COVID vaccine execs hyped vague data to cash in $90M in stock, watchdog says

An anti-corruption watchdog is pressing the US Securities and Exchange Commission to investigate executives of the biotech company Moderna after they cashed in about $90 million in company shares days after promoting “positive” but vague data from its early COVID-19 vaccine clinical trial.

The watchdog group, Accountable.US, called the timing of the trades suspicious and questioned whether executives coordinated their stock sales prior to the data release.

In a letter to the SEC that was released to CBS Moneywatch, Accountable.US President Kyle Herrig wrote, “This misconduct was particularly egregious because it involved not only financial fraud and manipulation of the financial markets, but also because it exploited widespread fears surrounding the ongoing COVID-19 pandemic.” In all, the executives’ exploitation served to “boost the company’s value, as well as their own bank accounts.

“I strongly urge the SEC to investigate these matters,” Herrig wrote.

Moderna is considered a front-runner in the race for a vaccine against the pandemic virus, SARS-CoV-2. The company is testing a vaccine involving mRNA, an unproven vaccine platform that is not used for any existing vaccines. However, Moderna became prominent in the pandemic after partnering with the National Institutes of Health to design and test its vaccine. It was the very first vaccine to go into clinical trials, which began March 16.

On May 18, the company sent out a press release saying that eight trial participants had developed neutralizing antibodies at levels that mimicked those seen in people who recover from a SARS-CoV-2 infection. Moderna painted the results as “positive,” but experts were quick to note that the press release didn’t contain any data and that the scant information provided is uninterpretable in terms of assessing the efficacy of the vaccine. Some also questioned why Moderna chose to release such incomplete data from a very small number of participants instead of waiting to publish a larger dataset in a peer-reviewed scientific journal—which is standard practice.

Still, the press release set off a frenzy of “encouraging” coverage, and Moderna’s stock surged 30 percent, raising it to an all-time high of $87 a share. Amid the surge, Moderna’s CEO, several executives, and funds controlled by the chairman of the board sold about $90 million worth of stock, according to CBS Moneywatch.

Though the company’s shares eventually sank and are now at $59 a share, CBS notes that executives are still cashing in millions of dollars’ worth of stock.

In a statement, Moderna defended the moves, saying, “Executive sales are made under pre-planned 10b5-1 plans, which are executed during open trading windows in accordance with the company’s insider trading policy.” The company said it does not comment on potential investigations.