First, the biopharma held its initial public offering (IPO) in early December, which means the customary 180-day lockup period in which employees cannot sell shares expired in early June. It appears employees unloaded at least some of their holdings when finally given the chance, according to Bloomberg.
Second, Moderna shared data from an ongoing phase 1 trial for one of its personalized cancer vaccines (PCV) at the 2019 American Society of Clinical Oncology (ASCO) meeting. The data were a little underwhelming, but mostly because they're still from very early studies in only a handful of patients. That left Wall Street wanting more.
Moderna raked in a biopharma-record $604 million in IPO proceeds in December, but shares have lost 21% in their first six months on the market. Despite the decline, the business sports a market valuation of about $5 billion. That's relatively healthy for a company that remains in the earliest stages of clinical development and reported a $141 million operating loss in the first quarter of 2019.
Of course, that sour calculus could also be driving investors to reconsider the company's valuation. Moderna is developing PCVs based on editing RNA molecules. Your body, of course, has DNA, which contains the genetic code for creating RNA, which contains the genetic code for creating the various proteins that drive cellular function. When your DNA has an error in it, the wrong RNA is created, which means faulty proteins (read: disease and aging) arise.
Moderna thinks that editing RNA molecules specific to a patient's disease or cancer and injecting them back into the patient could drive robust and durable responses to treatment by rallying the patient's immune system to attack damaged and mutated cells. The approach could work, but the recent emergence of gene editing and novel immunotherapies might make RNA editing a little outdated.
After all, DNA is the ideal therapeutic target for editing, since it's further upstream from RNA and actually fixes the source of the genetic error. There's also a heightened risk of safety issues, since a single RNA molecule can serve multiple functions in the body. In other words, an experimental PCV could successfully target cancerous tumors but cause unacceptable side effects in the process.
At this point, investors simply need to see more robust data from Moderna. That might not come until the 2020 ASCO meeting, but that's the nature of investing in early-stage biopharma companies. The silver lining is that the business exited March with $1.1 billion in cash, cash equivalents, and investments, which means it has plenty of capital to weather steep operating losses as it treks toward more complete results to share with Wall Street.