September 2, 2019 BARRON’S 19
After a selloff, the company now has a market
capitalization of $5 billion, with cash and invest-
ments worth a total of $1.4 billion. Moderna
reported quarterly revenue of $13.1 million in
early August, and a net loss for the quarter of
$135.1 million.
Without earnings, its valuation is difficult to
measure, but Wall Street analysts have set an
average price target of $30.25 on the stock, ac-
cording to FactSet, which implies a return of
99% from its current price.
Moderna’s Cambridge offices are modest;
done up more like a reasonably profitable medi-
cal clinic than a multibillion-dollar biotech super-
star. The old Polaroid plant, secluded amid
densely packed trees and a 45-minute drive from
Fenway Park, is where the unicorn gets flashy.
“It’s not built for today,” Moderna’s head of
quality, Scott Nickerson, said of the 200,000-
square-foot plant.
When Moderna’s first drugs make it to mar-
ket, assuming they do, the Norwood plant could
help fill the orders. It is at the core of Mod-
erna’s development approach.
In hyperclean labs with shiny floors, manu-
facturing operators wear color-coded hairnets
and stand at color-coded lab benches, delin-
eated by color-coded tape, making mRNA-
based cancer vaccines built for a particular
patient’s tumor. The color coding is to prevent
cross-contamination.
Nickerson shows off the enormous invest-
ment that Moderna has put into the place, with
its vast quality-assurance and quality-control
suites, its automation, and digital tools that can
track individual lab workers within their work-
spaces.
There’s a point to all of this expensive equip-
ment. According to Hartaj Singh, an analyst
who covers the company for Oppenheimer,
mRNA companies like Moderna are solving
issues around manufacturing and patents early
in the game.
“What you’re paying for, as an investor with
RNA companies, is that they’ve learned from
the.... mistakes the antibody companies, for ex-
ample, made. And what you’re getting now are
companies that are much more efficient in going
through the clinical drug-development process,”
Singh said. “Where the risk is coming from...is
actually will they be able to solve the disease.”
Moderna has spread its bets across
the whole table. It is currently recruiting pa-
tients for its first rare-disease Phase 1 trial,
which will include multiple dosing, for a therapy
targeting methylmalonic acidemia. The person-
alized cancer vaccines are currently in Phase 2
clinical trials, in which the vaccines are being
given in conjunction with Merck’s Keytruda.
“The idea is that it would stimulate your
immune response,” Moderna’s Zaks said.
In addition to the personalized cancer vac-
cines, Moderna is developing mRNA-based pro-
phylactic vaccines, where a small amount of
mRNA is used to activate the immune system
against a particular virus. Theoretically, mRNA
vaccines can be built quickly, and can target
diseases with no other vaccine available.
“It is the ideal application,” Zaks said.
Moderna has already completed six Phase 1
prophylactic vaccine trials, five of which have
had a positive readout, the company said.
In August, meanwhile, Moderna said it had
received a “fast track” designation from the
FDA for a new Zika vaccine currently in a
Phase 1 trial.
Translate, meanwhile, is all-in on rare dis-
eases. With one exception—a vaccine program
funded by Sanofi Pasteur—the company’s efforts
are clustered around the most technically chal-
lenging end of the mRNA therapy scale.
It is valued accordingly: The company has a
fraction of the market value of Moderna, at
$471 million, with cash and investments worth
$147 million. In July, the company reported a
net loss of $27.8 million for the quarter, and
said its current cash could fund operations into
the second half of 2020. Wall Street analysts
have an average target price of $20.67, which
implies a return of 124% over the current
share price.
That assumes things go well. The challenge
for Translate isn’t just developing rare disease
treatments. It’s that the company is starting
with a drug that needs to be delivered not
directly into the veins, as most of the mRNA
drugs are, but inhaled from a nebulizer, which
adds another layer of difficulty.
“Getting a [lipid nanoparticle], designing it so
it can go into a nebulizer....It’s got to fly through
the sheer forces of what happens inside that
nebulizer, [get inhaled], go down the respiratory
tract, make it across that hostile mucous layer
on the surface of the lung, get in, and let the
cellular machinery take over,” Translate CEO
Renaud said. “Yeah, that’s not something for the
faint of heart.”
If Translate’s cystic fibrosis drug makes it to
market, it would compete with a handful of
treatments made by Vertex Pharmaceuticals
(VRTX). Vertex’s drugs work only for certain
cystic fibrosis patients, though the company is
awaiting FDA approval on a new drug that
would significantly expand the number of pa-
tients it can treat. Translate’s drug theoretically
would work for all cystic fibrosis patients.
Translate could eventually face other compe-
tition, too. Moderna has joined with Vertex on a
cystic fibrosis research project, which it an-
nounced in August it was extending. That proj-
ect is in an earlier phase than Translate’s.
Eun K. Yang, a Jefferies analyst, projected
that Translate’s cystic fibrosis drug could reach
peak sales of $1.8 billion a year in the U.S. and
The Cell Side
CompanieslikeModernandTranslateBiocreatemessengerRNAthatencodesforproteins.WhenthemRNAisdeliveredintothe
cell, it triggers the cell’s own machinery to produce the desired protein to treat or prevent disease.
Lipid nanoparticle encapsulating mRNA
of desired protein enters the cell.
Nucleus
mRNA
Lipid
nanoparticle
EndosomeCell membrane
Cytoplasm
Transmembrane protein
Intracellular
protein
Desired
protein
Secreted protein
Ribosome mRNA directs
protein synthesis
Delivery vehicle degrades
Source: Translate Bio