Moderna Co-Founder’s Firm Bought Up This Embattled Biotech Stock

The purchase was made through a private placement with Evelo, in which the company sells the shares and receives the proceeds. With open-market transactions, the company that issued the stock doesn’t receive any proceeds from transactions.

Flagship led the buying in Evelo’s private placement, which totaled 11,025,334 shares priced at $2.31 each. Evelo said it would receive gross proceeds of about $25.5 million from the sale, and use them to fund the ongoing Phase 2a trial of EDP2939 in moderate psoriasis, to pay down about $5 million of debt, and for general corporate purposes.

Afeyan and Flagship didn’t offer comment on the Evelo stock purchase.

Evelo Biosciences is developing a novel platform of orally delivered inflammation-resolving medicines acting on the small intestinal axis. Evelo says its medicines have the potential to address inflammatory diseases and cancer. As of March 31, before the private placement, it had total cash and cash equivalents of $27.5 million—enough to fund planned operating expenses and capital-expenditure requirements into the third quarter.

Evelo’s initial public offering was in May 2018, and priced shares at $16 each, or $320 when adjusted for a 20-for-1 reverse split that was effective on June 30 of 2023. The company used a reverse split to remain compliant with the $1 minimum per-share bid price requirement for continued listing on the Nasdaq Global Select Market.

Before this year, Evelo stock had been a highflier, hitting a record adjusted intraday high of $398.56 in January 2021; that year, Evelo had Covid-19 therapies in trials. Since then, shares have tumbled as candidates haven’t panned out. The stock ended Monday at $3.61, down about 99% from the IPO price, and down 89% for the year so far.

Flagship remains Evelo’s largest shareholder—before the placement, its Evelo stake stood at 45%—and Afeyan is Flagship’s CEO, director, and sole stockholder.

Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Ed Lin at [email protected] and follow @BarronsEdLin.