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While Millions Lost Jobs, Some Executives Made Millions in Company Stock

Even as millions of people have lost their jobs during the pandemic, the soaring stock market since the spring has delivered outsize gains to the wealthiest Americans. And few among the superrich have done as well as corporate executives who received stock awards this year.

Executives With the Biggest Gains

Corporate leaders whose stock options or grants this year have appreciated the most.

Total value of all stock options

or grants given in 2020













Peloton Interactive


W. Stack





Dick’s Sporting Goods


W. Smith



















Total value of all stock options

or grants given in 2020





William Lynch







Peloton Interactive

Edward W. Stack





Dick’s Sporting Goods

Frederick W. Smith






Stéphane Bancel






Marc Benioff





Notes: *The value is zero in these cases because the company’s stock price at the time of the grant had not risen above the stock price at which the options were granted. Current value as of Oct.7.

Source: Institutional Shareholder Services

By Karl Russell

Edward W. Stack, the chief executive of Dick’s Sporting Goods, and William Lynch, president of Peloton, for example, are each sitting on paper gains of over $60 million on stock-based awards they mostly received in the first three months of the year, based on Wednesday’s closing stock prices, according to an analysis by Institutional Shareholder Services, which advises investors on how to vote on corporate matters.

And Stéphane Bancel, the chief executive of Moderna, a drug maker developing a coronavirus vaccine, received options in January that have appreciated by nearly $30 million.

The pay gains are a result of the sharp rise in the stock prices of these companies, which investors are betting are well positioned to grow during the pandemic. Another reason these stock awards have appreciated so much is that some of the grants were made when the stock market was close to its lowest point for the year. Of course, many executives are also sitting on gains on stock they got in earlier years.

But the surge in wealth also highlights how the compensation of senior executives is designed to give them enormous windfalls, which they have gotten even during one of the sharpest economic downturns in decades.

These gains are also a reminder that income and wealth in the U.S. economy are tilted heavily toward a tiny number of top earners who own significant amounts of stock. Most Americans own little or no stock, according to a recent Federal Reserve report, and many had less in savings in 2019 than they did before the last recession a decade ago.

“The stock market is not an indicator of the health of the economy for working people; it’s an indicator of economic inequality,” said Brandon Rees, deputy director of corporations and capital markets at the A.F.L.-C.I.O. “These C.E.O. payments reflect that reality.”

For decades, corporate boards have tried to tie executive pay to the performance of the company’s stock in an effort to make managers more accountable to shareholders. Yet executives still often end up doing far better than might be justified by a company’s fundamental business performance.

Mr. Stack’s compensation shows how top executives can rack up such large gains so quickly.

In March, when the stock market was close to its low point and the share price for Dick’s Sporting Goods was also at a nadir, he received 355 percent more stock options for his 2020 award than for his 2019 grant and 142 percent more restricted shares, according to the I.S.S. analysis and the company’s securities filings. (Businesses often hand executives stock in two forms: stock options or restricted shares. An option usually provides its owner the right to acquire company stock at a future date at the price it was trading on the day it was issued. A restricted share is stock that executives cannot sell for months or years.)

When asked to explain how the company arrived at Mr. Stack’s 2020 stock grants, it said in a statement: “As in prior years, the compensation committee considered a number of factors, including the company’s 2019 performance.”

Then, everything started to move in Mr. Stack’s favor. Investors, believing that Dick’s could profit in the pandemic economy and encouraged by stimulus from Congress and the Federal Reserve, bid up the price of the company’s stock. But because Mr. Stack had far more shares in the 2020 stock grants than he did in 2019, the overall value of that awards have ballooned. The 2020 awards were worth about $7 million when they were issued and are now valued at a combined $67.4 million. By contrast, Mr. Stack’s 2019 awards are worth $15 million at Wednesday’s stock price.

Of course, the gains could shrink if Dick’s stock declines. Mr. Stack can exercise and sell all his stock options only after four years. In a filing, the company said his restricted stock awards would become available over time but did not specify the period.

Still, the award raises questions. Shareholders may object to an arrangement that could give Mr. Stack compensation far in excess of what they might have expected when the stock grant was made.

“If you don’t adjust your approach when there is a shake-up in the market and your stock price is down significantly, investors are going to raise concerns,” said Brett Miller, head of data solutions for the responsible-investment arm of I.S.S. “What you don’t do is give executives more opportunities to increase their value.”

Employees may also feel left out. As Mr. Stack’s stock grant was swelling in value, Dick’s furloughed many of its employees for several weeks. In the company’s last fiscal year, his compensation was 1,487 times the pay of the company’s median employee, a measurement that includes many part-time workers. Mr. Stack has a large stake in Dick’s and controls the company through powerful voting shares.

The I.S.S. analysis covers top executives whose pay details are included in companies’ proxies, documents that publicly traded businesses file with the Securities and Exchange Commission annually. Proxies provide investors with important financial information and instructions on how to vote on corporate proposals and board appointments.

Not all executives have gains on their 2020 grants, because many companies have struggled in the pandemic. In its survey, which covers 2020 grants made by companies in the Russell 3000 stock index, I.S.S. found that 1,675 “named executive officers,” or the executives who appear in proxies, had gains while 1,388 had losses, as of Wednesday’s closing stock prices. The average appreciation was nearly $1.5 million and the average loss $827,000.

The chief executives of technology companies, many of which have thrived during the pandemic, have done particularly well. Their average gain on 2020 grants was $3.2 million, while the average loss was $543,000.

