Saturday, July 10, 2021

Emergent chief sold $10m in stock before company ruined 15m Covid vaccines

The chief executive of the pharmaceutical giant Emergent BioSolutions sold $10m in company stock weeks before the publication of the company’s financial results and a production error that ruined 15m Covid-19 vaccines sent its share price tumbling.

The stock unloaded by Robert G Kramer, 64, formerly chief operating officer and CEO since April 2019, would now be worth only $5.5m, according to the Washington Post, which first reported the story.

Earlier this month, a US Food and Drug Administration (FDA) report found peeling walls and other unsanitary conditions at Emergent’s Baltimore plant where millions of single-shot Johnson & Johnson vaccines were spoiled in March due to an ingredient issue.

Emergent, Kramer and other executives are the subject of a lawsuit filed by investors in Maryland, the Post said, which alleges the company artificially inflated its stock price ahead of the decline by talking up its ability to manufacture coronavirus vaccines and hiding problems at the Baltimore plant.

In a statement to the newspaper, Emergent said the stock sale by Kramer was part of a scheduled “trading plan” and in compliance with Securities and Exchange Commission (SEC) rules.

“Mr Kramer, our executive team and our board of directors are held to the highest ethical standards and follow strict compliance with all laws and regulations governing financial transactions,” an Emergent spokesperson, Nina DeLorenzo, said.

“Any insinuation of wrongdoing is without evidence or merit.”

DeLorenzo did not respond to questions about whether Kramer was aware of problems in Emergent’s coronavirus vaccine production or information from forthcoming financial results when he adopted his trading plan, the Post said.

Emergent’s share value dropped significantly after the publication of financial results on 19 February, and again following the Johnson & Johnson debacle.

On Monday, the share price of the company, which signed a $135m deal last year to manufacture more than a billion doses of the Johnson & Johnson vaccine, was hovering around $64, less than half of its August 2020 peak of $135.

Kramer sold about $10m of stock in January and February, securities filings show. It was his first “substantive” dealing since April 2016, a Post review of the filings revealed, when he was among four executives who sold a combined $14.5m in personal holdings.

Investors alleged then the executives fraudulently offloaded the stock after exaggerating the size of a federal government order for anthrax vaccine. In June 2016 the order was revealed to be smaller than expected. Emergent’s stock price plummeted.

The company denied the allegations but settled with the investors for $6.5m, the Post said.

Kramer joined Emergent in 1999 when it was named BioPort, a year after it bought a state-run laboratory in Michigan and won its first anthrax vaccine contract.

Since 2012, the first year Emergent reported his compensation to the SEC, Kramer has received more than $20m, mostly in stock and stock options, the Post said.

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