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'Bad Optics' Or Something More? Moderna Executives' Stock Sales Raise Concerns


A small Boston-area biotech company called Moderna is developing one of the leading candidates for a coronavirus vaccine. Its vaccine has not yet been proven effective, but the company's stock price has roughly doubled in value since spring. And executives at Moderna have taken advantage of that high stock price. Since June, they've sold more than $90 million worth of stock. And NPR investigative correspondent Tom Dreisbach found some other irregularities in these stock sales.

Hi, Tom.


PFEIFFER: Would you first catch us up on the backstory here?

DREISBACH: Sure. So Moderna's working with scientists from the National Institute of Allergy and Infectious Diseases, which is led by Dr. Anthony Fauci. And in May, Moderna released early results from its phase one vaccine trial, which showed some really positive news. Right after that, the stock price went way up, and people started noticing that executives at the company were selling tens of millions of dollars' worth of their stock. That led to a lot of criticism, and the head of the Securities and Exchange Commission even questioned it.

PFEIFFER: But of course, executives buy and sell stock in their companies all the time. So what's...


PFEIFFER: ...Behind the criticism in this case?

DREISBACH: Well, for one thing, Moderna's gotten about $2.5 billion in government money to develop its vaccine. And so that's a big reason why the company's stock price has gone up so much.

I spoke to Margarida Jorge. She's with the advocacy group Lower Drug Prices Now.

MARGARIDA JORGE: The insiders are making plenty of profit, and they're mostly doing it with our money.

DREISBACH: And she points out the Moderna vaccine may not even work, but executives are profiting whether it does or not. Now, the company says Moderna scientists spent a decade developing this technology with private investment. That put them in a position where they could work with the government on a vaccine. Now, another criticism is that two Moderna executives, including the chief medical officer, have sold all of their stock in the company. They currently own no direct shares.

PFEIFFER: Is there an expectation that they would've kept some of their shares?

DREISBACH: Yeah, there's generally this idea that executives should have what's known as skin in the game. And people might wonder, you know, if you're so confident in this vaccine, wouldn't you hold onto your stock? After all, if it's safe and effective, the company's stock could go even higher. And there is one other concern, which is around the specific timing of these stock sales.

PFEIFFER: Now, the company says its executives scheduled these stock trades a while ago, long before they could've known their stock would go way up. But you found some irregularities. Tell us what you found.

DREISBACH: Right. So to make these stock sales, company executives set up what are - these schedules in advance, kind of put them on autopilot - set it and forget it. You're only allowed to set up the schedule, though, when you don't have confidential inside information that could affect the share price. That way, you can't be accused of insider trading. And like you said, the company's CEO has said in interviews, look; we set these plans up almost two years ago.

But we looked through the official government disclosures, and it turns out they made changes to those plans or adopted new plans this year. In one case, the chief medical officer made changes to his plan one day before the company officially announced it was working on a coronavirus vaccine. In another case, three executives started a new schedule for their stock trades on a Friday. And then the following Monday, the company announced a new milestone in its vaccine development.

PFEIFFER: And that timing clearly raises the question of whether they had inside information when they made those changes.

DREISBACH: Exactly. I talked to a professor at Wharton who is also an expert in insider trading. His name is Daniel Taylor. And he told me that this type of trading behavior is just far outside the norm.

DANIEL TAYLOR: On a scale of 1 to 10, 1 being least concerned and 10 being the most concerned, this is an 11. At a minimum, you have weak internal controls over trading activity, and at worst, it's something nefarious. In either case, it's not good.

DREISBACH: Now, I spoke to Moderna about this. A spokesperson said, quote, "The individuals entering into these plans and the company were not in possession of material non-public information based on an assessment by legal counsel of the facts available at that time." The company says it strictly follows all of the rules and the laws and SEC guidelines. But in August, the company did say, to avoid any distraction, it will no longer make any changes to these stock trading plans until they finish the vaccine project.

PFEIFFER: That's NPR's Tom Dreisbach.

Tom, thank you for your reporting.

DREISBACH: Thanks for having me. Transcript provided by NPR, Copyright NPR.

Tom Dreisbach is a correspondent on NPR's Investigations team focusing on breaking news stories.