What happened

Shares of Moderna (NASDAQ:MRNA) are down 11% at 12:39 p.m. EST after the company priced its secondary offering at $19 per share, allowing the biotech to raise approximately $500 million. The company could get an additional $75 million or so if the underwriters exercise the 30-day option to purchase additional shares.

So what

Shares of Moderna closed at $21.35 yesterday, so it's not surprising that they would take a hit today. Buyers of secondary offerings typically seek a discount to the current price because selling the additional shares results in dilution.

With shares well off their lows of last year, it's a fairly good time for the biotech to raise additional capital, considering the company's pipeline is only in the very early stages of the drug-development marathon. Management was shooting for having $1.2 billion in the bank at the end of last year -- it hasn't released fourth-quarter financials yet -- but that won't be enough to get it to the finish line since its burn rate is likely to increase as the pipeline progresses.

Magnifying glass and pen on a balance sheet

Image source: Getty Images.

Earlier this week, Moderna moved its seventh drug into the clinic, starting a clinical trial for mRNA-3704 in patients with a rare genetic disease called isolated methylmalonic acidemia, which is typically caused by a mutation in a gene called mitochondrial enzyme methylmalonic-CoA mutase (MUT). Like Moderna's other drugs, mRNA-3704 is an mRNA that allows the cells to express a needed protein -- in this case MUT.

Now what

Dilution is never fun for investors since it results in each share representing a smaller piece of the pie. But the additional capital should help Moderna grow the size of the pie, ultimately rewarding investors for their patience.

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