In December last year, Cambridge, Massachusetts-based Moderna Therapeutics smashed the record for the biotech industry’s largest initial public offering (IPO). The company was originally aiming to raise $500m through the IPO, but refiled with the US Securities and Exchange Commission (SEC) with a revised goal of $600m.

On 6 December, Moderna announced the pricing for the IPO, which generated $604.3m from investors, outstripping the company’s revised goal and comfortably unseating the previous largest biotech IPO two months before, when cell therapy firm Allogene Therapeutics raised $324m. Other players at the top end of the biotech IPO spectrum include Dutch/Belgian novel small molecule developer Galapagos ($275m in 2015) and CAR-T specialist Juno Therapeutics ($264m in 2014), which was acquired early last year by Celgene for $9bn.

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Moderna: a fundraising machine

Moderna’s outsized IPO effectively values the company at around $7.5bn. It’s an immense valuation, particularly for a company that has no products on the market or even in late-stage clinical trials. The offering is also the cherry topping off Moderna’s distinctive business development strategy and impressive facility for raising money.

While most biotech companies might have two or three financing rounds as private firms before considering an IPO, Moderna, which was founded in 2010, remained private – and undeniably secretive – far longer, while raising a cumulative total of $2.6bn in equity financing, sometimes from investors that had only been given a narrow peek at the firm’s scientific data.

“We very consciously decided to stay private to be able to turn on a dime based on what we learn in the labs initially,” said Moderna CEO Stephane Bancel in a January 2018 interview with Xconomy. “That has served us well, because over the six years the company has been operating, there have been a couple of bumps [in] the road on the science – and nobody panicked.”

Moderna has also secured significant buy-in from big pharma, with UK pharma giant AstraZeneca (AZ) representing one of the company’s biggest single investors, having in 2013 signed a $240m agreement with Moderna to partner on new therapies. The company also has a cancer vaccines partnership with Merck, which was initiated in 2016 and expanded a year later.

Moderna’s message: a potential revolution through mRNA

Given the billions of dollars that Moderna has raised, both privately and through its IPO, without late-stage pipeline assets behind it, can the company’s therapeutic approach possibly live up to the industry hype?

Moderna’s strategy revolves around messenger RNA (mRNA), a family of RNA molecules that carry genetic information from DNA to the ribosomes inside cells, where they are translated into the protein products of gene expression based on the genetic information in the mRNA that is copied from the DNA sequence. In other words, mRNA acts as a biological instruction manual, the blueprint behind the proteins that carry out virtually every function in the body. Moderna calls mRNA ‘the software of life’.

The company’s therapeutic goal is to introduce mRNA into cells to produce proteins, both endogenous and foreign, to fight disease.

“If we could, we believe that messenger RNA could be used to make the full set of proteins in life, that might allow us to treat an incredibly broad range of human diseases,” said Moderna president Dr Stephen Hoge in promotional materials created by the company.

Getting mRNA to work therapeutically would effectively establish an entirely new type of gene therapy with a completely novel mode of action. It brings the prospect of turning our own cells into biological factories, pumping out disease-fighting proteins. And the potential applications are vast – this form of protein therapy could find indications across a wide range of hard-to-treat conditions, from cancer and heart disease to rare inherited diseases like propionic acidemia and Fabry disease.

On the manufacturing side, Moderna believes that once the initial puzzle of delivering mRNA to the right place is cracked, the process’s replicability would make subsequent treatments quicker and more cost-effective to make than, say, a customised therapy like CAR-T.

“The thing that is cool about mRNA is it is really hard to make the first one, but then we can scale very quickly,” Bancel told the Financial Times in September 2017.

A promising array of clinical programmes

Moderna’s talent for financing has given the company a healthy budget – with reported cash reserves of $1.2bn – to spend on developing an unusually wide array of mRNA-based treatments. The company has 21 clinical programmes underway, with ten in Phase I trials and one – heart failure candidate AZD8601, being developed as part of Moderna’s partnership with AZ – progressing through Phase II.

AZD8601 is a regenerative treatment involving the injection of mRNA encoding for a protein called vascular endothelial growth factor A (VEGF-A), which stimulates the formation of blood vessels and protects heart muscle cells. By producing a controlled amount of VEGF-A inside a patient’s cardiac cells, AZ and Moderna hope to improve blood and oxygen supply to the heart.

“In preclinical studies [for AZD8601], we have seen new blood vessels appear at the borders of damaged heart muscle,” wrote vice-president of AZ’s IMED Biotech Unit Dr Regina Fritsche-Danielson in a blog post last year. “This was in response to injections of VEGF-A mRNA carefully targeted at areas where oxygen levels were low. More than that, we have also seen improved cardiac function in these preclinical models as a result of the improved blood and oxygen supply being delivered to the heart.

While the AZ project is regenerative, other avenues include a broad portfolio of prophylactic and cancer vaccines. Moderna is working with Merck on two mRNA-based cancer vaccine candidates, which are being developed as monotherapies and in combination with Merck’s immunotherapy Keytruda (pembrolizumab).

The mRNA gamble

With a potentially revolutionary mechanism of action and an impressive range of research projects moving through preclinical testing and human trials, it’s easy to see how Moderna’s $7.5bn valuation might be entirely justified. But the complexity of the science and the risk of setbacks mean that investing so heavily in mRNA is undoubtedly a gamble for Moderna, its partners, its investors and – given the scale of fundraising and attention – the biotech industry more widely.

The biotech and pharmaceutical world certainly has its share of Moderna sceptics, who argue that the company may be overvalued – it is valued far higher than other established biotechs with innovative and late-stage treatments, as well as competitors in the mRNA space such as Translate Bio, CureVac and BioNTech. While Moderna has now started publishing data, especially on its vaccine programme, the company’s general secrecy around its science has done it few favours in the eyes of doubters.

“The only products they have data for so far are vaccine candidates,” an unnamed biotech executive told the Financial Times. “Even if they ever get it approved, they’re very low-margin.”

Vaccines might not be the most profitable place to start, but vaccines offer some shelter from the most pressing scientific challenge of making mRNA therapy work – actually delivering the mRNA into cells. The introduction of synthetic mRNA to the body generally elicits an immune response to destroy it, which works to the advantage of vaccines intended to stimulate the immune system, but represents a problem for other treatments. Getting the mRNA may require the molecules to be delivered through lipid nanoparticles, which can cause dangerous side effects.

Development of AZD8601 has progressed to Phase II as quickly as it has because it has sidestepped this issue.

“Perhaps the largest breakthrough in our research came when we discovered we could inject a simple solution of ‘naked’ mRNA directly into heart muscle,” wrote Fritsche-Danielson. “In the case of VEGF, this meant there was no need to wrap the mRNA in a protective coating to protect it from enzymes in the blood that could break down the mRNA before it reached the inside of cells where it acts. This was an unexpected and exciting finding as it appears that uptake of ‘naked’ mRNA is only possible in skin and heart tissue.”

Moderna’s solutions to this central problem will likely prove key to its ability to deliver on its lofty goals. The company’s unprecedented financial backing has given it the budget to pursue the answers to these questions across a wide swathe of mRNA therapeutics, but the outcome remains uncertain. Even the approval pathway will have to be built from scratch, as regulators haven’t assessed this type of therapy before. The risks are high but the reward is nothing less than, to borrow a phrase from Moderna’s mission statement, a whole new generation of transformative medicines. Whatever the outcome, there are billions of dollars invested in Moderna’s gamble paying off.