So far in 2020, no biotech has come close to pulling off a huge initial public offering (IPO) even close to what Moderna (NASDAQ:MRNA) did in late 2018. That's no knock against any of the biotechs listing their shares for public trading in the first half of this year, though, considering that Moderna's IPO was the biggest in biotech history.
But in the back of many investors' minds, every new biotech IPO that comes along raises the question: Could this one be the next Moderna? This question is really less about Moderna's IPO and more about what happened afterward, with the biotech stock tripling in value this year.
Pliant Therapeutics (NASDAQ:PLRX) held a successful IPO earlier this month, raising $144 million after originally planning to raise $86 million. While that upsized amount paled in comparison to Moderna's $604 million IPO, the question still lingers: Could Pliant become the next Moderna?
First things first: There are quite a few big differences between Moderna and Pliant. One that especially stands out is that the two biotechs focus on completely different areas.
Moderna specializes in developing messenger RNA (mRNA) technology that's used in developing vaccines and other therapies. The biotech believes that mRNA medicines could eventually be used in treating a wide range of diseases.
Pliant's niche is in developing drugs targeting fibrotic diseases. In particular, the company focuses on inhibiting integrin proteins that are known to play a role in releasing transforming growth factor beta 1 (TGF beta 1), which regulates wound repair but can be a root cause of fibrosis.
These different platforms also translate to significant differences in the pipelines of Moderna and Pliant. Moderna claims three phase 2 programs, two of which are vaccines against cytomegalovirus (CMV) and cancer. It also has a dozen programs in early stage clinical trials.
As a result of Pliant's narrower focus on fibrosis, the biotech's pipeline includes three clinical programs. It's evaluating lead candidate PLN-74809 in a phase 2 study targeting idiopathic pulmonary fibrosis (IPF) and in a phase 1 study targeting primary sclerosing cholangitis, a disease characterized by fibrosis in bile ducts. Pliant also kicked off a phase 1 study of PLN-1474 in March for treating nonalcoholic steatohepatitis (NASH) with liver fibrosis.
Arguably, the most important difference between Moderna and Pliant right now is that Moderna has benefited from a huge catalyst -- the COVID-19 pandemic. After the novel coronavirus outbreak made headlines in early 2020, investors became highly interested in Moderna because of the potential for its mRNA approach to be used in developing a COVID-19 vaccine.
But there are some common denominators between Moderna and Pliant, as well. Both biotechs, for example, were founded by scientists from prestigious universities who are experts in their respective areas of research. Both Moderna and Pliant quickly attracted venture capital interest, and Moderna was actually started by a VC firm.
Each biotech also landed at least one big drugmaker as a partner. Moderna teamed up with AstraZeneca on three of its programs and with Merck on two programs. Novartis was an early investor in Pliant and partnered with the small biotech on the development of PLN-1474 and up to three additional candidates.
Both Moderna and Pliant face similar risks associated with clinical-stage biotechs. There's no guarantee that their pipeline programs will be successful, and neither company is profitable. This means that the main option for both companies is to raise cash in the future through dilution-causing stock offerings. Moderna recently took this approach, raising more than $1.3 billion.
On the other hand, both companies also could have tremendous growth prospects. Moderna could have a blockbuster COVID-19 vaccine on its hands if all goes well. Pliant is targeting a total IPF market that's expected to approach $6 billion annually by 2025. The NASH market is the real prize, though, with some analysts projecting a $35 billion annual opportunity.
The next Moderna?
I don't think that Pliant Therapeutics will become the next Moderna. The unique situation created by the COVID-19 outbreak resulted in a massive tailwind for Moderna that's unlikely to unfold for Pliant. After all, aside from its big IPO, Moderna wasn't a rousing success story until a global pandemic came along.
However, Pliant could still become the next biotech that investors compare all other new biotechs to down the road. There's a tremendous unmet medical need in treating fibrotic diseases, especially with some diseases like NASH not having any approved drugs on the market yet. If Pliant's experimental drugs are successful, the stock could make early investors quite wealthy over time.
And maybe, just maybe, Pliant could end up becoming an even bigger winner than Moderna. It's too soon to know how the story will turn out for either biotech.