(Reuters) – Top executives at US pharmaceutical company Novavax Inc. are not waiting to see how well their COVID-19 vaccine works before getting the financial award back.
Chief executive officer Stanley Erk and his three top lieutenants have sold nearly $ 46 million of the company’s stock since the beginning of last year, according to a review of securities filings, betting investors by putting capital in a nearly 3,000% rally at Novaxax Loaded. Shot success under development.
Irk gave $ 8.7 million cashback during 2020, which eclipses the $ 2.2 million in shares he has sold over the past five years. An analysis by Compensation Advisors Advisory Advisors LLC, according to a review of the filing, of the stock’s sales volume for more than 20% of their vested stake in Novax, or less than 10% if stock options that are not yet vested. Company spokesperson.
The lucrative liquidation, which has not been previously reported, underscores the change in Novax’s fortunes during the global epidemic and gives its executives the opportunity to lock in huge profits from market optimism.
There is no certainty that Novavax, which has yet to bring the vaccine to market, will succeed in its latest endeavor. The 34-year-old company has become a major contender in a global race to develop vaccines against COVID-19 for $ 1.6 billion in taxpayer funds received under the US government’s “Operation War Speed” program.
Gaithersburg, a Maryland-based company, made only $ 250 million a year ago, when news of its experimental vaccine and its involvement in Operation Warp Speed increased its valuation to $ 11 billion.
A NovaWax spokesperson said officials were responsible for the sale of the stock.
“Our leaders remain confident in the value and potential of our vaccines and are fully committed to ending the COVID-19 epidemic and contributing to improving public health,” Novax said in a statement. “They hold a financially substantial personal and business interest, along with the success of Novax.”
Authorities did not respond to requests for comment. A NovaWax spokesperson did not provide officials for interviews.
According to an analysis by consumer advocacy group Accountable .US, only peers of rival biotech company Moderna Inc. among leading companies receiving US taxpayer funding to develop or manufacture the COVID-19 vaccine more than Novavax executives Stock is sold. November 2020. Modern’s COVID-19 vaccine is already being rolled out since it was approved by the US Food and Drug Administration on 18 December.
To be sure, many of the other companies in the vaccine race are much larger than Modern and Novavax, limiting the news’s impact on their shares.
Pfizer Inc.’s vaccine was first approved by the United States on 11 December. AstraZeneca plc received approval for its vaccine on 30 December in the UK, and Johnson & Johnson is scheduled to report test data in January, having it ready for the US. Authority in February.
Meanwhile, Novavax announced last month that it had begun late-stage testing of its COVID-19 vaccine in the United States, after it was delayed twice due to scaling issues in its manufacture. It expects to see results from another late stage trial in the United Kingdom, sometime in the first quarter of 2021.
Early stage data from Novavax’s small clinical trial of its vaccine showed it produced high levels of virus-fighting antibodies, and the company has been using it in Japan, Canada, Australia and the UK, as well as in the United States Already done supply deals with. States of America
Some corporate governance experts said that Novavax offered a great example of how boards use their stock teams to encourage their management teams without always closely linking them to their long-term prospects.
“Board members should have insisted that the officers take over their shares,” said Sanjai Bhagat, a finance professor at the University of Colorado. “Then they will have an incentive to do everything they could to vaccinate as soon as possible.”
Novavax’s board chairman James Young did not respond to requests for comment.
Harvard Law School professor Jesse Fried and a member of the research advisory council at Proxy Consultant Glass, Lewis & Co. said they did not consider it inappropriate to reward officers during the drug development process.
“This could be an opportunity to lock in huge gains once in a lifetime,” Fried said. “They don’t have the problem of making a lot of money even if they don’t have any medicine yet.”
Investors will get to express their views on Novax’s annual shareholder meeting on this year’s summer sale, where they will be asked to approve the company’s board of directors and executive compensation.
“If investors felt the action was unfair, they would ask what the board’s role was in overseeing this disposal of the stock,” said Peter Kimball, advisor and head of customer services at ISS Corporate Solutions, who spoke to companies on corporate importance gives advice.
To be sure, last year Novavax gave more than $ 85 million in stock option executives, including $ 41.1 million in Erk, specifically associated with the development of the vaccine and until they started vesting in August It cannot be practiced till then. However, the award was contingent on the vaccine entering the mid-stage clinical trial, not its ultimate success, Reuters reported in July.
Growth milestones for drugs can trigger large share price moves so that drug executives sometimes adopt a fixed schedule for stock sales – known as the 10b5-1 scheme – insider trading To avoid any suggestion of.
Novavax executives revealed in regulatory filings that they sold some of their shares using such trading schemes.
A NovaWax spokesman said officials adopted the plans over the summer, but did not provide exact dates.
Modern and Pfizer revealed the dates when the authorities adopted the trading plan in their filings. Such disclosure is not required and is less common in American companies, said Dan Taylor, a professor at the Wharton School at the University of Pennsylvania.
Of the $ 46 million stock sold, Novavax’s chief commercial officer John Trizino sold for about $ 13 million, while Novavax’s head of research and development, Greg Glenn, sold about $ 13.4 million, according to securities filings Of. The company’s chief legal officer, John Herrmann, made $ 10.9 million in sales.
According to Accountable.us, executives at Emergent Biosolution Inc., Pfizer and Johnson & Johnson, also the recipients of federal funds, selling $ 24 million, $ 10 million and $ 4 million of stock, respectively. According to Accountable.us, modern executives made $ 166 million in sales.
A majority of the transactions had already been planned under the 10b5-1 trading plan adopted in February by the company’s executive chairman, Fuad al-Hibari, Emergent Biosolutions spokeswoman Nina Delornzo said in a statement.
“Our executive team and board of directors uphold the highest ethical standards and strictly abide by the company’s policies for equity holding as well as all laws and regulations governing financial transactions,” the statement said. . ”
Pfizer and Modern did not respond to requests for comment.
Reporting by Jessica DeNapoli in New York; Editing by Greg Roumeliotis and Carmel Crimes