‘Why did you guys sell everything?’ Inside the life-and-death struggle to fund Moderna’s COVID-19 vaccine.

‘Why did you guys sell everything?’ Inside the life-and-death struggle to fund Moderna’s COVID-19 vaccine.

Moderna Inc.

was launched in 2010 by Noubar Afeyan, a Lebanese-born bioengineer running a biotech-venture firm called Flagship Pioneering. He recruited Stéphane Bancel, a Harvard Business School graduate and native of Marseilles, as Moderna’s CEO. Almost immediately, Bancel felt self-imposed pressure to raise enough money so his company could develop drugs and vaccines based on messenger RNA molecules before rivals caught up. In a few short years, he raised billions of dollars in private sales of the company’s shares and Bancel had emerged as the biotech industry’s smoothest and most effective fundraiser. 

But there was something about Bancel that raised concerns in parts of the biotech and investment communities. Bancel and Moderna were super-secretive, avoiding conferences and refraining from publishing in scientific journals. Bancel wasn’t a scientist, raising some eyebrows. Some snickered that Moderna was a “VC creation.” These skeptics suggested the company was merely an effort by its founding backers, including Afeyan, to create some hype and bring the company public before exiting with big profits.

In 2015, the Wall Street Journal began a series of investigative stories raising serious questions about a highflying blood-testing startup, Theranos Inc., and its chief executive, Elizabeth Holmes. Eventually, Theranos would be exposed as a fraud.

Soon, many on Wall Street and elsewhere were on the lookout for the next Theranos. Some pointed a finger at Bancel and Moderna. Holmes and Bancel were both smooth and telegenic salespeople who had raised shocking amounts of cash, sometimes from investors with limited scientific backgrounds. They ran secretive companies. And weirdly, Holmes and Bancel both favored turtlenecks, à la Apple founder Steve Jobs. It wasn’t a good look.


Safe and effective COVID-19 vaccines are modern science’s greatest achievement. Developed in less than a year, these shots have saved hundreds of thousands of lives and averted more than 1.25 million hospitalizations. The shots, based on revolutionary, new technologies, also represent modern finance’s most important accomplishment. Companies including BioNTech SE
based in Germany, relied on the steadfast backing of global investors as they spent years honing vaccine approaches that finally paid off in 2020 with effective shots to protect against COVID-19.

Cambridge, Mass.–based Moderna received crucial funding from venture-capital firms, sovereign wealth funds, hedge funds and individual investors as it pursued its own work with mRNA molecules in the decade leading up to 2020. The relationship between investors and Moderna was rocky, however. By the time the new coronavirus emerged in late 2019, many on Wall Street had lost patience with the company and its chief executive. The souring investor sentiment, which occurred over a number of years, raised questions about whether Moderna could raise enough money to produce vaccines to stem the pandemic.

‘I felt so bad for him’

Back in January 2017, Moderna CEO Stéphane Bancel flew to San Francisco to speak at a megaconference hosted by JPMorgan Chase, an annual gathering that serves as the healthcare industry’s Woodstock. Money, not music, was on everyone’s mind. That week, thousands of executives and investors piled into the elegant Westin St. Francis on Union Square, with others in nearby downtown hotels, many paying more than a thousand dollars a night to hear a week of pitches from top executives of the world’s drug companies about their products and plans.

Bancel hoped to convince attendees that Moderna was making headway on mRNA vaccines, but it was dealing with challenges. Expenses were piling up. Bancel knew the company would have to sell shares in an initial public offering to have a chance of producing any vaccines or drugs, so drumming up investor interest was crucial. He gave an upbeat address, describing Moderna’s first potential products.

A day later, though, a scientific publication described “troubling safety problems” associated with a treatment Moderna was developing with biotech giant Alexion Pharmaceuticals. Later that day, in a room Moderna rented in a nearby hotel so the company could host private meetings with investors, a downcast Bancel met with biotech investor Brad Loncar. It was a business conversation, but Loncar brought a beer and a bottle opener, hoping to lift Bancel’s spirits. He accepted the drink and they shared it together.

“I felt so bad for him,” Loncar says.

‘They must be targeting the Theranos investors with slides like this’

In 2018, Moderna unveiled a new factory, one that came at an enormous expense for a company nowhere near recording any profits. Research and other costs were also surging. Bancel was still finding enough investors willing to write enormous checks to cover their costs. In February 2018, he helped raise $500 million from Geneva-based Pictet Group, the sovereign wealth fund of Abu Dhabi, and New York hedge fund Viking Global Investors, among others. But many of Moderna’s newest backers weren’t health-care specialists. 

By then, skepticism of Bancel and Moderna had turned into outright derision. In March 2018, the scientific publication STAT wrote that Moderna had “baffled its peers” by placing a value of $7.5 billion on itself during its most recent fundraising effort. The article shared marketing materials Moderna had used to excite the investors, some of which pointed to “billion-dollar futures” for drugs the company had only tested in mice, predictions that investors told STAT were “pretty absurd.” The article suggested that Moderna was relying on naive or inexperienced backers who didn’t know enough to question the company’s rosy promises. It unleashed a new wave of ridicule aimed at Bancel and his company.

“They must be targeting the Theranos investors with slides like this,” one person wrote on Twitter.

“Weirdly, Elizabeth Holmes and Stéphane Bancel both favored turtlenecks, à la Apple founder Steve Jobs. It wasn’t a good look.”

