December 7, 2018 / 6:22 PM / 11 days ago

UPDATE 1-Moderna, largest biotech to go public, fails to impress in market debut

(Adds analyst comment, biotech index performance, background)

By Mary Ann Alapatt

Dec 7 (Reuters) - Moderna Inc's shares fell as much as 6 percent in an upsized market debut on Friday, taking a hit from a broader selloff in U.S. markets spurred by investor concerns over an economic slowdown amid renewed trade tensions.

Both the Dow Jones Industrial Average and the S&P 500 were down 1.5 percent, while the Nasdaq biotechnology index fell 2.6 percent.

Moderna's shares opened at $22.00, 4.3 percent below their initial public offering price of $23.00 per share.

Still, at the opening price, Moderna's valuation of $7.32 billion made it the biggest biotech company to go public. The company had 332.9 million shares outstanding, including over-allotment.

Moderna had originally planned to sell 21.7 million shares for between $22 and $24 per share, but on Thursday raised its offering by 21 percent to roughly 26.3 million shares.

The IPO raised $604.3 million and eclipsed the $373 million raised by Allogene Therapeutics in October, which is the largest biotech since Axovant Sciences' $363 million IPO in 2015. These trail only Genentech's blockbuster $1.9 billion IPO back in 1999.

"The company's and underwriters' decision to increase the size likely negatively affected the aftermarket appetite for the deal. This delicate balance is all too important for an IPO on day one," said Jeff Zell, senior research analyst and partner at IPO tracking firm IPO Boutique.

"However, the negative opening does not mean too much for Moderna as a company. The company still has a deep pipeline with many shots on goal to achieve milestones," he added.

Moderna's IPO comes a day after the U.S. Centers for Medicare and Medicaid Services released a report stating healthcare spending growth in the United States slowed for the second year in a row in 2017.

Founded in 2010, the Cambridge, Massachusetts-based company develops drugs based on molecules known as messenger RNAs (mRNA), which carries the recipe for making proteins inside the body.

Scientists have been touting using mRNA as medicine to tackle many hard-to-treat diseases, from cancer to infections to heart and kidney disorders.

No mRNA medicines have ever been approved to date by the U.S. Food and Drug Administration or other regulatory agency, marking the regulatory path uncertain, the company said. However, in September last year, its heart drug to treat coronary artery disease, developed along with AstraZeneca , met the main goal in an early-stage trial.

The IPO marks the third most highly valued venture capital exit in 2018, behind music streaming company Spotify Technology S.A. and data sharing and storage firm Dropbox Inc , according to IPO expert Renaissance Capital.

Overall for the year, biotech IPOs have performed strongly, returning on average around 14 percent in 2018 as of Nov. 30, according to PricewaterhouseCoopers data, compared to a broadly flat S&P 500 Index year to date.

Moderna has raised over $2.6 billion in total funding from collaborators and investors including drugmaker Merck & Co Inc and British drugmaker AstraZeneca Plc.

It currently has 21 programs in development and is yet to bring a product to the market. 10 of those are in clinical trial stages including a vaccine for the Zika virus and a drug to treat cancer.

The company's total revenue fell 12.5 percent to $99.6 million in the first nine months of this year. Net loss attributable to common shareholders widened to $257.8 million from $228.4 million a year earlier.

Morgan Stanley, Goldman Sachs and J.P. Morgan Securities LLC are among the lead underwriting banks for Moderna's IPO. (Reporting by Bharath Manjesh and Mary Ann Alapatt in Bengaluru; Editing by Maju Samuel and Sweta Singh)

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