Moderna Declines in Public-Market Debut -- Update
Source: Dow Jones News
By Corrie Driebusch and Kimberly Chin
Moderna Inc. on Friday lodged one of the worst-performing opening days for a company going public this year, as investors sold the risky biotechnology firm amid broad market declines.
The stock, trading on the Nasdaq Stock Market under the symbol MRNA, dropped 19% to $18.60, well below its initial-public-offering price of $23. That makes it the fifth-worst performer on its first day among all U.S.-listed IPOs this year, according to Dealogic. Its drop was the biggest among companies worth more than $1 billion at the time of their IPO since April 2017, when Carvana Co. fell 26%.
On Thursday, the Cambridge, Mass., company's stock sale to investors was strong: It sold 26.3 million shares -- more than expected -- and priced in line with expectations. It raised $604.3 million, giving the company a valuation of more than $7.5 billion.
Launching an IPO into such a rocky stock market was a gamble for Moderna. The S&P 500 has fallen roughly 4% since the company began its roadshow, where management meets with potential investors to pitch the IPO. Moderna's shares priced Thursday after a late rally nearly erased the day's prior deep declines. On Friday, the stock selloff deepened.
Still, Moderna's decline was much sharper than that of the broader markets. It lost nearly a fifth of its value, while the S&P 500 finished the day down 2.3%.
From the start of the roadshow last week, the company and its underwriters assured potential investors they could complete the deal, according to a person familiar with the offering.
One reason for their confidence was the many so-called testing-the-water meetings Moderna management had with fund managers and analysts in the years leading up to the IPO. Some fund managers said they skipped the company's IPO roadshow because they already understood Moderna's business from those past meetings.
Moderna's debut, one of the largest biotechnology IPOs, is considered to be one of the last big deals in a year that has brought in more than 200 new U.S. listings and raised more than $58 billion.
It has also been a banner year for biotech offerings. More than 60 biotech and pharmaceutical companies have listed shares in the U.S. this year, raising $7.1 billion, according to Dealogic. That makes it the second-biggest year on record for the industry and the biggest since 2014.
Moderna, which was founded in 2010, has 21 drug and vaccine research programs, including 10 that have progressed beyond the laboratory and are being tested in humans.
The company has drawn much fanfare, luring investors on the promise that its messenger RNA technology will bring new treatments for cancer, heart disease and other diseases. Critics have raised concerns that there is not much public information out about the company and that some of its programs remain relatively unproven since many are still in the earlier stages of clinical testing.
Before it began trading, Moderna's IPO process had drawn some controversy. The company disclosed on Tuesday that it had dropped an underwriter, claiming the firm had made "unauthorized communications" about the offering.
Write to Corrie Driebusch at firstname.lastname@example.org and Kimberly Chin at email@example.com
(END) Dow Jones Newswires
December 07, 2018 18:06 ET (23:06 GMT)
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