Shares of Moderna Inc Spike by 30%

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Shares of Moderna Inc Spike by 30%

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What happened?

On Monday, May 18, 2020, shares of Moderna, Inc., (Nasdaq: MRNA) spiked up to 30% after the company announced positive Interim Phase 1 Data for its vaccine against novel coronavirus. Following this, the company then announced a public offering of 1.76 million shares priced at $76.

So what?

In a press release dated May 18, 2020, Moderna announced that in its phase 1 study of the mRNA-1273 vaccine, the vaccine was able to produce antibodies in the participant.

Out of the dozen participants, 8 participants were able to produce antibodies at a level similar to or higher than that found in people who have naturally recovered from COVID-19. The participants were given two doses between 25 micrograms to 100 micrograms.

These antibodies bind with the virus preventing it from attacking the cell. But it is unclear whether the vaccine can prevent reinfection. Therefore it is unclear whether the vaccine guarantees immunity.

The company has been cleared by the US Food and Drug Administration for starting its phase 2 soon. The testings would be done on several hundred people. Following which the company plans to initiate its phase 3 testing in July. this testing would be done on a large scale.

The company stated that the vaccine is generally safe, with adverse effects occurring in people given a second dose of 250 micrograms. Even then the effects were self-resolving.

Following, this press release the stock of Moderna, Inc. opened at $86.28; a 30% increase from its previous closing at $66.69. The stock later closed at $ 80 showing a general spike of 20%.

The unaudited financial results for the first quarter of 2020 were as follows:

Total revenue was $8.4 million for the three months ended March 31, 2020, compared to $16.0 million for the three months ended March 31, 2019. 

Cash, cash equivalents, and investments as of March 31, 2020, and December 31, 2019, were $1.7 billion and $1.3 billion, respectively.

 Net loss was $124.2 million for the three months ended March 31, 2020, compared to $132.6 million for the three months ended March 31, 2019.

Now what

The press release about the phase one vaccine was followed by another on the same day. This press release stated that Moderna inc. has commenced an underwritten public offering of $1.25 billion in shares of common stock. In addition, Moderna expects to grant the underwriters a 30-day option to purchase up to an additional $187.5 million in shares of common stock in connection with the public offering. Morgan Stanley is acting as sole book-running manager for the offering. Moderna expects to raise the fund to meet its working capital requirements for manufacturing the mRNA-1273 vaccines and for distribution in the United States and outside the United States.

The company is offering the shares at a price of $76. Gross proceeds from the offering would approximately be $1.34 billion. The offering is expected to close on May 21, 2020.

Some analysts believe that the market of the vaccines would be between $10 billion and $30 billion.

Moderna has stated that it aims at producing 1 billion vaccines. If they price a dose at $10, they could generate revenues of $10 billion from the sale of vaccines alone. The worth of the company majorly depends on the pricing of these vaccines.

Hartaj Singh, a senior analyst at Oppenheimer has a $108 price target on the stock, while Goldman Sachs’s Salveen Richter assigned a 75% probability of success to Moderna’s Covid-19 prophylactic vaccine, setting a $105 price target from the previous target of $63. Given the analyst coverage and the success of phase 1, you may invest in Moderna’s stocks.

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