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Moderna is biggest biotech IPO, draws $604 million despite turbulent market

The Cambridge biotech, which is developing novel messenger RNA technology, priced at the midpoint of expected range in a sign of resiliency but shares declined in their first few minutes of trading
A researcher in a lab
Moderna is developing messenger RNA technology to spur the body to produce its own therapeutic proteins to protect against or even fight off disease

Moderna Therapeutics Inc (NASDAQ:MRNA) staged one of the biggest stock-market debuts for a biotechnology company in US IPO history late Thursday by raising $604 million in an otherwise volatile market.

The company priced its IPO at $23 per share, in the middle of its expected range, raising about $604 million. The company originally planned to sell 21.7 million shares but increased its offering to nearly 26.3 million Thursday. The public offering values Moderna at roughly $7.6 billion. 

Shares in Moderna declined 4.5 to $21.86 on the tech-laden Nasdaq on a broad market pullback as trading debuted.   

The next test will be how Moderna’s shares trade. They are set to make their stock-market debut Friday on the tech-laden Nasdaq under the ticker symbol MRNA.

READ: Moderna Therapeutics on path to becoming biggest US biotech IPO in history

Cambridge, Massachusetts-based Moderna, one of the most highly valued startups in health care, is trying to develop a new kind of drug and vaccine using the body’s own cellular machinery to protect against or even fight off disease.

The company develops drugs for the treatment of infectious diseases, genetic disorders, cancer and cardiovascular diseases, by using its novel messenger RNA technology to convey genetic information within cells. Moderna believes it can use mRNA to spur the body to produce its own therapeutic proteins.

Its partners include heavy hitters like AstraZeneca PLC (NYSE:AZN), Merck & Co Inc (NYSE:MRK) and Vertex Pharmaceuticals Inc (NASDAQ:VRTX).

Pipeline prospects

The biotech’s operating expenses in 2017 topped $475 million. The company is years away from actual product sales, but Moderna currently depends on revenue from grants and its collaborations with other companies, which totaled just over $200 million.

Investors paid close attention to the fact that Moderna has 21 drug and vaccine research programs, including 10 that have progressed beyond the laboratory and are being tested in humans.

It’s working on two cancer vaccines with one that targets solid tumors and the other that targets pancreatic cancer. It has a 50-50 global profit sharing with Merck on both the vaccines.

Drug discovery is an expensive business so it the biotech has high cash burn. MarketWatch reported that Moderna spent nearly $360 million on operating expenses in the first nine months of 2018 

“We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future,” the company said in its securities filing.   

 

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

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