The largest combined gain in the survey was Mr. Lynch’s $64 million on his 2020 options grants from Peloton. Its stock is up 500 percent from its 2020 low.

If a company’s stock soars like Peloton’s, employee stock awards will most likely produce immediate paper fortunes. But Mr. Miller said companies could structure stock awards to reduce that likelihood if they wanted to. For example, companies can space out grants so they are not all granted when the stock is at a low or a high point.

Peloton declined to comment.

Ray Jordan, a spokesman for Moderna, said Mr. Bancel’s options vested over several years, meaning that “paper gains in a few months do not necessarily translate to long-term gains if the stock performance is not maintained.”

Some executives at companies that have been hit hard by the pandemic have still done well. In March, William J. Hornbuckle, chief executive of MGM Resorts International, gave up the remainder of his 2020 salary in exchange for restricted stock units worth $700,000, the amount of his forgone salary. After MGM stock recovered somewhat from the lows it plumbed in March, that grant is worth $1.3 million on paper — and all his 2020 awards have appreciated by a combined $4 million.

“At a time of great uncertainty when all of our properties were closed with no clear plan for reopening, Mr. Hornbuckle and several of our executives volunteered to help the company conserve cash by exchanging all or a portion of their cash compensation for the remainder of 2020 for restricted stock units that vest at the end of the year,” Debra DeShong, an MGM representative, said in a statement. “By doing so, they took on great risk, risk that still exists in that we are not operating under normal circumstances and we are still in a period of recovery.”

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How to Ship a Vaccine at –80°C, and Other Obstacles in the Covid Fight

Many things will have to work out to end the coronavirus pandemic. Drug companies will have to develop a safe and effective vaccine. Billions of people will have to consent to vaccination.

But there are more prosaic challenges, too. Among them: Companies may have to transport tiny glass vials thousands of miles while keeping them as cold as the South Pole in the depths of winter.

A number of the leading Covid-19 vaccines under development will need to be kept at temperatures as low as minus 80 degrees Celsius (minus 112 degrees Fahrenheit) from the moment they are bottled to the time they are ready to be injected into patients’ arms.

That will not be easy. Vaccines may be manufactured on one continent and shipped to another. They will go from logistics hub to logistics hub before ending up at the hospitals and other facilities that will administer them.

While no vaccine has yet been approved by health officials in the United States, preparations for a mass-vaccination campaign are gearing up. The U.S. military and a federal contractor are expected to play a role in coordinating the distribution. But a hodgepodge of companies are scrambling to figure out how to keep hundreds of millions of doses of a vaccine very, very cold.

Planes, trucks and warehouses will need to be outfitted with freezers. Glass vials will need to withstand icy climes. Someone will need to make a lot more dry ice.

“We’re only now beginning to understand the complexities of the delivery side of all of this,” said J. Stephen Morrison, senior vice president at the Center for Strategic and International Studies, a research firm. “And there’s no getting around it. These have stark temperature demands that will constrain access and delivery.”

Credit…Hans Pennink/Associated Press

President Trump on Friday asserted that hundreds of millions of doses of an unidentified vaccine will be available to all Americans by April. That timeline is more ambitious than what his own advisers have described. Dr. Robert R. Redfield, the director of the Centers for Disease Control and Prevention, told a Senate committee on Wednesday that a vaccine would not be widely available until the middle of next year.

Of the three vaccines that have advanced to Phase 3 trials, two — one made by Moderna and the National Institutes of Health, the other by Pfizer and BioNTech — need to be kept in a near constant deep freeze. (They are made with genetic materials that fall apart when they thaw.) Another leading vaccine candidate, being developed by AstraZeneca and Oxford University, must be kept cool but not frozen.

McKesson, a major drug distributor, won a major federal contract last month to help distribute a coronavirus vaccine. Much of the work, however, will fall to companies outside the medical and drug industries. The major U.S. logistics companies, including UPS and FedEx, already have networks of freezers that they use to ship perishable food and medical supplies. The companies have experience shipping vaccines for other illnesses, including the seasonal flu.

But the Covid-19 vaccination effort is likely to dwarf all previous campaigns.

UPS said it was constructing a so-called freezer farm in Louisville, Ky., the company’s largest hub, where it can store millions of doses at subzero temperatures.

Creating an entire warehouse that could maintain that deep freeze would have been too complex and costly. So instead, rows of upright industrial Stirling Ultracold freezers, each capable of holding 48,000 vials, are being arranged inside a warehouse. There are 70 freezers so far, but the warehouse could fit a few hundred. A similar UPS center is in the works in the Netherlands.

“I haven’t seen anything like this before,” said Wes Wheeler, UPS’s head of health care. “Nothing has been quite this global in scale.”



At FedEx, the vaccine preparations are being led by Richard W. Smith, the son of the company’s founder, Fred W. Smith. The younger Mr. Smith, who runs the company’s airline operations in the Americas, was in charge of the life sciences business for FedEx’s airline operations in 2009, during the H1N1 pandemic. At the time, the U.S. government asked FedEx to prepare to help transport vaccines, Mr. Smith said, and the company doubled its number of freezers around the globe.

“Fortunately, H1N1 did not rise to the level of the pandemic we thought it could be,” he said. “But that allowed us to really beef up our cold-chain infrastructure.”

