Moderna Is Betting on a New Way to Fight Cancer

Moderna (MRNA -0.58%) is using some of the growing cash hoard generated by its COVID-19 vaccine to expand its pipeline. In this Motley Fool Live video recorded on Jan. 12, Motley Fool contributors Keith Speights and Brian Orelli discuss Moderna's recent deal with Carisma Therapeutics to develop cancer therapies that use a different approach than other treatments.

Keith Speights: Well, another leader in the COVID-19 vaccine market, Moderna, announced that it's partnering with Carisma Therapeutics to develop CAR-M programs to treat cancer. Brian, first of all, can you explain to everyone exactly what is CAR-M?

Brian Orelli: Yeah. People have probably heard of CAR-Ts. CAR-Ms are seven letters earlier in the alphabet soup of drug development.

The "CAR" in both of them stands for chimeric antigen receptor. This is added to an immune cell so that it can recognize a cancer cell, typically. Then the "T" in CAR-T, it stands for T cells. Their job is to kill cells that are infected with viruses before they can make more viruses.

In the case of CAR-Ts, the CAR tricks the T cell into thinking that the protein on the outside of the cancer cell is a sign that the cell is infected with a virus, and then it ends up killing the tumor cell.

So, long story short, the "M" in CAR-M stands for monocytes. These are a different type of immune cell. They make macrophages, which gobble up anything that looks foreign, then those are often presented to T cells to show them what to attack. Then, monocytes can also make dendritic cells.

If you're an old biotech investor -- and I'm including myself in that group -- you'll remember Dendreon, [which had] the first immune cell therapy, which was Provenge. That was the first immune cell therapy that was approved by the FDA. It used dendritic cells to train T cells to attack prostate cancer cells. There's your immunology lesson for today.

Speights: Thank you, Professor Orelli. We're all more enlightened now. With that background then, Brian, what's your take on Moderna's deal with Carisma?

Orelli: Moderna obviously has a windfall of cash from its COVID-19 vaccine. It's safe to say probably no other biotech has ever been in this position of having more money than it could possibly spend on its own internal programs off of just one drug. But a lot of companies have one drug on the market and still aren't even profitable because they're spending all of that to develop the rest of their pipeline.

But that's where Moderna finds itself. Moderna's paying Carisma $45 million up front and making a $35 million equity investment in the privately held company. Then there's also undisclosed development, regulatory, and commercial milestone payments, plus royalties on sales. The deal covers 12 targets. It's obviously an unproven technology, but $80 million up front doesn't seem like that much money to risk on CAR-M technology.

A knock on the partnership that I see is that it's not clear to me how Moderna adds any value here. Is Moderna's mRNA or lipid nanoparticle technology helpful for CAR-M Therapeutics? I don't really see how that's helpful. If it isn't, then why did a company like Carisma partner with Moderna rather than partnering with a big pharma that can take its technology further.

One logical conclusion, then, is that Moderna potentially had to overpay to license the technology -- that no pharma was willing to give Carisma that $80 million. So that could be a knock.

I would rather see Moderna go after partnerships with somebody like Beam, where at least they can use their lipid nanoparticle technology to potentially help, and be additive to the deal more. I just don't see that here. I mean, Moderna can afford it, but we'll have to wait and see whether it was a good deal.