Moderna’s New Deal: Is This a Case of ‘Sell the News’?
When Moderna announced a new deal with the U.S. government for its COVID-19 vaccine, it appeared be a case of “sell the news,” because this is ultimately a net positive for the company.
Moderna Inc. (NASDAQ: MRNA | MRNA Price Prediction) shares dipped on Wednesday after the company announced a new deal with the U.S. government for its COVID-19 vaccine. Although shares pulled back, this appears be a case of “sell the news,” because this is ultimately a net positive for the company.
Moderna announced that the U.S. government has secured 100 million doses of mRNA-1273 as part of the U.S. government’s goal of securing early access to safe and effective COVID-19 vaccines for the American people.
As a result, the company was awarded up to $1.525 billion for the manufacturing and delivery of these 100 million vaccines. This award includes incentive payments for the timely delivery of the product. The previous award was up to $955 million from the Biomedical Advanced Research and Development Authority (BARDA) for the development of mRNA-1273 to licensure.
This announcement brings the U.S. government commitments for early access to the vaccine up to $2.48 billion.
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Under the terms of the agreement, the U.S. government, as a part of Operation Warp Speed, also will have the option to purchase up to an additional 400 million doses of mRNA-1273 from Moderna.
One key part of this is that the U.S. government has announced that consistent with its commitment to free access to COVID-19 vaccines, Americans will receive mRNA-1273 at no cost for the vaccine itself. However, there may be costs associated with administering the vaccine.
Management also was quick to note that it is advancing the clinical development of mRNA-1273, with the ongoing Phase 3 study being conducted in collaboration with National Institute of Allergy and Infectious Diseases and BARDA. At the same time, Moderna is scaling up its manufacturing capability with its strategic partners.
Note that Moderna has posted gains of roughly 252% so far in 2020. Investors looking to realize gains could be pushing the stock down on Wednesday.
Moderna stock was last seen down about 1%, at $68.31 in a 52-week range of $12.47 to $95.21. The consensus price target is $93.77.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