In the years after that scare, FedEx expanded its supply of freezers and worked with the Federal Aviation Administration to win approval for its planes to carry more dry ice. (When dry ice melts, it emits carbon dioxide, making the air on planes potentially unsafe for pilots and crew.)

Now FedEx is adding freezers that can maintain temperatures as low as minus 80 Celsius in cities including Memphis, Indianapolis and Paris. It is installing additional refrigerated trailers in Oakland, Calif., Dallas and Los Angeles, which could be used for vaccines that need to be served chilled, not frozen.

“The demand for this is huge,” Mr. Smith said. “We know it’s going to be a very substantial market.” Analysts at Citi agreed, saying the business of transporting vaccines is likely to be profitable in a recent note suggesting that FedEx stock was a good investment.

As if the challenge weren’t sufficiently daunting, the world is facing a looming shortage of dry ice — an unexpected side effect of the pandemic.

Dry ice, the stuff that exudes chilly smoke and enthralls school-age scientists, is made from carbon dioxide, which is most commonly created as a byproduct during the production of ethanol.

But ethanol production ebbs and flows based on the demand for gasoline. This spring, as stay-at-home orders went into effect, people began driving less. As a result, ethanol production slumped, and so did the supply of carbon dioxide.

In April, Richard Gottwald, chief executive of the Compressed Gas Association, sent a letter to Vice President Mike Pence warning of “a significant risk of a shortage in carbon dioxide.”

Five months later, “the ethanol industry still has not bounced back,” Mr. Gottwald said in an interview. “We are seeing a shortage.” And that is making dry ice hard to come by.

For much of the summer, Marc Savenor, owner of Acme Dry Ice in Cambridge, Mass., which supplies medical companies, has been running low on carbon dioxide. Supply was the tightest he had seen in his 42 years of business, forcing Mr. Savenor to ration his dry ice.

“It was like a McDonald’s with no hamburgers,” he said, adding that carbon dioxide seemed to more plentiful in recent weeks.



UPS and FedEx are taking matters into their own hands. FedEx already has machines in warehouses that can produce dry ice, and UPS said it was considering adding them.

The companies will also have to provide their delivery employees with special training and equipment like gloves to handle their icy wares.

Pfizer has designed a special box to transport its hoped-for vaccine. The boxes, roughly the size of a large cooler, will hold a couple of hundred glass vials, each containing 10 to 20 doses of vaccine. The boxes are equipped with GPS-enabled thermal sensors, allowing Pfizer to know where the boxes are and how cold they are. (If they get too warm, workers can add dry ice.)

All of this leads to another problem: Glass often cracks in extreme cold.

Early this year, Corning, a 169-year-old glass maker in upstate New York, approached officials at the Department of Health and Human Services with a warning: There wouldn’t be enough cold-resistant glass vials to handle a frozen vaccine, said Brendan Mosher, Corning’s head of pharmaceutical technologies.



Corning pitched a solution. It could make millions of vials with a new type of pharmaceutical-grade glass that can withstand the lowest temperatures. In June, the government awarded the company a $204 million contract to increase its production of the special vials. The new glass is made without boron, a common ingredient in conventional glass that can lead to contamination of whatever is in the vials.

Mr. Mosher said Corning was using the federal money to quadruple the capacity at its plant in Big Flats, N.Y.; to accelerate construction of a glass furnace in New Jersey; and to speed up construction of an additional plant in North Carolina. Corning is hiring 300 workers and says it is on track to start producing hundreds of millions of glass vials next year.

Even if there is enough dry ice and chilled warehouses and sturdy vials, everyday pharmacies are unlikely to be equipped to stockpile large quantities of vaccines that require ultracold storage. Nevertheless, they might be able to keep Pfizer’s cooler-size boxes on hand, and Moderna’s vaccine can be stored at less extreme temperatures in the days before it is administered.

In a presentation to the White House coronavirus task force last month, Kathleen Dooling, a disease expert with the C.D.C., said strict temperature requirements “will make it very difficult for community clinics and local pharmacies to store and administer.” She said the vaccine would have to be dispensed “at centralized sites with adequate equipment and high throughput.” It’s not clear where those sites will be or who will administer the vaccines.

That is just in the United States. A vaccine requiring stringent temperature controls would be off limits for much of the developing world. A recent study by DHL and McKinsey found that a cold vaccine would be accessible to about 2.5 billion people in 25 countries. Large parts of Africa, South America and Asia, where super-cold freezers are sparse, would be left out.

“The consequence is to reinforce the staggering bias in favor of the wealthy and powerful few countries,” said Mr. Morrison, of the Center for Strategic and International Studies.

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Vaccine Makers Keep Safety Details Quiet, Alarming Scientists

The morning after the world learned that a closely watched clinical trial of a coronavirus vaccine had been halted last week over safety concerns, the company’s chief executive disclosed that a person given the vaccine had experienced serious neurological symptoms.

But the remarks weren’t public. Instead, the chief executive, Pascal Soriot of AstraZeneca, spoke at a closed meeting organized by J.P. Morgan, the investment bank.

AstraZeneca said on Saturday that an outside panel had cleared its trial in Britain to begin again, but the company still has not given any details about the patient’s medical condition, nor has it released a transcript of Mr. Soriot’s remarks to investors, which were reported by the news outlet STAT and later confirmed by an analyst for J.P. Morgan.

Another front-runner in the vaccine race, Pfizer, made a similarly terse announcement on Saturday: The company is proposing to expand its clinical trial to include thousands more participants, but it gave few other details about its plan, including how it would determine the effectiveness of the vaccine in its larger study.

