The chief scientist brought on to lead the Trump administration’s vaccine efforts has spent the last several days trying to disentangle pieces of his stock portfolio and his intricate ties to big pharmaceutical interests, as critics point to the potential for significant conflicts of interest.
The scientist, Moncef Slaoui, is a venture capitalist and a former longtime executive at GlaxoSmithKline. Most recently, he sat on the board of Moderna, a Cambridge, Mass., biotechnology firm with a $30 billion valuation that is pursuing a coronavirus vaccine. He resigned when President Trump named him last Thursday to the new post as chief adviser for Operation Warp Speed, the federal drive for coronavirus vaccines and treatments.
Just days into his job, the extent of Dr. Slaoui’s financial interests in drug companies has begun to emerge: The value of his stock holdings in Moderna jumped nearly $2.4 million, to $12.4 million when the company released preliminary, partial data from an early phase of its candidate vaccine trial that helped send the markets soaring on Monday.
Dr. Slaoui sold his shares on Tuesday, and the administration said he would donate the increased value to cancer research.
But the Moderna stock is just one piece of his pharmaceutical portfolio, much of which is not public. And some ethics and financial securities experts have voiced concerns about the arrangement Dr. Slaoui struck with the administration.
In agreeing to accept the position, Dr. Slaoui did not come on board as a government employee. Instead, he is on a contract, receiving $1 for his service. That leaves him exempt from federal disclosure rules that would require him to list his outside positions, stock holdings and other potential conflicts. And the contract position is not subject to the same conflict-of-interest laws and regulations that executive branch employees must follow.
Dr. Slaoui, an expert in molecular biology and immunology, is not the first Trump administration official with close relationships to drug and health care companies. His immediate boss, Alex M. Azar II, the health and human services secretary, is a former Eli Lilly executive. And the former commissioner of the Food and Drug Administration, Dr. Scott Gottlieb, has moved in and out of government twice, and divested of his interests immediately upon assuming the F.D.A. job in 2017.
Dr. Slaoui, 60, has spent his career developing vaccines and biotechnology businesses, and he has the investments and board seats to prove it. He still holds just under $10 million in GlaxoSmithKline stock and remains a partner in Medicxi, a venture capital firm that specializes in investing in biotech concerns, with several companies engaged in the global race to develop treatments or vaccines to stanch the coronavirus pandemic. GSK and Sanofi have become partners in creating a vaccine candidate against the coronavirus.
The administration has reviewed Dr. Slaoui’s affiliations with several companies and concluded in several instances that there were no conflicts because his advisory roles were unrelated to coronavirus research or treatments, and in some cases the corporations had no products against the virus in production, according to a senior official with the Department of Health and Human Services.
The new group of which Dr. Slaoui is lead scientist will vet candidates for vaccines and treatments, to decide whether they should receive federal financial backing and additional support.
In an interview, Dr. Slaoui said he was determined to avoid conflicts and would re-evaluate any remaining associations if his financial interests stood to gain more from his new post overseeing the government’s push to encourage speedy development of treatments or vaccines.
He did not say how much his GSK shares were worth. When he left the company in 2017, he held about 240,000 shares and share equivalents, according to the drug company’s annual report and an analysis by the executive compensation firm Equilar.
He said he told administration officials that he did not want to sell his company stock.
“I have worked for 29 years for GSK,” Dr. Slaoui said. “I have never sold a single share of any company in my life. This is my retirement. What I said regarding the GSK shares, I said I cannot take the job if I have to sell them.”
Advanced Decision Vectors, which regularly contracts with the National Institutes of Health and other federal agencies, will pay Dr. Slaoui’s living expenses when he stays in Washington away from his home in the Philadelphia area.
Without public disclosure, some ethics experts called his contract an end-run around the rules.
“This is basically absurd,” said Virginia Canter, who is chief ethics counsel for Citizens for Responsibility and Ethics in Washington. “It allows for no public scrutiny of his conflicts of interest.”
Ms. Canter also said federal law barred government contractors from supervising government employees.
But others noted the lengths to which Dr. Slaoui was already distancing himself. Joseph Grundfest, a Stanford law professor and a former commissioner on the Securities and Exchange Commission, said conflicts of interest involving scientific experts were hardly rare.
“The challenge is to manage them appropriately, because if you try to avoid them altogether you often won’t be able to get the best people for the job,” Mr. Grundfest said.
“And obviously there will be appropriate recusals on a situational, going-forward basis, as is common,” he added. “What more do you want the guy to do?”
Dr. Slaoui has stepped away from other commitments: He resigned last week from Lonza, which will manufacture Moderna’s vaccine if it goes into production. And he said he left his position as an adviser to a company that works with Chinese businesses to develop therapies against the virus.
Dr. Slaoui also said that if the value of GlaxoSmithKline accrues higher than that of the pharmaceutical sector of the S&P 500 Index by the time he leaves the job, and if GSK has received any investment from the government for the Covid-19 program, he will donate the difference in his stock value to the National Institutes of Health, for research.
