Thursday, May 30, 2024

Insiders pocket $1 billion on promise of Coronavirus vaccine

The Coronavirus pandemic is yielding big profits to executives and stockholders of a few pharmaceutical companies even if their promise of vaccine/drugs might never pan out.

Vaxart, a small US company, announced on June 26 that it’s vaccine-in-works has been selected by the US government to be part of Operation War Speed, the flagship federal initiative to fast track a medical solution to the raging pandemic, reports New York Times.

The value of its stock-options increased six-fold. A hedge fund with an investment in the company, walked away with more than $200 millions in instant profits.

Regeneron, a biotech company in New York, has climbed nearly 80 percent on its stock value since February. All it had done was to announce a collaboration with the Department of Health and Human Services to develop a treatment. The company’s executives and board members have sold nearly $700 million in stock. It’s chief executive sold $178 million of shares in a single day in May.

Moderna, a vaccine developer in  Massachusetts, has never brought a product to market. In January announced its work on coronavirus vaccine. It issued a stream of press releases of its progress. Its stocks have tripled. The company is now worth $30 billion. Moderna insiders have sold about $248 million of shares thus far.

More than $85 million worth of shares of Luminex, Quidel and Emergent BioSolutions have been sold by its exeuctives and board members after they announced the company was working on vaccine.

Novavax, after promising initial test results, reported a $1.6 billion deal with the Trump administration. It’s stocks, which were trading at below $24, have jumped to $130 a share. On paper, the four exxecutives’ stock options are now worth more than $100 million.

Vaxart apparently is the one which has made the biggest kill.

Vaxart was part of Operation Warp Speed trial which the federal agency was planning on primates. But it’s not getting funding or financial support. Yet, its heavily marketing the moment with publicity: “Vaxart’s Covid-19 selected for Operation Warp Speed.”

Vaxart has just 15 employees. It has never brought a vaccine to market. Yet, it kept announcing that it’s in partnership with a company that could manufacture it. On June 25, Vaxart announced it had signed a letter of intent with another company for mass production of vaccine. The next day it announced it had been selected for Operation Warp Speed. Through all this, company’s stocks were bought and sold as it would fit the profile of an insider.

So in essence, a desperate public is driving a few companies to paint a picture of vaccine in the offing and draw its stockholders, executive and investors as a magnet to the prospect of selling hundreds of millions, even billions of doses.

New York Times estimates that at least 11 companies, most of them small firms—have sold shares worth well ove $1 billion since March. Executives have reaped seven- or eight-figure profits thanks to their work on coronavirus vaccines and treatments.

Stock transactions are generally legal. But such practices could erode the confidence of people in the pharmaceutical industry.



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