It’s standard for drug companies to withhold details of clinical trials until after they are completed, tenaciously guarding their intellectual property and competitive edge. But these are extraordinary times, and now there is a growing outcry among independent scientists and public health experts who are pushing the companies to be far more open with the public in the midst of a pandemic that has already killed more than 193,000 people in the United States.

These experts say American taxpayers are entitled to know more since the federal government has committed billions of dollars to vaccine research and to buying the vaccines once they’re approved. And greater transparency could also help bolster faltering public confidence in vaccines at a time when a growing number of Americans fear President Trump will pressure federal regulators to approve a vaccine before it is proved safe and effective.

“Trust is in short supply,” said Dr. Harlan Krumholz, a cardiologist and health care researcher at Yale University in New Haven, Conn., who has spent years prodding companies and academic researchers to share more trial data with outside scientists. “And the more that they can share, the better off we are.”

Last week, nine pharmaceutical companies, including AstraZeneca and Pfizer, pledged to “stand with science” and rigorously vet any vaccine for the coronavirus — an unusual pact among competitors. But the researchers said that missing from the joint statement was a promise to share more critical details about their research with the public and the scientific community.

None of the three companies with coronavirus vaccines in advanced clinical trials in the United States have made public the protocols and statistical analysis plans for those trials — the detailed road maps that could help the independent scientists better understand how the trials were designed, and hold the companies accountable if they were to deviate from their plans. In some cases, crucial details about how the trials have been set up — such as at what points an independent board can review early study results, or under what conditions a trial could be stopped early — have not been made public.

“We’ve never had such an important clinical trial — or series of clinical trials — in recent history,” said Dr. Eric Topol, a professor of molecular medicine at Scripps Research in La Jolla, Calif., and a longtime expert on clinical trials. “Everything should be transparent.”

Public confidence in the drug companies’ findings and federal regulators’ rigor will be critical in persuading Americans to get vaccinated. A growing number of people are skeptical. A poll by the Kaiser Family Foundation this past week found that nearly two-thirds of Americans — 62 percent — are worried that the Food and Drug Administration will rush to approve a coronavirus vaccine without making sure it is safe and effective, under political pressure from Mr. Trump.

Credit…Hans Pennink/Associated Press

Pharmaceutical companies are counting on their vaccine research to help them rebuild reputations that have been tarnished by soaring drug prices and the industry’s role in fueling the opioid epidemic.

In an effort to restore public trust, senior regulators at the F.D.A. took the highly unusual step of promising in a USA Today op-ed piece on Thursday to uphold the scientific integrity of the process of evaluating treatments and vaccines, and to maintain the agency’s independence.

Representatives for the three companies with vaccine candidates in large, advanced trials in the United States — Moderna, Pfizer and AstraZeneca — said they had released many details about the trials.

Pfizer said in a statement that the novelty of the virus and the fast-moving nature of the coronavirus crisis had meant that the protocol had to be flexible “to enable us to enhance the evaluation of the potential vaccine’s safety and efficacy.” The company said it would publish the full protocol from the trial as part of its submission to a medical journal “that will include results, enrollment criteria and final number of participants enrolled.”

On Saturday, Pfizer said it would ask the F.D.A. for permission to expand its trial to 44,000 participants, from its initial target of 30,000. But the announcement raised new questions about how the company would be able to know the results by its goal of the end of October, with so many new participants. A Pfizer spokeswoman, Amy Rose, said, “We are not going to speak to timing or specifics of any interim analyses.”

AstraZeneca did not initially report that a participant’s illness had halted its clinical trials around the world. The studies were paused last Sunday, but not reported until the news was broken by STAT on Tuesday. The company still has not disclosed the patient’s illness that led to the pause, even though it has discussed the medical condition of another participant who developed multiple sclerosis in July, which led to another brief halt of the trial. That illness was determined to be unrelated to the vaccine.

The company said that Mr. Soriot’s appearance at the J.P. Morgan meeting was part of a long-planned event, and that he largely discussed the company’s business outlook, with a few questions about the trial. The New York Times has reported that the patient developed symptoms consistent with transverse myelitis, or inflammation of the spinal cord.

A spokeswoman for AstraZeneca, Michele Meixell, said that while trial sponsors were required to notify the doctors operating clinical trial sites if an “unexplained event” occurred, “it is not common practice for those pauses to be communicated beyond the clinical community involved in a trial — including the media — in order to protect the privacy of individual participants and maintain the integrity of the trial.”

There is precedent for greater transparency. The large Recovery trial being run by the University of Oxford in Britain — which helped determine that the steroid dexamethasone reduces deaths in patients with Covid-19 — has published its trial protocol and statistical analysis plans.

While the broad outlines of the vaccine trial designs have been made available — including on a federal clinical trial registry — crucial details remain a mystery.

For example, Pfizer’s chief executive has said the company could apply to the F.D.A. for emergency authorization of its vaccine as early as October. But the company has not said how many times — and at what point in the trial — it will allow an independent review board to examine its study data to evaluate whether the evidence of safety and efficacy is strong enough that it can stop the trial early and apply for an emergency approval from federal regulators.

And none of the companies have published the criteria they will use to determine when these outside boards would advise stopping the trial, which could happen if the vaccine showed overwhelming efficacy, if it showed that it did not protect against Covid-19 or if it was linked to serious safety issues.


