Moderna's mysterious medicines

In a hot biotech venture market, Moderna Therapeutics is ablaze. Based in Cambridge, Massachusetts, and shrouded in secrecy, the startup claims to be developing a new class of drug that hacks the very operating system of life, turning human bodies into drug factories by directing cells to produce therapeutic proteins. Its founders include three of the world’s foremost scientists from MIT and Harvard. The biotech community is buzzing with rumours about the company, which says it has 12 new drugs in its pipeline, yet few have a clue as to what specifically it is working on.

One thing is certain: If Moderna is successful, it will be revolutionary for medicine. The sky’s the limit on important new remedies it could help develop for everything from cancer to heart disease to the Zika virus. In November it quietly put its third drug in human trials.

This promise has made Moderna chief executive Stéphane Bancel into one of the most successful fundraisers in the industry’s history and has given him a near $500 million fortune. Moderna has raked in investor cash from the likes of billionaire Andreas Halvorsen’s Viking Global Investors and Wellington Management. Pitchbook puts its valuation at $4.7 billion—more than any publicly traded biotech without a drug on the market. Bancel, 44, a Harvard MBA with a background in sales and operations, is named on many of Moderna’s patents. So enthusiastic is he that he has accumulated his 10 percent stake by boosting his initial stake during each of Moderna’s fundraisings.

Big pharma is also lining up to get in on Bancel’s Moderna. In 2013 the startup signed a deal with AstraZeneca that included a $240 million cash payment, followed by a $140 million investment in 2016. A 2014 agreement with the rare-disease specialist Alexion reeled in a $100 million payment and a $25 million investment. In 2016 Merck paid $200 million so Moderna would help it develop cancer vaccines. In total, Moderna has raised $1.9 billion.

The money is real. What’s been mysterious is exactly what Bancel has been building. Now an obscure lawsuit filed in British Columbia in October sheds light on one of Moderna’s key partners, and through it Forbes can reveal details on Moderna’s amazing but still untested technology.

It appears that the first two products Mo­der­na has entered into clinical trials rely on technology from a small outfit in Vancouver, British Columbia, called Acuitas Therapeutics. (Acuitas is so small, in fact, that its worldwide headquarters are in its CEO’s single-family home.)

Almost all medicines either block proteins or, in the case of expensive biotech drugs, are proteins themselves. But Moderna has been promising to hack an entirely different part of life’s cookbook. In order to turn genetic information encoded in DNA into the cellular machines that actually are proteins, living things use a messenger chemical called mRNA.

Creating these mRNA drugs is a big challenge on many levels. For them to work, Moderna needs to deliver mRNA to the body’s cells. By itself mRNA breaks down in the bloodstream. Tiny Acuitas specialises in one method: Lipid-nanoparticle delivery systems. Its technology essentially wraps the mRNA into balls of fat that disguise the drug so that the target cells will readily ingest it.

“Although we are small,” says Thomas Madden, chief executive of Acuitas, “I believe the technology we have developed is highly effective.”

The problem for Madden and Moderna is that Acuitas doesn’t own the technology it has licensed to Moderna; it belongs to publicly traded Arbutus, which recently terminated the license for the tech it had granted to Acuitas. That’s why Acuitas filed the lawsuit in British Columbia, to protect the deal it had. Arbutus counter-sued, claiming its deal with Acuitas didn’t cover Moderna’s medicines.

The legal mess has its roots in Moderna’s 2011 start, when Robert Langer, an MIT professor, Moderna board member and founder of several biotech companies, told Bancel that Moderna was too underfunded and small to create its own delivery system. So Moderna vetted over a dozen external delivery methods for mRNA and settled on at least three. One belonged to Arbutus, but Moderna turned to tiny Acuitas to get access to it.

Acuitas was formed in 2009 by Madden after a merger eliminated his position at Arbutus’s predecessor, Tekmira Pharmaceuticals. After a contentious lawsuit Madden was able to license from his former employer the novel tech he had helped develop, and Bancel claims Moderna chose to work with Acuitas because it had “the people and the capabilities”.

But that doesn’t explain why Moderna didn’t make sure that sublicensing through Acuitas would be okay with Arbutus.

Bancel recently met with Forbes at a Brooklyn coffee shop to dispel the implications of the lawsuit. He is dismissive of Acuitas’s technology. “We knew it was not very good,” he says. “It was just okay.” He further explains that Moderna is in the process of producing its own nanoparticle lipids. One such lipid, N1GEL (called “Nigel” internally), appears to cause less inflammation than Acuitas’s version. Another is being licensed from Merck. Bancel says Moderna has stopped using the Acuitas tech for new drugs.

That still leaves a messy situation for any Moderna vaccines that are being developed using Acuitas’ tech.

Data from one vaccine is expected early next year. If results are good, it could lead to a sizzling-hot initial public offering, even if the Canadian lawsuit ultimately affords Arbutus bigger royalty from Moderna. “We’re making medicines that cannot be done using older technology, by getting inside the cells or getting proteins on the membranes of cells,” says Bancel between sips of Earl Grey tea. “There are diseases where we can have a hope to make drugs where today there is no hope for those patients.”