Key Takeaways
- Vaxcyte shares fell 10% after the company launched a $1 billion raise, split between $500 million of stock and $500 million of convertible notes, hours after its Phase 3 win.
- Raising now makes sense – as I noted yesterday – since VAX-31 isn’t due to be filed for approval until the first half of 2028 and Vaxcyte’s spending keeps climbing until then.
- Cash burned by operations rose from $121 million in 2021 to $656 million in 2025.
- If the notes all convert, the raise adds up to about 10% of Vaxcyte’s market value, and the next test is the OPUS-2 and OPUS-3 results due in the first half of 2027.
Vaxcyte (PCVX) shares are down 10% on Tuesday after the vaccine maker announced a $1 billion raise right after Monday’s close.
As I wrote yesterday, Vaxcyte’s VAX-31 met all its primary goals in OPUS-1, its pivotal adult Phase 3 trial. It was tested against Prevnar 20 from Pfizer (PFE) and Capvaxive from Merck (MRK), the pneumococcal vaccines it’s built to compete with. Shares soared on the news.
A few hours later, Vaxcyte was selling stock into that pop. As I predicted would happen “in the near future” yesterday.
The details
Vaxcyte is selling…
- $500 million of common stock and pre-funded warrants (essentially shares, paid for up front)
- $500 million of convertible senior notes due 2032 (debt that can be swapped for stock)
- Up to $75 million more of each, if the underwriters use their option
The company says the money will go to VAX-31’s adult and infant trials, to scaling up manufacturing, and to building inventory ahead of a potential U.S. launch in adults.
Why raise now?
Here’s the thing: VAX-31 is still years from bringing in any revenue. Two more adult Phase 3 trials, OPUS-2 and OPUS-3, report results in the first half of 2027. Vaxcyte plans to file for approval (a Biologics License Application, or BLA) in the first half of 2028.
Until then, the spending keeps climbing. Cash burned by operations rose from $121 million in 2021 to $656 million in 2025, and capital spending on manufacturing comes on top of that (as much as $119 million in 2024)…
Meanwhile, cash and short-term investments keep declining…
Last year Vaxcyte spent about $713 million in all: $656 million on operations plus $57 million of capital spending. Vaxcyte was running pretty low on cash.
As for the cost to shareholders, $500 million of stock is about 5% of Vaxcyte’s $9.9 billion market value. The notes could add almost as much again if they all convert (a bit less if the conversion price is set above today’s share price, as it usually is).
Which is roughly the size of today’s drop.
So is the drop a problem?
Today’s 10% drop looks like the market pricing in up to about 10% more shares, a day after it priced in the win. BofA, for one, raised its price target to $146 from $130 this morning and kept its Buy rating.
Of course, the final terms aren’t set until the offerings price, and OPUS-2 and OPUS-3 still have to deliver next year.
But in the meantime, this is the standard dilution you expect for a cash-burning biotech after a big win.
So what is Vaxcyte stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Vaxcyte could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
