Moderna raised one of the largest biotech IPOs in history. Then its stock dropped more than 19%.
A bitter pill: The day after the largest biotech IPO ever, Moderna’s stock fell more than 19%
Last week, Biotech company Moderna raised $604.3m in an IPO that valued the company at $7.5B. But, the celebration was short-lived: Its stock slumped more than 19% in its first day of trading.
Moderna’s flashy IPO and historically bad first day send mixed signals about the biotech market, which was breaking records this year until the recent stock slump.
Don’t shoot the messenger RNA
Moderna specializes in messenger RNA therapy, a type of treatment that uses a patient’s own cells to fight diseases. If Moderna’s drugs work, they could provide revolutionary (and valuable) new treatments for cancer.
But like many biotech companies, Moderna has yet to bring any drugs to market: Moderna is currently running 21 drug research programs (only 10 of which have passed the lab phase and moved on to human trials).
Investors have pumped $7.1B into 60 biotech companies this year, making 2018 the 2nd largest year of biotech funding (after 2014). So, how can biotech companies raise billions without viable products?
Everyone’s hoping for a miracle (drug)
Biotech investing is like venture capital on steroids: Investors are happy to invest in dozens of experimental drugs because they only need 1 to succeed.
Because pharmaceutical R&D is so expensive, many promising biotech startups IPO early so they have more money for research. But biotech stocks are still risky.
Since the trade-war stock slump began, some investors have stopped taking their medicine. The Nasdaq Biotechnology index was up 14% in August: Now it’s up only 0.2% for 2018.
An uncertain prognosis
Moderna’s first day of trading was the 5th-worst performance of any 2018 IPO. Now, it’s uncertain whether the company will make a recovery.
With its new cash, the company will have enough money to push its drugs through further clinical trials.
But unless some of them show promising results in the near future, Moderna could be in trouble. Moderna spent $475m in operating expenses in 2017, and its funding will only last so long.
Get well soon, Moderna
Altria, the owner of Marlboro, takes a $2B drag of the weed biz
Tobacco giant Altria (parent company of Philip Morris) is investing $1.8B into Canadian cannabis company Cronos Group.
The investment will give Altria (also owner of Marlboro), a 45% stake in Cronos, with an option to increase its ownership to 55% over the next 5 years.
Puff, puff… pass?
It was only a matter of time before major cigarette companies got into the budding joint industry.
As Quartz notes, outlets have speculated since the ’60s that cig companies were waiting patiently to pounce on legalization, alleging that they had already copyrighted names like “Acapulco Gold” and “Tijuana Gold” in anticipation.
However, letters from key tobacco industry players vehemently denied the notion for decades. Of course, now that other companies are smelling the dank (such as Molson Coors and Constellation Brands), big cig is rippin’ and roaring to take a hit.
Looking for a re-light
Altria’s stock has fallen nearly 25% in 2018, and the company is expected to report a measly revenue growth of 1% this year, with the plateau expected to continue in 2019.
Bottom line, cigarette companies are fighting tooth-and-tar to remain relevant as people cut back on cancer sticks (Altria is also in talks to invest in Juul).
And, from a revenue standpoint, Altria isn’t in it for a contact high, they’re lookin’ to get stunk from a nearly $2B gravity bong, in hopes that going green will wean the company off its tobacco addiction.
Walmart purchases Art.com to add to its gallery wall of e-commerce acquisitions
Walmart acquired Art.com last week, adding the company’s home decor business to its growing roster of acquisitions.
To challenge Amazon’s e-commerce dominance, Walmart has spent hundreds of millions acquiring successful companies that enhance the Big W’s e-commerce “category expertise” and “assortment” — and Art.com looks great next to past buys like Shoes.com, ModCloth, and Bonobos.
More than just a pretty domain name
According to Walmart, Art.com does $300m in annual revenue. The 20-year-old company is “the world’s largest online retailer in the art and wall decor category,” according to Walmart’s release.
But more importantly, Art.com gives Walmart a strong (and immediate) foothold in the $10B art and wall decor market.
Walmart plans to operate Art.com as its own domain and include its products on Walmart’s site, much like its other recent acquisitions.
Amazon kills off its e-tail rivals, Walmart just buys them
Over the next few months, Walmart plans to continue improving its e-commerce sites, especially for home goods and fashion. But Walmart’s acquisition streak is just getting started.
“Just four brands aren’t going to do it, but imagine 40,” Walmart’s head of US e-commerce, Marc Lore, explained to investors earlier this year.
Chinese investors cleat up to buy the owner of Louisville Slugger
Chinese investors offered to buy Amer Sports, the massive Finnish sports company that owns American sports brand staples Louisville Slugger, Wilson and many others, for more than $5B.
The consortium, led by China’s Anta Sports, has offered $45 per share to acquire the sports company — nearly 14% above the stock’s closing price.
The many lives of Amer
The Finnish-based company was established in 1950 as an industrial conglomerate with a wide array of interests in tobacco trading (it held a 75% market share in Finland at its peak), ship owning, and publishing.
Then, in the ’80s, the company moved into the vehicle import industry and dabbled in the textiles and plastics markets before finally settling into sporting goods in 1986, when it first acquired a majority stake in the golf equipment maker MacGregor Golf from Jack Nicklaus.
Aside from Louisville and Wilson, Amer now owns premiere trail running brand Salomon, outdoor brand Arc’teryx, and the ski brand Atomic.
So why is Anta stepping up to the plate?
According to Bloomberg, Anta (which has a market value of about $12.7B), is uppin’ the ante on its business overseas amid the Chinese government’s push to expand in sports ranging from soccer to skiing.
With brands like Salomon and Atomic, Amer could be an attractive prospect for Anta ahead of the upcoming Olympic Games in Asia.
Back in 2013, a short video made the rounds of a mysterious 70-year-old named ‘Slomo,’ who skates up and down Pacific Beach in slow motion, balancing on one leg, and grinning like a goon for hours on end.
His legend precedes him. Locals speculate that he was either homeless, or crazy, and some had heard that he suffered from ‘face blindness’ — turns out, only that part is true.
Dr. John Kitchin (AKA, ‘Slomo’) is a former neurologist who — when his vision started to fail him in middle-age — left his successful practice to pursue the only thing that made him truly happy: rollerblading.
Kitchin traded in his white coat for a bucket hat; his BMW for blades; and his prestige for judgment from friends and strangers — all in the spirit of just doing what he really wanted to do.
When I first saw this video years ago, it struck a nerve. I was going through a major life change myself: leaving the engineering field to pursue a writing career.
On paper, it was ill-advised. People would tell me I was selling myself short — that I could have an illustrious career as a ‘Woman in STEM (™)’ and I could always write on the side, right?
You know what I support more than women in STEM? Women doing whatever the f*ck they want. People doing what makes them happy, unabashedly and unapologetically.
This is not to incite a purge-like uprising of desk workers looting Best Buys and buying one-way tickets to Costa Rica. This is just to say, you always have options.
People are reasonable, skills are transferable and, if you find your personal ‘fountain of youth,’ you don’t have to keep buying FIJI water just because everyone else tells you it’s good.