Credit…Jeenah Moon/Getty Images

These so-called interim analyses are the subject of intense interest, because they are the only way that late stage trials could be halted early.

Company executives have provided some trial details when they have spoken on discussion panels or at investor conferences, or in news releases. But researchers looking for clues have had to comb through transcripts, videos and articles posted online, rather than to examine documents that the companies provided.

The lack of transparency is unacceptable, several researchers said, given that the federal government has billion-dollar deals with each of the companies.

“Look, we paid for it,” said Saad B. Omer, the director of the Yale Institute for Global Health. “So it’s reasonable to ask for it.”

A federal clinical trial registry details the number of trial participants, who should be included and excluded from the study, and the main outcomes. But it only skims the surface, Dr. Krumholz said. “The protocols are much more detailed.”

Peter Doshi, who is on the faculty at University of Maryland School of Pharmacy in Baltimore and an editor with The BMJ, a medical journal, said he recently requested the protocols from Pfizer, Moderna and AstraZeneca. None of the companies shared them, he said.

“I imagine most of the public would like to believe scientists are all sharing their data, that this process is open to scrutiny among the scientific community,” said Dr. Doshi, who has helped pressure drug makers to share trial records with researchers. “Just not true.”

Dr. Doshi said the protocols could help researchers answer important questions about the studies, and possibly to critique them. For example, can the trials determine whether the vaccine can prevent Covid-19 and complications in high-risk groups like older adults? When the researchers test for the coronavirus, how do they account for false results?

Other independent scientists said they were eager to examine the trials’ statistical analysis plans, which would guide them in analyzing the results.

“Frankly, I would love to know what they’re planning to do, and how they’re planning to do it,” said Dr. Judith Feinberg, the vice chairwoman for research in medicine at West Virginia University in Morgantown.

By making these documents public, outside experts said they would be able to hold the companies accountable if they changed the way they analyzed the results.

“There’s no downside” to sharing the documents, said Dr. Paul A. Offit, a professor at the University of Pennsylvania in Philadelphia who serves on the F.D.A. advisory committee that will review coronavirus vaccines. “People are skittish about these vaccines. I think it helps to be transparent.”

Dr. Omer said he was in favor of the companies releasing the protocols and analysis plans, but he said he also worried that, in the wrong hands, the technical documents could be misinterpreted.

“You cannot kid around with this kind of stuff,” he said. In the long run, however, he said it was to the companies’ advantage to allow qualified researchers to evaluate the plans.

If independent researchers agreed the trials were set up properly — and Dr. Omer said he expected that would be the case — that could help enhance their credibility. They can say: “Hold your horses. No need to jump up and down.”

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This Company Boasted to Trump About Its Covid-19 Vaccine. Experts Are Skeptical.

As the deadly new virus spread globally, Inovio Pharmaceuticals, a small biotech company in Pennsylvania, rushed to develop a vaccine. After announcing promising early results, Inovio’s stock soared more than 1,000 percent. Riding the momentum, the company sold more shares to the public.

That was 2009, when H1N1, better known as swine flu, was stoking fears of a devastating pandemic. In the years since, Inovio has announced encouraging news about its work on vaccines for malaria, the Zika virus and even a “cancer vaccine.” The upbeat declarations have caused the company’s stock price to leap, enriching investors and senior executives.

There’s only one catch: Inovio has never actually brought a vaccine to market.

Now, with a new pandemic raging, Inovio is working on a new vaccine: for the novel coronavirus. A flurry of positive news releases about its funding and preliminary results have sent Inovio’s shares up by as much as 963 percent — and helped the company attract money from the government and investors. At the same time, Inovio insiders have sold stock.

But some scientists and financial analysts question the viability of Inovio’s technology. While there are some early signs of promise with the company’s vaccine, Inovio has only released bare-bones data from the first phase of clinical trials. It is locked in a legal battle with a key manufacturing partner that claims Inovio stole its technology.

Shareholders have sued Inovio, claiming it has exaggerated its progress on a coronavirus vaccine to inflate its stock price. Adding to the challenges, Inovio’s potential vaccine will have to be administered by a gadget — it resembles an electric nose-hair trimmer and is called the Cellectra — that would direct genetic material into millions of patients.

And while the company has said that it is part of Operation Warp Speed — the flagship federal effort to quickly produce treatments and vaccines for the coronavirus — Inovio is not on the list of companies selected to receive financial support to mass-produce vaccines.

“The absence of that funding, coupled with their ongoing litigation, coupled with the need to scale a device, coupled with the absence of complete Phase 1 data, makes people skeptical,” said Stephen Willey, an analyst at Stifel, an investment firm.

As it tries to defuse the coronavirus crisis, the Trump administration is wagering, in part, on companies — like Moderna and Novavax — with spotty track records and penchants for self-promotion. In June, Inovio received $71 million from the Department of Defense to manufacture its battery-operated Cellectras.

Some medical experts worry that taxpayer backing for unproven companies could erode the public’s already tenuous faith in vaccines.

Credit…John Francis Peters for The New York Times

“If you dry up trust, you’ll have almost a self-defeating proposition with vaccine uptake,” said Arthur L. Caplan, a bioethicist at the New York University School of Medicine. “The more you’re hype and less you’re reality, the more you are taking funds away from things that are cheaper, closer or both,” he added.

Inovio could provide an update on its progress with the vaccine when it releases its second-quarter financial results on Monday.

