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The Moderna episode is a case study of how the coronavirus pandemic and the desperate hunt for treatments and vaccines are shaking up the financial markets. Now Moderna (MRNA) stock is trading below $70 again.
The stock of U.S. pharmaceutical hope Moderna Inc (NASDAQ: MRNA) jumped around 30% after the company revealed it had pretty promising results on early testing for its COVID-19 vaccine. However, as some investors eagerly rushed in, two insiders decided to crawl out. As the market closed on Friday, Moderna (MRNA) stock was 2,91% up, at $69. After hours, it lost 1.03% to trade at $68.29.
As per SEC filings review, Moderna’s chief financial officer Lorence Kim and chief medical officer Tal Zaks executed options and sold nearly $30 million of shares combined on Monday and Tuesday.
The sales happened as Moderna (MRNA) boosted Wall Street before markets opened Monday by announcing optimistic vaccine trial results. Moderna’s market value went up to $29 billion, although the company has not one product on the market.
After it rose to as high as $87 on Monday, Moderna (MRNA) stock price has since retreated below $70 as medical experts have discussed over the exact value of the early findings. Stocks ended the week with a fall of 1.03% to $68.29.
The securities transactions were done through automated insider trading plans, known as 10b5-1 plans, that lay out future stock trades at set prices or on set dates.
Two Executives Selling Them Stocks, Earning Them Money
As per the filings, Lorence Kim, therefore, exercised 241,000 options for $3 million on Monday. He almost immediately sold them over for $19.8 million, creating a profit of $16.8 million. The next day, Tal Zaks, Moderna’s chief medical officer, spent $1.5 million to exercise options. He immediately sold the shares for $9.77 million, getting himself a profit of $8.2 million. Not bad, huh? Moderna said the sales were made according to 10b5-1 trading plans that were established earlier.
They said from the company:
“These transactions are executing automatically pursuant to these trading plans.”
Although the somewhat odd timing of the transactions made a lot of traders wondering, Charles Whitehead, professor at Cornell Law School, said the stock sale wasn’t anything that they should be worried about.
These plans decide when and how many shares company insiders, including directors and executives, can sell. The transactions are typically done automatically, without the insiders’ action.
Andrew Gordon, director of research services at Equilar, said there would only be a “legal issue if they created or modified their 10b5-1 plan while in possession of material insider information.”
So, be it as it may, Moderna’s share price fell 10% to $71.67 on Tuesday after health website STAT stated that the company did not provide enough information regarding the significance of the Phase 1 discoveries.
By Thursday, Moderna went down by 16% to $67.05, from its Monday close.
Moderna (MRNA) Stock Falling Down Looks Bad from PR Perspective
Gordon then stated:
“It’ll look bad from a PR perspective if Moderna’s stock price starts to fall dramatically after all this trading.”
Moderna (MRNA) shares grew a bit, by 2% to $68.60 on Friday after the National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci said that there is good news to be happy about.
“Although the numbers were limited, it was quite good news because it reached and went over an important hurdle in the development of vaccines. That’s the reason why I’m cautiously optimistic about it.”
Moderna is one of the companies that came into the vaccine discovery race among the first. Fauci explained that the biotech company’s vaccine produces neutralizing antibodies that bind to the virus and disable it from attacking human cells.
Also, some experts think that it is possible that the medicine be ready this year. Dr. Carlos del Rio, an Emory University professor of medicine, told CNBC on Friday that a Covid-19 vaccine could be ready in some form for distribution by the end of 2020.
However, he added:
“I am cautiously optimistic. We are developing at a pace that has never been done before. Trying to think that, a year after a virus has been identified, we will have a vaccine ready to deploy and ready to go into massive distribution, it’s simply mind-boggling to me. I have to be a little cautious and say I hope it happens, but I don’t want to be — I want to make sure we do it the right way.”
You can find more about companies’ stocks amid coronavirus, in our stock market news section.