May 19, 2020

Axios Markets

Good morning! Was this email forwarded to you? Sign up here. (Today's Smart Brevity count: 1,223 words, 4.5 minutes.)

🚨 Situational awareness: The ZEW survey measuring German investor expectations for the next six months climbed to the highest level in five years. (Bloomberg)

🎙 “When I was 17 years old and just starting the business my mother said to me, ‘Don’t chase the money. It runs really fast. Do the right thing and it will follow you.'” - See who said it and why it matters at the bottom.

1 big thing: Moderna ignites hopes for a coronavirus cure

Illustration: Sarah Grillo/Axios

Biotech company Moderna had a day for the ages on Monday and finished by announcing the issue of $1.34 billion of new stock at a hefty price.

What happened: A small number of healthy patients given the first doses of Moderna's coronavirus vaccine appeared to have generated antibody responses to the virus, according to early phase one trial data released by the company Monday.

  • Moderna, which has yet to produce any marketed drugs, saw a 20% surge in its share price Monday and now carries a market value of about $30 billion.
  • The news pushed U.S. stock indexes through important psychological resistance levels as the S&P 500 rose by more than 3%.

By the numbers: The company announced late Monday it would price an offering of 17.6 million new shares at $76 each.

  • That's about 409% higher than where it debuted on the Nasdaq in December 2018.

Yes, but: The initial data is based on eight healthy volunteers so far.

  • "This is an early snapshot of a small sample size within a trial that is focused on the vaccine's safety," Axios' Bob Herman notes.
  • "This is a positive first step, but still a first step."

Origin story: Moderna is a VC-created startup that began inside an incubator program run by Flagship Pioneering that became the first biotech unicorn, valued by venture capitalists at $3 billion in early 2015.

  • It went public in the largest-ever IPO for a development-stage biotech with an $8 billion market cap before it ever had a product on the market, as Axios' Dan Primack wrote in March.
  • The U.S. government pumped more than $480 million into the company.

Watch this space: Short sellers also have lined up to bet against the stock, data from S3 Partners shows. Moderna is the fifth largest short in the company's domestic biotech sector with 24.5 million shares shorted.

  • The stock is currently up 309% year to date, and 320% in the past three months, after never having risen above $30 a share during its first year as a public company.

Where it stands: Moderna isn't just another biotech company. "Moderna’s core technology is designed to help people make medicines within their own cells, rather than create something in a lab which patients need to ingest or inject," Primack wrote in 2015 for Fortune.

  • "Not only does this open up a massive number of therapeutic possibilities, but it also could make Moderna’s products significantly faster to test and cheaper to buy."
Bonus chart: Things could get complicated
Data: FactSet; Chart: Axios Visuals

Moderna's stock has taken flight since April when CEO Stéphane Bancel said the company had received as much as $483 million in taxpayer funds to accelerate development of a coronavirus vaccine, but controversy already is swirling about recently departed executive Moncef Slaoui.

What's happening: Slaoui was appointed to co-chair the White House coronavirus vaccine project and said he would divest approximately $12.4 million worth of stock options.

  • The timing was particularly interesting after Moderna's price surge on Monday, but representatives for the Department of Health and Human Services told Primack that Slaoui resigned last week and will donate all of the proceeds from Thursday to the time of sale, expected to be tomorrow, to cancer research.
  • SEC filings showed that as of Monday morning Slaoui still had 155,438 options in Moderna, CNBC reported.

Of note: A follow-up email seeking details on when and how Slaoui would divest his options was not returned.

