Moderna to Issue $2 Billion in Convertible Bonds to Fund Cancer Vaccine R&D After 177% Surge

TradingKey - Moderna (MRNA) announced Thursday that it intends to offer $2 billion in aggregate principal amount of senior convertible notes due 2032 in a private placement to qualified institutional buyers.

The company also plans to grant the initial purchasers an option to purchase up to an additional $300 million aggregate principal amount of notes within a 13-day period beginning on the initial issuance date of the notes. If the option is exercised in full, the total financing amount could reach up to $2.3 billion.

The notes will be general unsecured senior obligations of Moderna, bearing no regular interest and with no principal accretion over time. Upon conversion, Moderna may settle in cash, shares of common stock, or a combination of both, at its discretion.

A portion of the net proceeds will be used to pay the cost of capped call transactions, and the remainder will be used for general corporate purposes, which may include supporting the expansion of its oncology business and repaying debt. Capped call transactions are hedging arrangements entered into by the company with financial institutions, aimed at reducing potential common stock dilution upon conversion of the convertible notes or offsetting cash payment obligations in excess of the principal amount of the notes.

Moderna expects that the initial cap price of the hedging transactions will represent a premium of at least 150% over the last reported sale price of its common stock on the pricing date. If the option for the additional $300 million of notes is exercised, the company also plans to use a portion of the additional proceeds to enter into corresponding hedging transactions.

Driven by the news, Moderna fell about 5% to $142.31.

Source: TradingView

Just a week earlier on August 19, Moderna surged by about 177%, adding $44.5 billion to its market capitalization that day. Earlier that day, Moderna and Merck announced positive preliminary results from a late-stage trial of an experimental skin cancer therapy. The Phase 3 trial evaluated the safety and efficacy of intismeran in combination with Merck's Keytruda compared to Keytruda alone in patients with high-risk resected cutaneous melanoma.

The two companies noted that the results also mark the first positive Phase 3 trial results for a personalized neoantigen therapy and an mRNA cancer therapy, while also being the first late-stage study to demonstrate a "clinically meaningful improvement" compared to Keytruda alone in the adjuvant treatment of resected melanoma patients.