Moderna to Raise $2 Billion Following a Surge in Its Stock Price — Including Funding for a Cancer Vaccine

Moderna, a pharmaceutical company that impressed the market last week with successful trial results for an experimental melanoma vaccine, plans to raise $2 billion through the issuance of convertible bonds. The funds will be used, among other things, to develop cancer treatments.

On August 27, Moderna announced that it would issue $2 billion in convertible bonds maturing in 2032. In addition, buyers will receive an option to purchase an additional $300 million in securities.

The company made this decision shortly after its stock price soared. On August 19, Moderna’s stock rose by a record 177%, causing its market capitalization to increase by $44.5 billion in a single day. Investors reacted to the release of positive results from late-stage trials of a personalized mRNA cancer vaccine developed in collaboration with Merck.

Moderna’s stock is currently trading near a more than three-year high, which allows the company to set a higher conversion price for the bonds,

Bloombergnotes. If the debt is subsequently converted into shares, fewer new shares will need to be issued, and the dilution of existing shareholders’ stakes will be less severe. Companies often plan to issue convertible bonds after a sharp rise in market value to lock in cheaper financing during a period of high investor interest, the agency explains.

Moderna plans to use the proceeds to further develop cancer vaccines and repay its debt.

This is a particularly opportune moment for Moderna, according to Bloomberg. The company is actively investing in the development of personalized cancer treatments using mRNA. In the second quarter, the company reported a loss of $1.97 per share, and its cash reserves stood at approximately $1.72 billion.

At the same time, Moderna is counting on success in the oncology sector to reduce its reliance on vaccines against respiratory diseases. Sales of its COVID-19 vaccine have plummeted since the pandemic began, and several new products have failed to meet expectations. In particular, the vaccine against respiratory syncytial virus has not gained widespread use, according to Bloomberg.

At the close of trading on August 27, Moderna’s stock fell 4.6%. However, the company’s market value has increased nearly fivefold since the beginning of the year. And even after such a surge, it remains less than one-third of its peak level during the pandemic.

Wall Street is taking a cautious stance on the pharmaceutical giant’s stock today: 18 analysts recommend holding the stock, five advise buying it, and three recommend selling it, according to MarketWatch. The average price target is $104.9, which implies a 27% decline from the closing price on August 27.

This article was AI-translated and verified by a human editor