prior plan and that Nabel still holds vested options to purchase additional Moderna shares.
“On May 21, 2020 during a Moderna opening trading window and at the recommendation of her financial adviser, Dr. Nabel set up a SEC 10b5-1 plan with a limit order for a portion of her Moderna options. Dr. Nabel did not select the date, rather Moderna stock hit the requisite price on July 15,” said the spokesperson.
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Moderna released preliminary vaccine results on May 18. That day, the company’s shares rose to a then-all-time high of $87. But the stock price slumped days later as critics questioned the company for releasing incomplete results.
By May 21, Moderna’s stock price had fallen to $67. That day, Bancel amended his stock plan to sell more shares.
On the same day, Moderna director Nabel, on the advice of her financial adviser, her spokesperson said, also set up an executive stock plan to sell additional Moderna shares at the pre-arranged price. Nabel had already cashed in 30,000 shares in mid-May through another executive trading plan that was set up in mid-March.
Over the next few days, Moderna shares continued to slide, hitting $52 on May 27, but then started to rebound. With the stock price at around $62, Hoge amended his stock plan on June 1. A month later, on July 2, Hoge sold 10,000 shares for just under $600,000. He sold a similar amount four days later and an additional $700,000 worth of shares on July 13.
Bancel, as part of the amendment to his plan, set an additional 9,235 shares to sell on July 10, a day after Moderna was expected to begin Phase 3 trials of its coronavirus vaccine.
Instead, the trial’s start was delayed earlier this month, causing the company’s shares to dip. Bancel sold the shares on July 10 as planned, generating nearly $600,000 for the executive.
In all, Bancel has sold $4.8 million worth of shares since the beginning of July — with sales transactions on July 1, July 2, July 6, July 9, July 10, July 15 and July 16, according to SEC filings.
On July 15, Moderna’s stock spiked more than 20% mid-day to a then-record $88.37 on the public release of the full results of Moderna’s phase 1 coronavirus vaccine trial. That jump hit the price Nabel and her financial adviser had set to sell Moderna’s shares nearly two months earlier.
The shares closed that day at $80, down from the high, but still up for the day. Nabel sold her shares at an average price of $87.84, according to the Friday filing.