With $900 million in the bank, three pharma partners, and the shareholder base of a large publicly traded company—all well before its first clinical trial–Moderna is no typical biotech. In fact, it wouldn’t be wrong to call it part-biotech, part-startup incubator.
Witness today’s news: Moderna has launched a new company called Elpidera to target rare genetic diseases. It’s the third seedling that the Cambridge, MA-based company has spun out from its labs. Like the other two—Onkaido Therapeutics for cancer and Valera for infectious diseases—Elpidera has been formed to house different drug programs based on Moderna’s messenger RNA technology.
Moderna CEO Stephane Bancel (pictured above) isn’t saying which rare diseases Elpidera will tackle first, but he says the first clinical trials are likely 18 to 24 months away.
Moderna already has a rare disease collaboration with Alexion Pharmaceuticals (NASDAQ: ALXN, signed in early 2014, that gives Alexion rights to up to 10 mRNA therapies. Bancel says Elpidera is now managing the programs that could go to Alexion, but the new startup also has about six programs that wouldn’t compete with the potential Alexion assets.
Greg Licholai, a former executive at two other local biotechs—Amicus Therapeutics (NASDAQ: FOLD, and Proteostasis Therapeutics—has been named the president of Elpidera. The startup, for now, is located in Moderna’s incubator space, just like Onkaido and Valera. It has fewer than 10 employees but could grow to about 20 by the end of the year, says Bancel.
For those unfamiliar with the Moderna story, the company is trying to develop a completely new class of drugs: synthetic versions of mRNA—the molecules that carry genetic code to the part of the cells that manufacture proteins. Moderna’s mRNA, injected into the body, are meant to enable patients to make their own therapeutic proteins inside their bodies.
The company was formed by Flagship Ventures in 2011, stayed stealthy for awhile, then exploded onto the scene in 2013 with a series of fundings and partnerships that have helped it amass about $900 million in cash. Its $450 million round in January was the largest private financing ever for a biotech.
While Moderna’s goals are novel, its therapies are completely unproven in humans. Moderna says it’s been able to show in animal studies that its mRNA drugs can trigger two kinds of proteins: Ones that remain in cells, and others that find their way into the bloodstream and restore a function somewhere else in the body.
Staying private has let Moderna keep the rest of the details and the status of its programs under wraps. Bancel says by the end of 2016, several mRNA drugs should be in clinical testing, and that Moderna would start sharing its data with the scientific community.
“We’re going to do that really extensively, and very systematically,” he says.
The formation of Elpidera is the latest move in an unusual strategy by Moderna. With its war chest, it birthed a “venture creation” unit last June to start a bevy of companies.
There are two main points to this. First, Moderna can push forward therapies in several different disease areas at once. With its in-house programs and three startups, Moderna says it now has more than 50 programs in cardiovascular diseases, oncology, infectious diseases, and rare diseases.
Second, this strategy allows Moderna to hedge its bets. Moderna itself won’t develop and sell the mRNA drugs it creates, but it also won’t have to do all the work—and carry all the risk of potential failure—on its own. Bancel notes, for instance, that pharma partners have their hands in two thirds of the preclinical programs created by Moderna. As CFO Lorence Kim told Xconomy earlier this year, Moderna has the “flexibility to create value with transactions,” say, by licensing of selling parts of the portfolio in a variety of different deals.
“None of us really know where [mRNA] is going to work the best 10 years from now, we would be arrogant to say that,” Bancel says. “So what you see here is the board and management team trying to be thoughtful about getting into enough places—not too many—where we think the technology has a competitive advantage.”
Those areas include oncology, the focus of Onkaido, and infectious diseases, the targets of Valera. Moderna has put about $20 million into each of those companies, as well as Elpidera, for preclinical development. Moderna is also the sole owner of all three.
Bancel isn’t saying how far along Onkaido and Valera are, but he did note that Onkaido, led by former Genentech executive Stephen Kelsey, now has about 20 employees and will move into its own office at the end of May.
Valera—which cut a research deal with Merck just after forming in January—could do the same by the end of the year. Elpidera may follow later.
Bancel says Moderna is working on a few more startups, but those likely won’t debut before the end of the year. They’re going after “more complicated” biological problems (Bancel wouldn’t specify), and will need more time. In the case of Elpidera, Onkaido, and Valera, Moderna knows “how to make a medicine”—as in, deliver an mRNA drug safely and effectively, in animals, at least.
“We think of [Onkaido, Valera, and Elpidera] as the first wave,” Bancel says.