Merck & Co. (NYSE:MRK) is cashing in on the meteoric rise of Moderna Inc. (NASDAQ:MRNA) in 2020 after the pharmaceutical giant dumped its equity stake in Moderna. Since the beginning of this year, Moderna, which is developing a potential COVID-19 vaccine, has gained over 620%.
Merck sells its stake in Moderna
A statement from the company said that Merck sold its investment in Moderna in the first half of Q4 achieving a substantial gain. Merck invested $125 million in Moderna in a preferred equity stake in 2018 after an initial $50 million investment in 2015 when Modern went public.Moderna started selling shares to the public in 2015 for the first time. The companies have been collaborating on potential cancer treatments.
Moderna stock has surged significantly this year due to its development of a potential COVID-19 vaccine. Merck stated that it received considerable gain on its holding in Moderna, especially this year when the stock surged. Interestingly Merck will maintain exposure to Modern indirectly via its venture funds’ investments. The company’s statement added that the company would continue partnering in the development of cancer vaccines, including cancer vaccines encoding the four common KRAS mutations.
Merck didn’t say how much in profits it booked from the investment. However, it stated that it would record the gain in the other income section in its statement once it announces earnings. Cambridge-based Moderna is currently developing a potential COVID-19 vaccine, which will receive a regulatory review in the coming weeks.
Moderna’s value up by $50 billion
Since late March, Moderna’s shares have added almost $50 billion after it accelerated COVID-19 vaccine development with US Biomedical Advanced Research and Development Authority’s help. The company said that its vaccines achieved a 94.1% overall efficacy rate, which is almost 95% efficacy reported in Pfizer (NYSE:PFE) and BioNTech’s (NASDAQ:BNTX) vaccine candidate.
The US government contract under the Operation Warp Speed and those with EU and the UKS offered an early revenue boost for Moderna. According to analysts, extending orders into next year and beyond could also boost the company’s topline by $4.5 billion.