Moderna Therapeutics has just completed a new $500 million round of funding, raising its market valuation to a staggering $7.5 billion. Even more jaw-dropping: Moderna’s pipeline is almost exclusively Phase 1 assets built on a platform that has not yet fully proven its efficacy. Can Moderna justify these high expectations – or will we remember this as the round that burst the bubble?
Moderna’s value is grounded in its unique platform and pipeline of mRNA-based therapies. While their platform is being levied against multiple targets, two big bets anchor the expectations: influenza vaccines, and – of course – oncology.
Looking to oncology first, Moderna believes they have a unique spin: their mRNA-based approach may elicit immune responses against tumors, an approach that would break the increasingly defined immune checkpoint inhibitor drug class mold. With that said, their in-house approaches (including targeting OX40, a validated immune checkpoint) for now relies on combination partnerships with IO giants Merck and AstraZeneca, likely increasing the cost of any successful product.
Further, therapeutic cancer vaccines have been tried before. Only one vaccine – Provenge – is currently approved; and due to its low efficacy benefits and manufacturing issues, doctors and plans were slow to adopt it (leading to the death of parent company Dendreon). Meanwhile, the explosive growth and ground-breaking efficacy of PD-1s, as well as rapidly-arriving CAR-T therapies, may create a hostile payer and provider landscape for Moderna in absence of large-scale improvements in efficacy, safety, or – dare we say it – price.
In influenza, Moderna is focused on the pandemic – rather than seasonal – variety. Their platform could dramatically streamline manufacturing, enabling Moderna to be the first-responder. Of course, the big prize would be a seasonal vaccine – and the associated multi-billion market. While Moderna has not announced any such approach, investors may well be expecting it. The question will be whether Moderna’s approach can compete with the low-cost and time-tested egg-based standard.
Moderna has placed a string of additional bets, including a vaccine program for public health fear number one, Zika. However, many of these programs have smaller markets, and in themselves can’t sustain the company.
So do these bets add up to $7.5 billion, a price more typically associated with companies about to launch their second – or third - drug? Let’s leave it at this: Moderna has a tightrope to navigate, balky payers to convince, and a lot more data to share before we can say anything definitive. Maybe that says enough.