At least at first glance, this seems to be another story of corporate executive greed. on Monday, Pfizer (New York Stock Exchange: PFE) with Biotechnology (Nasdaq stock code: BNTX) Exciting news was announced. Their coronavirus vaccine candidate BNT162b2 achieved at least 90% efficacy-much better than expected. This revelation was so good that it triggered a major stock market rally.
Then came more news: Pfizer CEO Albert Bourla sold some of his shares in the company on the day of the important announcement regarding BNT162b2. Should you be angry? Or is it almost groundless to dispute the timing of Bourla’s stock sale?
First of all, it is true that the CEO of Pfizer sold shares of the pharmaceutical company on November 9, the same day that Pfizer and BioNTech announced that BNT162b2 had achieved outstanding mid-term results. Specifically, Albert Burla sold 132,508 shares at a price of $41.94 per share.
This is also understandable. Why some people might find this suspicious. The head of a large pharmaceutical company made more than $5.5 million in one day when the company’s stock rose 15% in a major announcement. The timing seems easy to doubt.
However, in this case, no conspiracy theory is needed. why?Because Bourla’s stock is scheduled to sell Nearly three months in advance.
Bourla’s sale of Pfizer’s shares took effect on August 19, 2020. That was long before anyone at Pfizer (or anywhere else) knew what the interim results of BNT162b2 were. In fact, Bourla said in an interview that he was not told what the result was until the afternoon of Sunday, November 8.
Burla uses rule 10b5-1’s trading plan to schedule the sale of Pfizer stock. The US Securities and Exchange Commission (SEC) established trading rule 10b5-1 in 2000 to provide company insiders with a method to buy and sell a predetermined number of stocks at a predetermined time. The reason for making such a trading plan is actually to allow insiders to complete stock transactions without insider trading.
Coincidentally, this special deal for Bourla coincided with the same day that the major event regarding the results of Pfizer’s COVID-19 vaccine candidate occurred. The independent data monitoring committee for the later BNT162b2 study controls the time for interim analysis and the time for sharing results with Pfizer.
Many company executives use Rule 10b5-1 trading plans. E.g, modern CEO Stephane Bancel (Stephane Bancel) has completed a number of pre-scheduled stock transactions this year. This is a common practice and is not limited to one department.
Don’t follow the leader
Obviously, there is no doubt about any anger at Burla’s stock sale. However, the controversy over counterfeiting does raise a very good question for investors: Pfizer’s CEO sells shares, should you also sell shares?
First, you should know that Bourla still owns Pfizer stock worth nearly $3 million. Of course he hasn’t completely escaped the predicament.
More importantly, Pfizer’s momentum may have just begun. The company should make another important announcement about the security data of BNT162b2 next week. This statement may provide Pfizer and BioNTech with emergency conditions for filing with the Food and Drug Administration to approve the emergency use authorization (EUA) for their COVID-19 vaccine. When the partners obtain the EUA for BNT162b2, they will receive $1.95 billion in funding from the US government to provide 100 million doses of vaccine.
The sale of Pfizer stock by Albert Bourla is on the rise. But this is a good example of how you should not follow a leader.