Moderna Therapeutics doesn’t need cash to keep the doors open, like many biotech startups. It just went out and raised a ton of dough, anyway.
The Cambridge, MA-based biotech startup, which is attempting to make injectable messenger RNA molecules that trigger production of protein drugs in the body, has raised a whopping $110 million in new equity financing.
Moderna isn’t disclosing who is doing the bankrolling this time, but Flagship Ventures remains the only venture capital firm with an ownership stake, CEO Stephane Bancel says. Taken together, Moderna has now raked in $415 million in cash through a combination of this investment, prior venture capital from Flagship, government support from the Defense Advanced Research Projects Agency, and largesse from its pharmaceutical partner, AstraZeneca.
The company isn’t saying what it plans to do with the new loot, other than it will have more to say about it in 2014.
“We want to go really big,” Bancel says via email. “$340 million in the bank allows us to invest and do both clinical programs, and develop the best mRNA platform in the world.”
Noubar Afeyan, the managing partner of Flagship, added that the financing includes many returning and some new investors. “The promise of creating a new drug modality remains strong,” he said.
For those new to the Moderna story, here’s some background to help understand its big, audacious dream: Today’s pharmaceutical industry is mostly about making small-molecule chemical compounds that people take as pills, or large-molecule protein drugs that people take via injections. A third class of RNA-based treatments has stirred excitement over the past 10-20 years, with specific technologies like antisense, RNA interference, and microRNA therapy that seek to precisely alter disease processes at the molecular level. The RNA category is thought to be exciting, in part, because of its potential to hit molecular targets that are “undruggable” with existing small molecules or larger protein drugs.
Moderna is taking a different spin on RNA-based therapy. It synthesizes messenger RNA molecules as the therapies themselves. These messenger RNA molecules carry the instructions for making proteins, which can take the form of enzymes, growth factors and other 3-D molecules that carry out most human bodily functions. The Moderna mRNA molecules are designed to be injected, get inside cells, and to stimulate the cellular machinery to make proteins that scientists know have therapeutic value. In theory, it’s another way of making insulin for diabetes, or erythropoeitin for anemia.
Moderna’s financing is all equity, no debt, and was done without the help of an investment banking firm or a chief financial officer, Bancel says. That means the company saved about 5 percent in discounts and fees, he adds. If you were to rank Moderna’s private financing alongside the biotech initial public offerings in terms of size, it would be in the top 10, in the same league with a few neighbors in Cambridge, MA—Foundation Medicine (NASDAQ: [[ticker:FMI]]), Agios Pharmaceuticals (NASDAQ: [[ticker:AGIO]]), and Bluebird bio (NASDAQ: [[ticker:BLUE]]).
By raising such a mountain of cash as a privately held company, Moderna avoids the expense, and risk of making detailed disclosures to investors through filings with the Securities and Exchange Commission. By staying private, Moderna can keep its competitors in the dark for longer, and avoid the scrutiny that comes from scientific experts employed by hedge funds, mutual funds, and big banks.
Moderna, as a private company, also can take its time to make sure it can optimize its technology before pushing into clinical trials — the ultimate proving ground for all drugs, and the place where many big biotech visions fizzle out. When I visited Bancel at his office in September, he said he didn’t want to rush into the clinic and make a mistake that could set the field back a decade or more. The historic precedent is clear, in the field of gene therapy.
Moderna was started in 2010, but didn’t tell the outside world what it was doing until December 2012. That was when the company said it had raised $40 million in venture capital from Flagship Ventures. The company made much bigger waves in March, when it said AstraZeneca had agreed to shell out
