By Jared S. Hopkins and Gregory Zuckerman
The timing this week of Pfizer Inc. Chief Executive Albert
Bourla's sale of about $5.6 million in company shares -- on the
same day it announced positive results from its Covid-19 vaccine --
is drawing scrutiny from some investors.
Mr. Bourla sold about 60% of his personal Pfizer holdings
Monday, joining some top executives at other drugmakers that are in
pursuit of Covid-19 vaccines, including Moderna Inc. and Novavax
Inc., who have sold large chunks of stock after promising news
about their own coronavirus shots, as well as at other times. But
some investors say the stock sales, though eye-catching, aren't
necessarily a concern.
On Monday, Pfizer and partner BioNTech said their Covid-19
vaccine showed in an early analysis to be more than 90% effective
at preventing infections of the disease. The company is waiting on
safety data, but could file for emergency authorization with
regulators as early as later this month.
The news vaulted Pfizer and BioNTech to the front of the global
race for a safe and effective vaccine and caused Pfizer's share
price to spike almost 15% to $41.99, its highest in more than a
year. Global markets surged too, latching onto hopes the world may
be a step closer to returning to normal.
Mr. Bourla sold more than 132,000 directly-owned shares at
$41.94 per share, equal to more than 60% of his personal
stockholding of Pfizer, according to a regulatory filing. He still
owns 78,273 direct shares and 3,539 indirectly. On Wednesday, the
shares closed at $38.52.
Mr. Bourla authorized the sale in February and renewed the
authorization in August with identical price and volume terms, a
Pfizer spokeswoman said.
The sale was part of Mr. Bourla's personal financial planning
and relied on what's known as a 10b1 plan, which regulators allow
for company insiders of exchange-listed corporations to trade a
predetermined number of shares at a predetermined time, according
to Pfizer. The spokeswoman said that Mr. Bourla owns "a substantial
amount of Pfizer stock under our qualified and nonqualified savings
plans" valued at about nine times his $1.65 million salary after
the sale this week.
Several other Pfizer executives also sold shares, filings
show.
Plans such as the one Mr. Bourla used are usually designed to
trigger automatic stock trades and are intended to be set up far
enough in advance that an executive wouldn't have material inside
information when the plan was created, said Marc Fagel, a former
SEC regional director.
Some academics said that while the vaccine-maker stock sales may
be legal and predetermined, they risk further straining large parts
of the public already hesitant about taking Covid-19 vaccines amid
concerns their development is being rushed.
While Mr. Bourla's sale isn't cause for alarm, it holds
"potential for eroding trust," said Maurice Schweitzer, a professor
at the University of Pennsylvania's Wharton School who studies
trust in business. "It's still a bad look and it's a substantial
sale, and we already have people who are trying to figure out how
to instill confidence in a vaccine," he said.
At Moderna and Novavax, which are also developing Covid-19
vaccines, executives have also sold off large chunks of stock,
mostly preplanned, after positive news releases. Stephane Bancel,
Moderna's CEO, has noted that he retains about 99% of his shares
owned at the beginning of the year.
A Moderna spokesman cited language in the company's regulatory
filings that executives selling shares as part of preplanned sale
programs "were not in possession of material, nonpublic
information, at the time those programs were established."
A Novavax spokeswoman said its executives may sell stock for
reasons that include "diversification, to pay college tuitions, to
purchase their home," continue to hold shares and that they have
sold "a fraction of their overall holdings" in the company.
Some investors say such selling could indicate the executives
are privately concerned about their companies' future, or even the
efficacy of their vaccines, and want to lock in profit while they
can. But corporate executives feel financial pressures, like anyone
else, and may have reasons to sell that bear no reflection on the
companies they run. Investors tend to scrutinize buying by
executives more than they do selling, though selling at unusual
times or in huge amounts can spark concern.
"For most of the executives and senior scientists in these
positions, 98% of their net worth is in shares they have in their
employer and by selling some stock they can pay down their
mortgage, put aside money for college education of their children,
get a bit of financial diversity, etc." says Jeffrey Jay, who runs
investment firm Great Point Partners LLC.
Some investors noted that Pfizer's size means its vaccine, even
if effective in curbing the pandemic, may not lead to a huge impact
on the company's shares.
"Insider selling by vaccine makers should serve as a warning
because it suggests insiders may fear their stocks will decline
after hype gives way to the logistics challenges of distributing
vaccines," says Michael Krensavage who runs hedge fund Krensavage
Asset Management LLC.. He's betting against shares of Moderna and
Novavax but doesn't have a Pfizer position.
Mr. Bourla's sale might have less to do with the company's
vaccine and simply more to do with the stock's share price, which
is down nearly 2% this year, says Louise Chen of Cantor Fitzgerald
LP.
"I don't think it's a testament to his confidence in the vaccine
but it may be testament to how he feels about how his shares will
trade," Ms. Chen says.
Mr. Bourla began leading Pfizer at the start of last year after
working in a variety of business roles in his 25 years at the
company. A veterinarian from Greece, Mr. Bourla was hired by Pfizer
while doing animal-health research, and he joined the board in
2018.
Under Mr. Bourla, Pfizer has focused on growing largely through
its internal pipeline rather than via acquisition and working to
shed older products. It combined its consumer health-care division
into one similar to GlaxoSmithKline PLC for a joint-venture. And
late last month, regulators cleared the merger between Pfizer's
businesses that sell off-patent medicines with Mylan NV.
In March, the company began working with BioNTech SE on a
Covid-19 vaccine, building off a partnership that began in 2018 for
work on a flu shot.
Write to Jared S. Hopkins at jared.hopkins@wsj.com and Gregory
Zuckerman at gregory.zuckerman@wsj.com
(END) Dow Jones Newswires
November 11, 2020 19:14 ET (00:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Novavax (NASDAQ:NVAX)
Historical Stock Chart
From Feb 2024 to Mar 2024
Novavax (NASDAQ:NVAX)
Historical Stock Chart
From Mar 2023 to Mar 2024