2. Catch up quick

Nasdaq is set to unveil new restrictions on IPOs, a move that will make it more difficult for some Chinese companies to debut on its stock exchange. (Reuters)

Uber will eliminate about 3,000 more jobs in a second wave of layoffs, as it cuts 23% of its workforce to deal with coronavirus restrictions. (Reuters)

One in four Hong Kong retailers could disappear by December unless landlords offer more relief and sales improve, a retail association warns. (Bloomberg)

The investment firm behind Peet’s Coffee, Pret A Manger and Panera Bread, is moving forward with an IPO of its coffee business, looking to raise up to $2.2 billion. (WSJ)

The governors of California, New York and Texas said professional sports can begin to move forward without crowds if coronavirus cases continue to decline. (N.Y. Times)

3. America re-engages
Data: Axios/Ipsos surveys. Note: The first survey was April 10-13, and 1,098 adults were interviewed. The second was May 15-18, and 1,009 adults were interviewed. Chart: Axios Visuals

Axios' Margaret Talev writes: Americans are increasingly stepping out for social calls amid the pandemic — making playdates for their kids, restarting visits with elderly relatives, even grabbing a haircut, according to the latest installment of the Axios-Ipsos Coronavirus Index.

Why it matters: They're enabled and emboldened by states that have begun reopening, even as infections in the U.S. near 1.5 million and office closures and work-from-home arrangements remain in effect.

  • This testing the waters breaks down heavily along partisan and regional lines.
  • People still perceive social interactions as risky, but are being drawn to some anyhow as they crave creature comforts and the company of loved ones.

What they're saying: "There's still this high level of perceived risk about the COVID-19 world, but people are poking their heads out now," said Cliff Young, president of Ipsos U.S. Public Affairs. "The overall trend is, everything's jumping up."

  • "The restrictions are being lifted in some places; in other places there's this expectation they will be lifted."
  • "They're venturing out in a safe way. They're using some of the basic social distancing, masks and six feet apart."

By the numbers: Southerners lead the push for haircuts, meals out and playdates, and that's in keeping with the pace of where restrictions are being lifted. Visits with the elderly are less about where you live than whether you're old enough to have elderly parents.

  • Southerners are three times as likely to have gone out for a haircut in the last week (9%) as Northeasterners (3%).
  • Southerners (16%) are twice as likely as Northeasterners (8%) to have gone out to eat in the past week.
  • Parents in the South (41%) and Midwest (38%) are more than twice as likely as parents in the Northeast (17%) to have let their children play with other children in the past week.
  • Overall, 15% of respondents say they visited elderly relatives in the last week, the highest share in nine weeks; that share shoots up to 23% among those ages 50–64.

Go deeper: Axios-Ipsos Coronavirus Index Week 10: America re-engages

4. The retail apocalypse could be a win for the survivors

Retail has been hard hit by the coronavirus pandemic as bankruptcies and store closures have accelerated, but that is creating opportunities for the companies that survive, especially as a period of surging traffic could be on the way, data firm says.

What they're saying: The much ballyhooed retail apocalypse is poised to benefit budget retail names like Ross and Kohl's that have gained market share in recent years.

  • With major brands like J.C. Penney potentially closing their doors in the spring and more than 3,000 companies announcing store closures already this year, "the treasure hunt appeal and the value orientation could position these brands to thrive."

By the numbers: data shows that Ross saw a visit increase of 8.8% in January and 12.2% in February prior to visits plummeting as stores shuttered.

  • Kohl's saw a similar trend with visits rising 8.7% and 7.6% year-over-year in January and February before taking their pandemic-driven plunge.

The intrigue: "With potential store closings on the horizon on the back of bankruptcy announcements, much of these visits could be up for grabs."

  • 36.8% of Kohl's shoppers and 30.6% of Ross shoppers visited a J.C. Penney during this period.

The big picture: "The combination of very strong performance heading into the crisis, effective positioning for the coming period of economic uncertainty and a weakened competitive landscape may actually set these brands up to thrive in the coming months and years," per

Thanks for reading!

Quote: “When I was 17 years old and just starting the business my mother said to me, ‘Don’t chase the money. It runs really fast. Do the right thing and it will follow you.'”

Why it matters: Tariq Farid is a U.S. immigrant from Pakistan who is the co-founder and CEO of Edible Arrangements. In 2009, he was recognized as Entrepreneur of the Year by the International Franchise Association and in 2017 he was inducted into its Hall of Fame.