Michael R. Caputo, assistant secretary for public affairs at H.H.S., said that the agency’s ethics office had cleared Dr. Slaoui to hold onto his GSK investment and that he had agreed not to trade other coronavirus-related stocks. He added that Dr. Slaoui’s contract now included an ethics addendum, but could not provide details.
Mr. Caputo said Dr. Slaoui’s role would be to recommend decisions that would be considered by government officials, including the chief operating officer Gen. Gustave Perna and others supervising the project.
Ms. Canter, a former ethics lawyer in the Obama and Clinton administrations, the Securities and Exchange Commission and other agencies, pointed out that GSK’s vaccine candidate with Sanofi could wind up competing with other manufacturers vying for government approval and support.
“If he retains stock in companies that are investing in the development of a vaccine, and he’s involved in overseeing this process to select the safest vaccine to combat Covid-19, regardless of how wonderful a person he is, we can’t be confident of the integrity of any process in which he is involved,” Ms. Canter said.
In addition, his affiliation with Medicxi could complicate matters: Two of its investors are GSK and a division of Johnson & Johnson, which is also developing a potential vaccine.
Moderna has already received nearly $500 million from the government to help scale up production.
In stepping down from Moderna’s board, Dr. Slaoui also gave up the potential for future stock gains. Equilar estimated that he stood to forfeit 73,000 options to buy shares valued at $4.2 million.
In the past, he also worked for a company with extensive dealings in China, which has become a target of the president’s criticism during the pandemic. Mr. Trump and others have questioned whether China did enough to contain the coronavirus and assist other countries in controlling its spread.
The company, Brii Biosciences, where Dr. Slaoui was an adviser until Friday, has ties to China’s top business leadership.
The company’s high-profile list of investors includes Boyu Capital, the private equity firm where Jiang Zhicheng, the grandson of the former Chinese president Jiang Zemin, was a partner until January of this year, according to corporate filings. Sequoia Capital and Yunfeng Capital, the private equity fund of Jack Ma, the co-founder of Alibaba, are also investors.
In April, Brii, which has offices in Durham, N.C., announced a partnership and licensing deal over its Covid antibody research with Tsinghua University and the 3rd People’s Hospital of Shenzhen.
In a statement, Brii said Dr. Slaoui “received compensation consistent with his service” and left with “a small amount of stock options.” The company added that Dr. Slaoui was not involved in Brii’s coronavirus work in China.
Dr. Slaoui said he would resign from the boards of Clasado and Artizan Biosciences, both companies that work on treatments for intestinal problems. He said he would remain on the board of SutroVax, which recently raised $110 million from investors and is developing vaccines for pneumonia. He will also continue on the boards of Divide & Conquer, and Monopteros, which work on cancer treatments.
At his first appearance in the White House Rose Garden, Dr. Slaoui divulged that he had “recently seen early data from a clinical trial with a coronavirus vaccine, and these data made me feel even more confident that we will be able to deliver a few hundred million doses of vaccine” — enough to inoculate much of the United States — “by the end of 2020.”
While he did not mention Moderna specifically, the company did release partial data the following Monday morning, saying that its vaccine candidate appeared safe and had provoked an immune response in eight of 45 people.
Some researchers and ethicists criticized the company’s decision to publicize only a piece of a study that had not been published in a peer-reviewed journal. The National Institute of Allergy and Infectious Diseases, the agency led by Dr. Anthony Fauci and Moderna’s partner on the vaccine, has not commented.
Moderna has yet to produce any successful vaccine and has a lot riding on its Covid-19 project. Its technology, which uses genetic material from the virus called mRNA, is relatively new and unproven. And many vaccine candidates fail after showing preliminary promise, or cause serious side effects in later human trials.
By late Monday, Moderna kicked off a big stock offering in which it hopes to raise $1.34 billion with the sale of 17.6 million shares. The company, which expected to close the offering on Thursday, is looking to raise capital to help bankroll vaccine development.
The company went public in 2018 with a $600 million initial public offering, the biggest to date for a biotech company. Its board includes several members of venture capital firms — Flagship Pioneering and General Catalyst. Flagship was one of the early backers of Moderna and owns 17 percent of its stock. Another large shareholder is the pharma company AstraZeneca. Until late last year, the big hedge fund Viking Global was a sizable investor in Moderna, but it slashed its holdings at the end of 2019, according to regulatory filings.
Moderna’s chief executive, Stéphane Bancel, owns 8.7 percent of outstanding stock and last year received a compensation package worth $8.9 million.
The company has approval to begin a second-phase trial involving 600 people, and said it was moving on an accelerated timetable to begin the third phase in July with thousands of people.
Many public health experts continue to say it is unlikely that a vaccine will be ready for mass production before next year.
Cao Li contributed research.
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