By the end of 2018, Moderna had become a true battleground company, with fans and foes equally adamant about its future. Some biotech investors had become exasperated with Bancel’s big talk. They remained unconvinced the mRNA molecule could consistently make it into cells and produce enough protein to be of much value. Enough mutual funds and other investors found Bancel’s pitch persuasive, enabling Moderna to sell shares during the first week of December in the largest-ever biotech IPO. By the end of the year, however, the shares had fallen 34% and Moderna was the most-shorted biotech stock in the market, meaning it was the company that bearish “short sellers” were most convinced was overpriced and overhyped. Moderna had raised $620 million in its IPO, but Bancel knew much more would be needed to keep it going until it could bring a product to market.

Even former fans, including Viking Global Investors, were dumping the stock 

By early 2020, Moderna was burning through a half a billion dollars each year but cash from investors had stopped pouring in. Shares were 15% below their IPO price, making it hard for Bancel to raise new money. In executive meetings, Bancel emphasized the need to stretch each dollar, and employees were told to reduce travel and other expenses, a frugality they were advised would last several years. 

Even former fans, including Viking Global Investors, were dumping the stock. The $29 billion New York hedge fund had owned over 5% of Moderna shares at the end of 2018, but it now owned almost no shares. 

On January 12, Bancel flew to San Francisco to attend JPMorgan Chase’s annual health-care conference, hoping to impress attendees with a speech about Moderna’s progress on its shots to protect against cytomegalovirus, a common virus affecting babies. During his speech and his conversations with investors and others, Bancel didn’t mention the new pathogen circulating in China. It didn’t seem relevant to anyone in the room. 

Bancel’s pitch received a lukewarm response. Some at the event remained unsure why Moderna had pivoted to vaccines from drug research. Others noted the company still didn’t have a vaccine approaching late-stage, phase 3 clinical trials, let alone in the market.

“People weren’t thrilled with us,” Bancel says.

At an event a few weeks later, Bancel spotted Andreas Halvorsen and Brian Kaufmann, two top executives at Viking Global, the hedge fund that had dumped almost all its Moderna shares in previous months.

“Why did you guys sell everything?” Bancel asked them.

In February, after Moderna began work on a vaccine against Covid-19, it raised $500 million by selling new shares at a price of nineteen dollars apiece. In many ways the deal was an embarrassment. Moderna had gone public at $23 a share. Over the following year or so, the company made progress on a number of vaccines. Now it was making headway on shots to halt a coronavirus that had the world in its grip. Yet its stock price had gone down, suggesting that Moderna was less valuable than before.

“It was humbling,” says Stephen Hoge, Moderna’s president.

The money meant everything to Bancel and his team

By the spring of  2020, Bancel and his colleagues were despondent. The Moderna team was certain they had a winning formula for a vaccine, but the company needed hundreds of millions of dollars, perhaps even $1 billion, to buy essential ingredients to manufacture its vaccines. Bancel and Hoge didn’t know where the money was going to come from. Time was ticking, rivals were acting, people were dying, and Moderna was sitting on its hands. It was eating the team up.

Bancel begged for money. He asked Trevor Mundel, a top leader of the Gates Foundation. He reached out to an arm of the World Health Organization called Covax. He phoned or went on Zoom calls with representatives of other government bodies and charitable foundations. Each time, Bancel presented reasons why Moderna deserved financial assistance and each time he failed to raise the necessary cash. 

Bancel was upset with himself, convinced that he had failed his company, his shareholders, and the world. He was a master fundraiser but when it truly counted, he had come up short. Lives were at stake and he had blown it.

By May, Moderna still couldn’t produce much of its vaccine. AstraZeneca, Pfizer/BioNTech, and J&J were all bulking up their own manufacturing capacities, preparing to produce tens of millions of doses as soon as regulators authorized their shots. Moderna was sitting still. People were dying all over the world and Moderna couldn’t do a thing to pitch in. 

Moderna’s executives decided to turn to the only place they were feeling love: Wall Street. By then, the company’s shares were absolutely soaring. After starting 2020 below twenty dollars a share, the stock topped $66 on May 15, as investors became hopeful that the company’s COVID- 19 vaccine could be a big seller. Moderna hired investment banking firm Morgan Stanley to sell new shares to investors, this time specifically to pay for the manufacturing of the vaccines.

On the morning of Monday, May 18, Moderna reported results from its first human study: Eight subjects in the phase 1 study who had been inoculated with the company’s COVID-19 vaccine had developed neutralizing antibodies comparable to those seen in patients who were infected by the virus and subsequently recovered, and the shots were generally safe and well tolerated. The data were early and based on a small number of subjects. But investors were so excited about the prospect of an effective vaccine that they sent the Dow Jones Industrial Average

up 899 points that day, or 3.8%, while Moderna’s shares jumped 20%, past $75. 

The trial results were good news for the vaccine, less so for Morgan Stanley’s bankers. The stock’s climb made it harder to sell a big batch of new shares — who wanted to buy a stock that has already jumped in price? Nonetheless, Morgan Stanley agreed to purchase $1.34 billion of Moderna’s newly issued shares, betting it could sell them to the bank’s customers.

The money meant everything to Bancel and his team — they finally had a genuine chance to produce huge numbers of doses. Right away, they started spending it all on lipids, glass, steel, and every other kind of material and piece of equipment he needed.

Bancel and Hoge breathed deep sighs of relief. They had hope.

Adapted from “A Shot to Save the World: The Inside Story of the Life-or-Death Race for a Covid-19 Vaccine,” by Gregory Zuckerman, published by Portfolio on October 26, 2021.

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