Developing vaccines is hard. In addition to coming up with an effective formula and the funding to produce it, drug makers need to navigate an obstacle course of government safety checks and rigorous scientific review on a fast enough timeline to stay competitive. The fact that a company like Inovio has never brought a vaccine to market is not necessarily an indictment of its underlying approach to creating vaccines. Otherwise, scientists say, the world would never have technological breakthroughs.

Inovio’s specialty is attempting to develop DNA-based vaccines, which use a virus’s own genes to provoke an immune response. But the company’s decade of attempts have not borne fruit.

In fact, no DNA-based vaccine has ever made it to market. While some have produced encouraging results in small animals, they have not proven effective in humans — against the coronavirus or any other disease.

Nonetheless, the scientific community continues to believe the technology is promising in part because such gene-based vaccines can be designed quickly. Companies in Korea, India and Japan are pursuing similar DNA-based coronavirus vaccines.

Inovio’s chief executive, J. Joseph Kim, has said that when the DNA sequence of the coronavirus became public in January, the company was able to immediately engineer a vaccine. Later that month, Inovio secured a $9 million grant from the Coalition of Epidemic Preparedness Innovations, a leading funder of vaccine research.

In March, Dr. Kim — an immunologist who became chief executive of Inovio in 2009 — was invited to participate in a meeting in the White House’s Cabinet Room with President Trump and pharmaceutical executives.


Credit…Drew Angerer/Getty Images

At the public meeting, Dr. Kim described Inovio as “the leader in coronavirus vaccine development in the world,” adding that it had its own manufacturing capabilities.

Mr. Kim said that, thanks to “our very innovative, 21st-century platform,” Inovio had been “able to fully construct our vaccine within three hours.” All the company needed now, he told Mr. Trump, was the federal government’s support to help scale up manufacturing.

Inovio’s stock shot up 220 percent over the coming days. Its market value has gone from less than $500 million at the start of the year to more than $3 billion today.

Shortly after the White House meeting, Inovio announced that it had received a $5 million grant from the Bill and Melinda Gates Foundation. The money would help Inovio test the Cellectra. The devices use electrical pulses to direct DNA into patients’ cells — a technique that experts said is grounded in legitimate science.



Some investors, though, had grown skeptical.

On March 9, Andrew Left of Citron Capital, which is shorting Inovio’s stock and stands to profit if it declines, began publicly questioning Inovio’s approach to devising a coronavirus vaccine and accusing it of engaging in “serial stock promotion.” He later issued a report comparing the company to Theranos, the disgraced blood-testing company, and cataloging Inovio’s history of promoting and then failing to produce vaccines.

Inovio’s stock price plunged 66 percent, though it would soon soar to new heights thanks to optimism about its potential vaccine.

Days later, shareholders sued Inovio in federal court in Pennsylvania. Citing Dr. Kim’s remarks at the White House and earlier comments he made on Fox Business Network about having created a vaccine, the suit claimed that the company had “capitalized on widespread Covid-19 fears by falsely claiming that Inovio had developed a vaccine.” In April, another group of shareholders filed a separate suit in the same court, accusing Dr. Kim and Inovio’s board of mismanagement and unjustly enriching themselves, among other things.

Inovio has disputed Mr. Left’s critiques, but the company publicly clarified that it had developed a vaccine construct — essentially a road map — not an actual vaccine. Inovio has not publicly responded to the pending shareholder lawsuits.

Over the past 10 years, insiders at Inovio have sold more than $25 million in stock, according to the financial data provider Equilar. Last year, Dr. Kim was forced to sell about half his Inovio shares — causing the stock price to drop by more than a third — after he used his shares as collateral to borrow money and was caught in a so-called margin call, requiring him to immediately repay his loan.

This year, following steep run-ups in Inovio’s stock price, insiders have sold $3.8 million in shares. (Earlier this year, Inovio banned executives from “engaging in short-term or speculative transactions in the company’s securities, including pledging and purchasing company securities on margin.”)

Hoping to raise money to fund its vaccine efforts, Inovio said this year that it planned to sell some $150 million in new stock to investors.

In April, Inovio began trials of its potential vaccine, testing it on 36 people. (A volunteer in the trial said that getting zapped with the Cellectra didn’t hurt. “It just feels strange,” she said.)

On the last day of June, Inovio reported encouraging results in the 36-person trial. Inovio said its vaccine was “generally safe and well-tolerated” and generated an immune response.

But the company did not disclose any data about the magnitude of that response. Scientists said that made it impossible to gauge whether the vaccine would protect anyone.

Jeff Richardson, an Inovio spokesman, said the company would release more data soon.

When it announced the study results, Inovio also claimed that its vaccine had been “selected for the U.S. Government’s Operation Warp Speed.” But Inovio was not given federal funding to produce vaccines. Instead, its vaccine candidate had been chosen for inclusion in a preliminary study on rhesus macaque monkeys that had been organized by Warp Speed. (Vaxart, another company participating in the monkey trial, similarly claimed to have been selected for Warp Speed, drawing criticism from the Department of Health and Human Services.)

Asked about Inovio’s claim to be part of Warp Speed, Mr. Richardson said: “It depends on what you call Warp Speed.” He declined further comment.

At the White House, Dr. Kim had talked up Inovio’s manufacturing capabilities. While the company does manufacture its Cellectra, it has relied on another company, VGX International, to manufacture its vaccine candidate.

