Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
For almost a year, hundreds of millions of people have been anticipating a COVID-19 vaccine. As Pfizer announced its alleged 90% effective vaccine being almost ready for deployment, why would Pfizer’s own CEO behave in a manner completely contrary to the announcement?
Pfizer’s CEO Sells Stock After Vaccine Announcement
On November 9, Dr. Albert Bourla, Pfizer CEO, lauded COVID-19 vaccine trials as a “great day for science and humanity”. As the last stage of the two-month trial completed, testing 43,000 vaccine participants, Pfizer is set to file for an emergency use authorization (EUA) by the end of the month with the FDA.
In cooperation with German BioNTech, Pfizer is leading the COVID-19 vaccine race as they’re ready to ship hundreds of millions of vaccine doses. As part of Operation Warp Speed, the US government had already bought 100 million doses, with provisions to buy 500 million more. Across the globe, other nations also arranged to purchase Pfizer/BioNTech vaccine doses, delivering at least 50 million by this year’s end. In total, during 2021, the companies expect to sell about 1.3 billion COVID-19 vaccine doses.
Yet, with all this fantastic news, which would provide a cash windfall for the companies, entrench branding, and expand operations, Pfizer CEO sold 62% of his stock shares! Precisely, $5.6 million worth of stocks on Monday, close to their 52-week high at $41.94 per share, as a part of August 19, rule 10b5-1 predetermined trading plan. However, this cashout happened on the same day of the vaccine announcement when Dr. Albert Bourla framed the vaccine trials with high praise.
Possible Reasons for Pfizer CEO’s Suspicious Stock Cashout
Dr. Bourla’s cashout is obviously not a pump-and-dump operation, which is highly illegal and difficult to prove. However, the Eastman Kodak incident teaches us a valuable lesson. Movers behind the scenes know much more than stock traders looking in. Nonetheless, in the case of the Pfizer vaccine situation, we can derive some conclusions:
The primary scientific authority for all things viral, the Centers for Disease Control and Prevention (CDC), put forward the following fatality rates for the COVID-19 pandemic, as of September 10:
This means that COVID-19 survivability is extremely high, comparable to a mild seasonal flu, which can be exacerbated by comorbidities and very old age. Accordingly, these are the CDC survival rates across the age groups (average American life expectancy is 79):
The nature of the vaccine itself
Pfizer’s COVID-19 vaccine employs experimental messenger-RNA technology, in which genetic code gets injected into cells in order for cells to produce proteins that trigger an antibody response.
For numerous safety reasons, vaccine development takes 2-4 times longer than under the newly-implemented Operation Warp Speed framework. This leaves plenty of space for mistakes to occur, especially down the line when no one expects them with experimental tech.
When push comes to shove, how likely is it that people will accept an experimental vaccine for a virus that has a vanishingly low fatality rate? More importantly, how likely is it that a fast-tracked, experimental vaccine may cause unpredicted outcomes months or years later?
Pfizer’s CEO’s cashout may provide you with clues to those questions.
Pfizer (NASDAQ:PFE) Stock Outside the COVID-19 Vaccine
Pfizer is a well-established biopharmaceutical giant with a $220 billion market cap. Its future is assured by multiple income streams and research pipelines. Oncological treatments alone provide the company with a $10 billion revenue, which marks an increase of 32% over a period of five years.
In the near future, Pfizer is expected to deliver numerous drugs and cutting-edge treatments to deal with immune and inflammatory disorders such as psoriatic arthritis, rheumatoid arthritis, Crohn’s disease, lupus, ulcerative colitis, and many others.
Headed by Dr. Bourla, Pfizer adopted a leaner business model, allowing for more budget to be harnessed into research. This makes Pfizer a long-term blue-chip stock, regardless of the COVID-19 vaccine outcome.
Are you interested in taking the COVID-19 vaccine when it becomes available, or do you have concerns about many shortcuts taken in its development? Let us know in the comments below.
Disclosure:Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.