According to the report, the options are worth $101 million and do not hinge on the clinical success of the vaccine program.
In the weeks since Novavax secured $1.6 billion in federal funding to support its COVID-19 vaccine development program, the company’s stock prices have nearly doubled from $79.44 on July 6 to $139.60 as of 10:30 a.m. this morning.
The nearly doubling of the Maryland-based company’s stock has certainly been good for investors, particularly those who bought early. The price has also been a boon for company executives, particularly Chief Executive Officer Stanley Erck and three other executives who were recently awarded stock options worth tens of millions of dollars. This morning, Reuters reported the executives will earn the options if Novavax’s COVID-19 vaccine candidate enters Phase II clinical testing, which the company soon expects to do. According to the report, the options are worth $101 million and do not hinge on the clinical success of the vaccine program. Reuters speculated why the options were awarded at mid-stage of development as opposed to a positive outcome from a Phase III study. Reuters said companies often grant stock options that vest over a set amount of time, but few tie them to performance goals, which makes Novavax’s arrangement “unusual.” Citing an analysis conducted by ISS Corporate Solutions, Reuters said seven of 125 U.S. biotech companies pegged option awards to achieving drug development milestones in 2019 and 2018.
In its report, Reuters said Erck’s stock options would be worth $48.6 million if they could be exercised at Novavax’s closing price of $140.69 per share on Tuesday. Erck’s annual compensation is $2.4 million.
Novavax awarded 2.5 million stock options to all of its employees in April, which are now worth about $304 million, the news agency added.
Novavax reported the options in a filing with the U.S. Securities and Exchange Commission. In a statement to Reuters, Novavax said the stock option awards were provided to those executives in order to retain their talent and also recognize their “intense effort” in shaping the pipeline of the company, including its potential vaccine, NVX‑CoV2373.
“Launching a Phase II trial quickly and under these circumstances is a significant achievement,” the company told the news agency.
Bringing a vaccine to market typically takes a decade or more, but Novavax and other pharma companies have undertaken herculean efforts to swiftly develop potential vaccines against the novel coronavirus that has shut down the world economy. NVX‑CoV2373 consists of a stable, prefusion protein made using its proprietary nanoparticle technology and includes Novavax’s proprietary Matrix‑M adjuvant. In preclinical trials, NVX‑CoV2373 demonstrated an indication of antibodies that block the binding of spike protein to receptors targeted by the virus, a critical aspect for effective vaccine protection. The company initiated a Phase I/II trial in May, with preliminary immunogenicity and safety results expected at the end of July. The Phase II portion of the trial, which will assess immunity, safety, and COVID-19 disease reduction is expected to begin thereafter.
