A biotech that made history with its record $7.5 billion IPO will plunge to $3 billion in 2019, according to a top investor

cami samuels

Venrock partner Cami Samuels has a bold prediction for a biotech that had a record-breaking initial public offering in 2018.
Among other predictions for 2019, Samuels told Business Insider that "Moderna will exit at a $3 billion valuation next year."
Moderna debuted on the public markets after raising $600 million, which valued the company at $7.5 billion, more than double what Samuels is predicting Moderna will fall to.
Here's why she thinks that slump will happen.

Venrock partner Cami Samuels has a bold prediction going into 2019: "Moderna will exit at a $3 billion valuation next year."

Moderna debuted on the public market on December 7 after raising more than $600 million in the biggest initial public offering in biotech history. While the IPO valued Moderna at $7.5 billion, it's currently trading well below its IPO price with a market value of $5 billion.

By the end of 2019, Samuels expects that to drop even further to a market value of $3 billion, less than half of its valuation at the IPO.

"It’s hard for me, looking at their pipeline, to figure out why they’re valued 5x, 6x other companies with the same pipeline," said Samuels, whose firm Venrock makes investments in technology and healthcare companies.

Moderna is developing medical treatments based on messenger RNA, and the company is still in the early days of human trials for its treatments, which include cancer treatments as well as a vaccine for cytomegalovirus, or CMV. The idea is that by putting messenger RNA into the body, it can turn the body into a drug factory, pumping out the proteins needed to fight a particular disease.

Which isn't to say she's not interested in the science.

"Having said that, I do think that they’re at the beginning of RNA and gene-editing RNA being emphasized almost as much as DNA gene-editing, based on all the startups I’ve been seeing," Samuels said.

Samuels joined Venrock in 2014 and is currently invested in Unity Biotechnology, a company developing treatments related to aging. She has a few other predictions as well for the coming year.

For one, she's ready to get back to the basics in biotech.

"I’m enthused by the correction," Samuels told Business Insider. Over the past five years, the Nasdaq biotech index is up 25%, though recently stocks have taken a tumble, putting them well into correction territory, a term which refers to a 10% or greater decline from a stock's most recent peak.

In 2019, she said she's anticipating a return to the basic biotech business model. That is, instead of a broad platform with six or more potential drugs in the works, a more straightforward focus on one or two lead programs that a company knows super well.

The correction, in turn will drive that because there will be less available capital pouring into early stage companies, forcing them to have a more zoomed-in approach.

"I remain an optimist on the fundamentals of biotech, but the industry has gotten so enthusiastic as to be undisciplined," Samuels said.

On the policy side, Samuels said she expects to see the biopharma industry make a concession on drug pricing to appease the Trump administration. That said, she doesn't expect it to have broad implications.

Lastly, she sees exhaustion with financing cancer-drug makers sinking in, with interest picking up for other diseases that have been left at the wayside.

Two of the scientific areas she's most interested in at the moment: mitochondrial RNA-based medicines (a similar area to the work Moderna's in) and anti-aging biology, particularly an area she refers to as "inflamm-aging."