Moderna Therapeutics Inc. is set for a record initial public offering that could be the biggest biotech IPO in U.S. history.
Valued at more than $7 billion by private investors, the Cambridge, Mass.-based company has bet on the promise of molecules called messenger RNA, or mRNA, and their potential to prompt the human body to make its own medicine. In an apparent homage to the molecules, the company plans to trade under the symbol “MRNA” on the Nasdaq.
Since its inception in 2009, Moderna
has raised more than $2.6 billion through partnerships and investments. Despite the boom in biotech IPOs over the years, the company has remained private — until now. And although biotech stocks haven’t been doing so well lately, Moderna’s highly-anticipated IPO could help lift the sector out of its current slump.
Moderna sold about 26.3 million shares priced at $23 a share late Thursday, at the midpoint of its range. The offering was larger than expected, raising $604.3 million and valuing the company at around $7.5 billion. Moderna listed 10 underwriters on its filing, led by Morgan Stanley, Goldman Sachs and JP Morgan.
Here are five things you should know about Moderna, which will start trading Friday on the Nasdaq.
The science behind the pipeline
Moderna calls mRNA “the software of life.” Cells use mRNA to translate DNA into the proteins the body uses to function. Moderna believes it can use mRNA to spur the body to produce its own therapeutic proteins, essentially putting a drug factory inside of the patient.
As one might guess, it’s not an easy task. Moderna’s scientists have a big job ahead of them: For each potential drug, they need to figure out how to safely get the mRNA therapy into the appropriate cells, make sure the mRNA actually yields sufficient amounts of protein to have a therapeutic effect and ensure the therapies won’t trigger an immune reaction in patients.
Years away from a marketable product
The company’s drug development programs run the gamut of clinical specialties, spanning infectious disease, oncology, cardiovascular disease and rare genetic diseases. The biotech unicorn has 21 mRNA-based drugs in the pipeline, but only 10 are in clinical trials. As the company noted in its most recent securities filing, no mRNA-based drug has ever been approved by the FDA nor any other regulatory agency, so it will be years before Moderna will be able to bring anything to market.
Executives make a pretty penny
Moderna disclosed the compensation of its three highest-paid executive officers, who made a combined $40 million in cash and stock in 2017. Stephen Hoge, the company’s president, received $19 million in options and a $4.4 million cash bonus in 2017. Lorence Kim, Moderna’s CFO, received $5.5 million in stock and a $1 million cash bonus, while Chief Executive Stéphane Bancel received $4.6 million in options and a $1.5 million cash bonus.
Bancel, who has been CEO since 2011 and previously worked at Eli Lilly & Co.
, owns 10%of the company ahead of the IPO. He has the second-largest stake in Moderna, behind venture investor Flagship Pioneering Inc., which owns 19.5% of pre-IPO shares. AstraZeneca PLC is the third-largest investor, with a pre-IPO stake of 8.4%, and also has a collaboration agreement with Moderna.
The FDA had a problem with one of its products
Earlier this year, Moderna ran into a speed bump while working on combining two vaccines for cytomegalovirus, or CMV, according to the company’s securities filings. Moderna was running an early-stage trial when it realized in August one of the vaccines “did not meet our internal quality control specifications for visual inspection after one year of storage.” The FDA placed a clinical hold on the trial and Moderna agreed to remove that vaccine from the study.
Cash burn is high
Moderna spent nearly $360 million on operating expenses in the first nine months of 2018, and the company warned investors in its latest securities filing that cash spend would likely rise as it continues to develop its clinical programs.
“We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future,” the company wrote.
Moderna said that it had incurred net losses each year since its inception in 2009. “As of September 30, 2018, we had an accumulated deficit of $865.2 million,” the company wrote.
It’s a high-risk, high-reward situation. Losses may never be recouped, as the company is years away from actual product sales. Moderna currently depends on revenue from grants and its collaborations with other companies.