“I was perplexed by such a huge [market] reaction to phase 1 trial results that were positive for, get this, just 8 participants.”
While there were some interesting transactions on the buy side, what caught my eye was the selling by the insiders of Moderna (NASDAQ:MRNA). Moderna kicked off a powerful broad-based rally last Monday when it reported promising results for a COVID-19 vaccine it was testing.
The stock shot up nearly 30% to $86.14 at the open on Monday based on this pre-market news but settled down during the day to close at $80 with a gain of “just” 20%. I was perplexed by such a huge reaction to phase 1 trial results that were positive for, get this, just 8 participants.
By the end of that day, Moderna had announced it was going to raise $1.25 billion in a secondary stock offering and priced it at $76 per share. The icing on the cake was that Moderna executives were selling their stock on the open market on Monday, Tuesday, and Wednesday, as you can see here. While some of these were options-related sales and others were part of an established 10b5-1 selling plan, these transactions and the secondary offering don’t pass the smell test.
As folks who are familiar with the 10b5-1 plan will tell you, it can be gamed, and the reason we have the 10b5-1 plan is because its predecessor, the 10b-5, was also gamed by some insiders.
Matt Egan and Chris Isidore wrote an excellent article discussing these sales in more detail. By the end of the week, Moderna had given back most of its Monday gains, but the S&P 500 continued to hold on to its gains.