Anglo-Swedish drugmaker AstraZeneca (NASDAQ:AZN) has sold its entire 7.7% equity stake in COVID-19 vaccine producer Moderna Inc. (NASDAQ:MRNA) for over $1 billion. The company sold the entire stake over the course of 2020, cashing in the meteoric rise of the US biotechnology firm’s shares following its success in the production of a COVID-19 vaccine candidate. However, it is unclear over what period AstraZeneca sold its stake in Moderna.
AstraZeneca sold equity holdings worth $1.3 billion
During its 2020 annual report, the Anglo-Swedish drugmakers said that it sold part of its equity holdings last year and received a consideration of $1.38 billion. A large junk of the consideration was related to the sale of its entire stake in Moderna. Moderna’s stock went public in 2018 at$23 per share, but over the past year, the shares surged fivefold after the biotechnology firm started working on a potential COVID-19 vaccine-based ion messenger RNA (mRNA) tech, which won approval in December.
Moderna’s vaccine relies on synthetic genes in sending a message to the immune system to trigger an immune response. Most importantly, the short can be manufactured quickly at scale compared to other vaccine candidates such as that of AstraZeneca. Moderna indicated last week that it will receive around $18.4 billion in COVID-19 vaccine sales this year, thus putting it on a path to its first profit since its establishment in 2010. The company’s sales projection is higher compared to the forecast of other vaccine makers such as Pfizer, which expects its COVID-19 vaccine revenue to be around $15 billion.
Most importantly, Moderna is planning to produce around 700 million vaccine doses this year, up from the previous low-end target range of 600 million, and expects almost 1.4 billion doses in 2022.
AstraZeneca sought to leverage Moderna’s RNA expertise
AstraZeneca first invested in Moderna in 2013 after it paid an upfront payment of $240 million, and by the start of last year, its stake had grown to 7.65%. Based on Modern’s 2020 closing share price of $104.47, this could be worth around $3.2 billion. AstraZeneca made its investment in Moderna to gain access expertise in RNA manipulation, which creates proteins in cells. According to the agreement terms l, AstraZeneca received exclusive rights for five years to choose up to 40 drugs for development. Besides the initial $240 investment, Moderna was also expected to receive $180 million for attaining specific technical milestones and payments, including royalties on AstraZeneca developed drugs.
Proceeds from the sale will help AstraZeneca shore up its finances as it continues to enhance its drug pipeline and finalize the $39 billion takeovers of Alexion pharmaceuticals. The Alexion acquisition will help the company in expanding its footprint in the lucrative rare diseases drugs segment and enhance drug sales in new markets, especially in China.
Besides AstraZeneca, Merck & Co also sold its equity investment in Moderna last year, but the US drugmaker didn’t reveal how much it received from the sale.