Now, Inovio and VGX are in a legal fight. In June, Inovio sued, claiming that VGX was refusing to share technology needed to produce the Inovio vaccine with other companies and was endangering public health. The case, along with a countersuit by VGX, is pending in state court in Pennsylvania.

In court filings, VGX accused Inovio of stealing trade secrets and challenged its claim that there is a public interest in Inovio’s work.

“Although the Covid-19 pandemic is horrible, Inovio is unlikely to win the race for the vaccine,” VGX lawyers wrote. Despite Inovio’s years of work, “it has never developed an F.D.A.-approved product.”

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Corporate Insiders Pocket $1 Billion in Rush for Coronavirus Vaccine

On June 26, a small South San Francisco company called Vaxart made a surprise announcement: A coronavirus vaccine it was working on had been selected by the U.S. government to be part of Operation Warp Speed, the flagship federal initiative to quickly develop drugs to combat Covid-19.

Vaxart’s shares soared. Company insiders, who weeks earlier had received stock options worth a few million dollars, saw the value of those awards increase sixfold. And a hedge fund that partly controlled the company walked away with more than $200 million in instant profits.

The race is on to develop a coronavirus vaccine, and some companies and investors are betting that the winners stand to earn vast profits from selling hundreds of millions — or even billions — of doses to a desperate public.

Across the pharmaceutical and medical industries, senior executives and board members are capitalizing on that dynamic.

They are making millions of dollars after announcing positive developments, including support from the government, in their efforts to fight Covid-19. After such announcements, insiders from at least 11 companies — most of them smaller firms whose fortunes often hinge on the success or failure of a single drug — have sold shares worth well over $1 billion since March, according to figures compiled for The New York Times by Equilar, a data provider.

In some cases, company insiders are profiting from regularly scheduled compensation or automatic stock trades. But in other situations, senior officials appear to be pouncing on opportunities to cash out while their stock prices are sky high. And some companies have awarded stock options to executives shortly before market-moving announcements about their vaccine progress.

The sudden windfalls highlight the powerful financial incentives for company officials to generate positive headlines in the race for coronavirus vaccines and treatments, even if the drugs might never pan out.

Some companies are attracting government scrutiny for potentially using their associations with Operation Warp Speed as marketing ploys.

For example, the headline on Vaxart’s news release declared: “Vaxart’s Covid-19 Vaccine Selected for the U.S. Government’s Operation Warp Speed.” But the reality is more complex.

Vaxart’s vaccine candidate was included in a trial on primates that a federal agency was organizing in conjunction with Operation Warp Speed. But Vaxart is not among the companies selected to receive significant financial support from Warp Speed to produce hundreds of millions of vaccine doses.

“The U.S. Department of Health and Human Services has entered into funding agreements with certain vaccine manufacturers, and we are negotiating with others. Neither is the case with Vaxart,” said Michael R. Caputo, the department’s assistant secretary for public affairs. “Vaxart’s vaccine candidate was selected to participate in preliminary U.S. government studies to determine potential areas for possible Operation Warp Speed partnership and support. At this time, those studies are ongoing, and no determinations have been made.”

Some officials at the Department of Health and Human Services have grown concerned about whether companies including Vaxart are trying to inflate their stock prices by exaggerating their roles in Warp Speed, a senior Trump administration official said. The department has relayed those concerns to the Securities and Exchange Commission, said the official, who spoke on the condition of anonymity.

It isn’t clear if the commission is looking into the matter. An S.E.C. spokeswoman declined to comment.

Credit…Will Ragozzino/Patrick McMullan

“Vaxart abides by good corporate governance guidelines and policies and makes decisions in accordance with the best interests of the company and its shareholders,” Vaxart’s chief executive, Andrei Floroiu, said in a statement on Friday. Referring to Operation Warp Speed, he added, “We believe that Vaxart’s Covid-19 vaccine is the most exciting one in O.W.S. because it is the only oral vaccine (a pill) in O.W.S.”

Well-timed stock transactions are generally legal. But investors and corporate governance experts say they can create the appearance that executives are profiting from inside information, and could erode public confidence in the pharmaceutical industry when the world is looking to these companies to cure Covid-19.

“It is inappropriate for drug company executives to cash in on a crisis,” said Ben Wakana, executive director of Patients for Affordable Drugs, a nonprofit advocacy group. “Every day, Americans wake up and make sacrifices during this pandemic. Drug companies see this as a payday.”

Executives at a long list of companies have reaped seven- or eight-figure profits thanks to their work on coronavirus vaccines and treatments.

Shares of Regeneron, a biotech company in Tarrytown, N.Y., have climbed nearly 80 percent since early February, when it announced a collaboration with the Department of Health and Human Services to develop a Covid-19 treatment. Since then, the company’s top executives and board members have sold nearly $700 million in stock. The chief executive, Leonard Schleifer, sold $178 million of shares on a single day in May.

Alexandra Bowie, a spokeswoman for Regeneron, said most of those sales had been scheduled in advance through programs that automatically sell executives’ shares if the stock hits a certain price.

Moderna, a 10-year-old vaccine developer based in Cambridge, Mass., that has never brought a product to market, announced in late January that it was working on a coronavirus vaccine. It has issued a stream of news releases hailing its vaccine progress, and its stock has more than tripled, giving the company a market value of almost $30 billion.

Moderna insiders have sold about $248 million of shares since that January announcement, most of it after the company was selected in April to receive federal funding to support its vaccine efforts.


