Shares of Moderna (MRNA 2.58%) were jumping 7.4% higher as of 3:42 p.m. EDT on Wednesday. The gain came after the company announced that it won a new deal to supply its COVID-19 vaccine to Israel for 2022.
Moderna didn't reveal how many doses are included in its latest agreement with Israel. However, Israeli news organization Ynet reported earlier this week that Israel was buying 7.2 million doses of the company's COVID-19 vaccine for around 0.5 billion shekels, which equates to roughly $150 million.
Why did the market cap for the biotech stock rise by close to $5 billion on a new supply deal worth only a fraction of that amount? Investors could simply be overreacting to Moderna's good news.
However, it's important to note that this is the first firm order that the company has received to supply COVID-19 vaccine doses for next year. Israel previously ordered 10 million doses of Moderna's vaccine for 2021. A large order for next year could bode well for the company's prospects of winning supply agreements with other countries that aren't much lower than its 2021 deals.
Israel also retains an option to buy doses of one of the new variant-specific COVID-19 vaccine candidates that Moderna is developing pending regulatory approval.
Investors will watch closely now to see if other countries begin placing orders for Moderna's vaccine for use next year. The stock could move even higher if the company lines up major supply agreements with the U.S. and/or the European Union.