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You're excused if you've never heard of Moderna Therapeutics. The company is still private, so unless you've got enough money to invest in a venture-capital fund, you're out of luck buying shares. In 2015, the company raised $450 million, reportedly pegging its valuation at around $3 billion. There are plenty of public biotechs with smaller valuations, but Moderna Therapeutics has elected to remain private for now.

But retail investors should still be paying attention to Moderna given its interesting new technology that multiple larger biotechs have signed on to use. And if it eventually schedules an IPO, you'll have a head start on your due diligence.

Expressing proteins

There are numerous protein replacement drugs used to treat genetic diseases in which the gene that expresses the protein has a mutation. But proteins generally don't cross cell membranes, so this type of therapy doesn't work for proteins that function inside the cell.

Moderna Therapeutics' solution is to express the proteins inside the cell using a messenger ribonucleic acid (mRNA) as the drug. mRNAs are the intermediary between DNA and the proteins they encode for. Moderna's technology allows the mRNA to avoid the body's immune system and get into the cell where it can use the cell's machinery to express the protein.

Like companies developing RNA inhibition and antisense drugs to degrade mRNAs -- and thus decrease expression of the protein -- Moderna has a platform that allows it to quickly develop new drugs. Once all the kinks with the technology are worked out, applying it to another mRNA is relatively easy.

As it is a private company, we don't have a lot of information about the technology, but Moderna says is has "two phase 1 clinical studies under way of mRNA vaccines for the prevention of infectious diseases," so we might get some more information about its potential shortly.

It should be noted that gene therapy can accomplish the same kind of internal cellular expression of proteins, but unlike gene therapy, mRNA therapeutics don't change the underlying DNA, avoiding the potential complications such as creating new mutations that next-generation gene therapies are working to overcome.

Partners galore

While you can't invest in Moderna Therapeutics directly, there are ways to get a piece of the new technology through the larger drug companies Moderna has partnered with.


Therapeutic Area

Number of Drugs


Cardiometabolic diseases and selected oncology targets

Up to 40


Rare diseases

Up to 10


Infectious diseases


Vertex Pharmaceuticals

Cystic fibrosis


Data source: Moderna Therapeutics.

AstraZeneca (AZN 0.18%) gave Moderna $240 million up front and pledged additional milestone payments as well as royalties on drugs developed under the partnership. While it's the largest of the four partnerships, AstraZeneca is a fairly large pharmaceutical company, so investors need to be comfortable with the prospects for the rest of the pharma's drugs.

In addition to its partnership with Moderna to develop vaccines and other treatments for infectious diseases, Merck (MRK 1.31%) recently announced a collaboration deal to combine Moderna's personalized cancer vaccines with Merck's immuno-oncology drug Keytruda. The idea is that Moderna's drugs will activate the immune system to attack the tumor while Merck's Keytruda removes the signal that tumors use to turn off the immune system, potentially producing a synergistic effect.

Like AstraZeneca, Merck is a large company, and its size dilutes the impact of potential successes from the Moderna deal on the overall share price. But Keytruda has prospects to become Merck's top-selling drug, which could be boosted further if the combination works, so Merck has a lot of upside since the oncology deal allows Merck to eventually become a 50-50 partner with an additional undisclosed payment after human proof-of-concept studies.

With just three drugs on the market, Alexion's (ALXN) potential to add 10 more drugs could be a substantial boost to its revenue. The first drug in the partnership, ALXN 1540 for Crigler-Najjar syndrome, is still in pre-clinical development, so it'll be a while before Alexion starts to see rewards from the partnership, but it's something to watch.

Vertex Pharmaceuticals (VRTX 0.88%) only has a one-drug deal with Moderna, but it's right up the biotech's alley since it already sells two cystic fibrosis drugs and has more in the pipeline. Vertex paid $20 million up front and made a $20 million equity investment to start research on an mRNA to express cystic fibrosis transmembrane conductance regulator (CFTR) protein, encoded by the gene mutated in patients with cystic fibrosis. The company is also on the hook for development and regulatory milestones of up to $275 million if the drug works.

We'll have to see how the research goes, but Vertex's deal with Moderna might turn out to be a defensive one since an efficacious CFTR mRNA could potentially make Vertex's current stable of cystic fibrosis drugs useless.

Too early?

As is the case with many new technologies, it may take years to work out the kinks in mRNA therapeutics, so if you're going to invest in Moderna's partners, it's wise to value the companies on their approved drugs, treating the potential for mRNA therapeutics as a bonus.