Astrazeneca, the British pharmaceuticals giant that is currently the UK’s most valuable public company, is sitting on a major ‘paper profit’, on its 7.7% stake in Moderna, the Massachusetts-based drugs company at the front of the queue to provide a Covid-19 vaccine. Having invested an initial $240 million in Moderna in 2013, topped up by $140 million in 2016, Astrazeneca’s stake is now worth over $2 billion.
The boost is a win for Astrazeneca CEO Pascal Soriot, with the initial investment in Moderna made five months after he took up the role. Moderna’s share price has risen by around 400% in 2020, including gains of 20% recorded on Monday after the company reported positive early results for its experimental Covid-19 vaccine. The announcement also catalysed a wider international stock market rally.
Astrazeneca has flourished under Mr Soriot’s leadership. The company has now recorded 7 consecutive quarter of growth after 9 years in the doldrums, as a pipeline of blockbuster new drugs focused on oncology have come to market. In 2014, Mr Soriot fought off a controversial £55-a-share takeover bid launched by U.S. rival Pfizer.
Moderna is just one of several pharmaceuticals companies in the race to develop a safe and effective vaccine for the Covid-19 virus. But after patients involved in limited phase one human trials received an immune response able to fight the virus, the company appears to have shot to the front of the queue to have a vaccine approved for mass production. Phase 2 trials are set to commence in the near future. If they are successful, the final phase 3 round is expected to start in early July.
Moderna’s share price did take a hit during yesterday’s Wall Street trading session, dropping 10% after the company sold 17.6 million shares in a discounted offering, raising $1.3 billion which will be used to fund the mass manufacture of the vaccine. The placement offered shares at $76, a discount of $4 on Monday’s $80 high.
Astrazeneca is also part of a joint-venture project with the University of Oxford developing a potential Covid-19 vaccine.
Astrazeneca are not the only beneficiaries of Moderna’s recent share price rally. The company’s directors, including Professor Robert Langer of the Massachussetts Institute of Technology, one of biotech’s star names, are also now sitting on ‘paper fortunes’. Professor Langer owns a little under 3% of the company, having been paid in ‘sweat equity’. At Monday’s high of $80 a share, that would have made him a billionaire. However, he did not boost that fortune by buying discounted shares in the placing, stating:
“I’m helping on the science, not investing”.
Astrazeneca overtook oil majors Royal Dutch Shell and BP as the UK’s most valuable public company last month after the drastic slump in oil prices over the past couple of months saw the valuations of both drop significantly. Astrazeneca’s share price is up 14% this year and the company is now valued at £114.5 billion.