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Nov. 27, 2021, 11:38 a.m. EST

‘Why did you guys sell everything?’ Inside the life-and-death struggle to fund Moderna’s COVID-19 vaccine.

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By Gregory Zuckerman

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Even former fans, including Viking Global Investors, were dumping the stock 

By early 2020, Moderna was burning through a half a billion dollars each year but cash from investors had stopped pouring in. Shares were 15% below their IPO price, making it hard for Bancel to raise new money. In executive meetings, Bancel emphasized the need to stretch each dollar, and employees were told to reduce travel and other expenses, a frugality they were advised would last several years. 

Even former fans, including Viking Global Investors, were dumping the stock. The $29 billion New York hedge fund had owned over 5% of Moderna shares at the end of 2018, but it now owned almost no shares. 

On January 12, Bancel flew to San Francisco to attend JPMorgan Chase’s annual health-care conference, hoping to impress attendees with a speech about Moderna’s progress on its shots to protect against cytomegalovirus, a common virus affecting babies. During his speech and his conversations with investors and others, Bancel didn’t mention the new pathogen circulating in China. It didn’t seem relevant to anyone in the room. 

Bancel’s pitch received a lukewarm response. Some at the event remained unsure why Moderna had pivoted to vaccines from drug research. Others noted the company still didn’t have a vaccine approaching late-stage, phase 3 clinical trials, let alone in the market.

“People weren’t thrilled with us,” Bancel says.

At an event a few weeks later, Bancel spotted Andreas Halvorsen and Brian Kaufmann, two top executives at Viking Global, the hedge fund that had dumped almost all its Moderna shares in previous months.

“Why did you guys sell everything?” Bancel asked them.

In February, after Moderna began work on a vaccine against Covid-19, it raised $500 million by selling new shares at a price of nineteen dollars apiece. In many ways the deal was an embarrassment. Moderna had gone public at $23 a share. Over the following year or so, the company made progress on a number of vaccines. Now it was making headway on shots to halt a coronavirus that had the world in its grip. Yet its stock price had gone down , suggesting that Moderna was less valuable than before.

“It was humbling,” says Stephen Hoge, Moderna’s president.

The money meant everything to Bancel and his team

By the spring of  2020, Bancel and his colleagues were despondent. The Moderna team was certain they had a winning formula for a vaccine, but the company needed hundreds of millions of dollars, perhaps even $1 billion, to buy essential ingredients to manufacture its vaccines. Bancel and Hoge didn’t know where the money was going to come from. Time was ticking, rivals were acting, people were dying, and Moderna was sitting on its hands. It was eating the team up.

Bancel begged for money. He asked Trevor Mundel, a top leader of the Gates Foundation. He reached out to an arm of the World Health Organization called Covax. He phoned or went on Zoom calls with representatives of other government bodies and charitable foundations. Each time, Bancel presented reasons why Moderna deserved financial assistance and each time he failed to raise the necessary cash. 

Bancel was upset with himself, convinced that he had failed his company, his shareholders, and the world. He was a master fundraiser but when it truly counted, he had come up short. Lives were at stake and he had blown it.

By May, Moderna still couldn’t produce much of its vaccine. AstraZeneca, Pfizer/BioNTech, and J&J were all bulking up their own manufacturing capacities, preparing to produce tens of millions of doses as soon as regulators authorized their shots. Moderna was sitting still. People were dying all over the world and Moderna couldn’t do a thing to pitch in. 

Moderna’s executives decided to turn to the only place they were feeling love: Wall Street. By then, the company’s shares were absolutely soaring. After starting 2020 below twenty dollars a share, the stock topped $66 on May 15, as investors became hopeful that the company’s COVID- 19 vaccine could be a big seller. Moderna hired investment banking firm Morgan Stanley to sell new shares to investors, this time specifically to pay for the manufacturing of the vaccines.

On the morning of Monday, May 18, Moderna reported results from its first human study: Eight subjects in the phase 1 study who had been inoculated with the company’s COVID-19 vaccine had developed neutralizing antibodies comparable to those seen in patients who were infected by the virus and subsequently recovered, and the shots were generally safe and well tolerated. The data were early and based on a small number of subjects. But investors were so excited about the prospect of an effective vaccine that they sent the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.68% up 899 points that day, or 3.8%, while Moderna’s shares jumped 20%, past $75. 

The trial results were good news for the vaccine, less so for Morgan Stanley’s bankers. The stock’s climb made it harder to sell a big batch of new shares — who wanted to buy a stock that has already jumped in price? Nonetheless, Morgan Stanley agreed to purchase $1.34 billion of Moderna’s newly issued shares, betting it could sell them to the bank’s customers.

The money meant everything to Bancel and his team — they finally had a genuine chance to produce huge numbers of doses. Right away, they started spending it all on lipids, glass, steel, and every other kind of material and piece of equipment he needed.

Bancel and Hoge breathed deep sighs of relief. They had hope.

Adapted from “A Shot to Save the World: The Inside Story of the Life-or-Death Race for a Covid-19 Vaccine,” by Gregory Zuckerman, published by Portfolio on October 26, 2021.

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