Credit…Adam Glanzman/Bloomberg

While some of those sales were scheduled in advance, others were more spur of the moment. Flagship Ventures, an investment fund run by the company’s founder and chairman, Noubar Afeyan, sold more than $68 million worth of Moderna shares on May 21. Those transactions were not scheduled in advance, according to securities filings.

Executives and board members at Luminex, Quidel and Emergent BioSolutions have sold shares worth a combined $85 million after announcing they were working on vaccines, treatments or testing solutions.

At other companies, executives and board members received large grants of stock options shortly before the companies announced good news that lifted the value of those options.

Novavax, a drugmaker in Gaithersburg, Md., began working on a vaccine early this year. This spring, the company reported promising preliminary test results and a $1.6 billion deal with the Trump administration.

In April, with its shares below $24, Novavax issued a batch of new stock awards to all its employees “in acknowledgment of the extraordinary work of our employees to implement a new vaccine program.” Four senior executives, including the chief executive, Stanley Erck, received stock options that were worth less than $20 million at the time.

Since then, Novavax’s stock has rocketed to more than $130 a share. At least on paper, the four executives’ stock options are worth more than $100 million.

So long as the company hits a milestone with its vaccine testing, which it is expected to achieve soon, the executives will be able to use the options to buy discounted Novavax shares as early as next year, regardless of whether the company develops a successful vaccine.

Silvia Taylor, a Novavax spokeswoman, said the stock awards were designed “to incentivize and retain our employees during this critical time.” She added that “there is no guarantee they will retain their value.”

Two other drugmakers, Translate Bio and Inovio, awarded large batches of stock options to executives and board members shortly before they announced progress on their coronavirus vaccines, sending shares higher. Representatives of the companies said the options were regularly scheduled annual grants.

Vaxart, though, is where the most money was made the fastest.

At the start of the year, its shares were around 35 cents. Then in late January, Vaxart began working on an orally administered coronavirus vaccine, and its shares started rising.

Vaxart’s largest shareholder was a New York hedge fund, Armistice Capital, which last year acquired nearly two-thirds of the company’s shares. Two Armistice executives, including the hedge fund’s founder, Steven Boyd, joined Vaxart’s board of directors. The hedge fund also purchased rights, known as warrants, to buy 21 million more Vaxart shares at some point in the future for as little as 30 cents each.


Credit… Rafael Henrique/Getty Images

Vaxart has never brought a vaccine to market. It has just 15 employees. But throughout the spring, Vaxart announced positive preliminary data for its vaccine, along with a partnership with a company that could manufacture it. By late April, with investors sensing the potential for big profits, the company’s shares had reached $3.66 — a tenfold increase from January.

On June 8, Vaxart changed the terms of its warrants agreement with Armistice, making it easier for the hedge fund to rapidly acquire the 21 million shares, rather than having to buy and sell in smaller batches.

One week later, Vaxart announced that its chief executive was stepping down, though he would remain chairman. The new C.E.O., Mr. Floroiu, had previously worked with Mr. Boyd, Armistice’s founder, at the hedge fund and the consulting firm McKinsey.

On June 25, Vaxart announced that it had signed a letter of intent with another company that might help it mass-produce a coronavirus vaccine. Vaxart’s shares nearly doubled that day.

The next day, Vaxart issued its news release saying it had been selected for Operation Warp Speed. Its shares instantly doubled again, at one pointing hitting $14, their highest level in years.

“We are very pleased to be one of the few companies selected by Operation Warp Speed, and that ours is the only oral vaccine being evaluated,” Mr. Floroiu said.

Armistice took advantage of the stock’s exponential increase — at that point up more than 3,600 percent since January. On June 26, a Friday, and the next Monday, the hedge fund exercised its warrants to buy nearly 21 million Vaxart shares for either 30 cents or $1.10 a share — purchases it would not have been able to make as quickly had its agreement with Vaxart not been modified weeks earlier.

Armistice then immediately sold the shares at prices from $6.58 to $12.89 a share, according to securities filings. The hedge fund’s profits were immense: more than $197 million.

“It looks like the warrants may have been reconfigured at a time when they knew good news was coming,” said Robert Daines, a professor at Stanford Law School who is an expert on corporate governance. “That’s a valuable change, made right as the company’s stock price was about to rise.”

At the same time, the hedge fund also unloaded some of the Vaxart shares it had previously bought, notching tens of millions of dollars in additional profits.

By the end of that Monday, June 29, Armistice had sold almost all of its Vaxart shares.

Mr. Boyd and Armistice declined to comment.

Mr. Floroiu said the change to the Armistice agreement “was in the best interests of Vaxart and its stockholders” and helped it raise money to work on the Covid-19 vaccine.

He and other Vaxart board members also were positioned for big personal profits. When he became chief executive in mid-June, Mr. Floroiu received stock options that were worth about $4.3 million. A month later, those options were worth more than $28 million.

Normally when companies issue stock options to executives, the options can’t be exercised for months or years. Because of the unusual terms and the run-up in Vaxart’s stock price, most of Mr. Floroiu’s can be cashed in now.

Vaxart’s board members also received large grants of stock options, giving them the right to buy shares in the company at prices well below where the stock is now trading. The higher the shares fly, the bigger the profits.

“Vaxart is disrupting the vaccine world,” Mr. Floroiu boasted during a virtual investor conference on Thursday. He added that his impression was that “it’s OK to make a profit from Covid vaccines, as long as you’re not profiteering.”

Noah Weiland contributed reporting.

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