Moderna's Splashy Biotech IPO Fizzles as Stock Sinks on Day One

(Bloomberg) -- Moderna Inc. shares sank on their first day of trading as investors gave a chilly reception to one of this year’s splashiest stock-market debuts.

The biotechnology company that is aiming to make personalized cancer vaccines fell 19 percent to $18.60 Friday, a disappointing start for what had been one of the most richly valued private health-care startups.

The listing is likely to be the last in what has been a banner year for initial public offerings by biotech firms. Before Moderna’s debut, some 53 biotech companies had gone public this year on U.S. exchanges, raising $5.7 billion overall. That topped the previous record of $5.27 billion raised by such IPOs in 2000, according to data compiled by Bloomberg.

Moderna expanded the size of its offering Thursday to sell almost 26.3 million shares at $23 each, in the middle of the marketed range of $22 to $24 a share, according to a statement. The offering gave the company a market value of about $7.85 billion, topping its $7 billion valuation after a $500 million private funding round in February.

By Friday’s close, Moderna’s market value had shrunk to $6.1 billion.

The IPO’s vast size and rich price may have played a role in its poor performance, analysts suggested. Moderna has no approved products on the market and has consistently lost money as it ramps up its research and drug-development efforts.

The deal “was too aggressive,” said biotech analyst David Nierengarten of Wedbush Securities Inc., which wasn’t involved in the listing. The analyst previously cautioned that the biotech’s valuation was “disproportionately high relative to the stage of development.”

Additionally, the shares were sold at a time when the wider stock market is struggling. The S&P 500 Index declined 2.3 percent on Friday amid increasing worry about U.S.-China trade relations, the health of the U.S. economy and interest rates. The Nasdaq Biotechnology Index sank 3.2 percent.

Scrutinized Unicorn

Moderna is researching how to make personalized cancer vaccines using messenger-RNA to help patients’ own bodies fight the disease. The company, established in 2010 and based in Cambridge, Massachusetts, has 21 programs in development. Its most advanced experimental product is in the middle stages of clinical testing.

Having raised more than $2.6 billion as a private company, Moderna was one of biotech’s most scrutinized “unicorns.” Startups that study drugs typically go public earlier in their corporate life cycles to fund their research. Moderna had been one of the few exceptions to that rule, raising private funding rounds that dwarfed typical financings.

There are at least seven other biotech unicorns in the U.S., according to Pitchbook and data compiled by Bloomberg. Roivant Sciences Ltd., backed by the SoftBank Vision Fund, said after a $200 million fundraising round in November that it was valued at $7 billion.

Proceeds from the IPO will help fund drug discovery and clinical development, Moderna said in a regulatory filing. In the nine months ended Sept. 30, it recorded a loss of $243 million on revenue of $100 million, compared with a loss of $218 million on $114 million in revenue in the same period a year earlier, the filing showed.

The company has strategic alliances with other drugmakers including AstraZeneca Plc, Merck & Co. and Vertex Pharmaceuticals Inc.

Banks including Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. led the offering. The underwriters have the option to buy up to 3.9 million more shares at the IPO price, Moderna said.

--With assistance from Michael Hytha and Tatiana Darie.

To contact the reporter on this story: Rebecca Spalding in Boston at rspalding@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, ;Drew Armstrong at darmstrong17@bloomberg.net, Timothy Annett, Mark Schoifet

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