🔒 Biotech firm Moderna enters global Covid-19 vaccine race – Wall Street Journal

American biotech firm Moderna has yet to develop an approved drug. However, the company is now in the global Covid-19 vaccine race. In June, the National Institute of Health (NIH) said Moderna’s vaccine will enter a large phase three trial starting this month. Recent news of a delay in Moderna’s coronavirus vaccine trial may threaten the company’s position as the front-runner to produce a vaccine, though its bosses insist the trial’s commencement is imminent. Studies of vaccines from pharmaceutical heavyweights AstraZeneca and Johnson & Johnson are set to start in August and September. Moderna’s formidable progress is partly credited to its chief executive officer Stéphane Bancel. While his level of intensity has been criticised by some of the company’s employees, his rigorous focus led to Moderna’s collaboration with the NIH in January. – Nadya Swart

Inside Moderna: The Covid vaccine front-runner with no track record and an unsparing CEO

By Peter Loftus and Gregory Zuckerman

At the year’s start, few outside the world of biotech had heard of a Boston-area company with a New Age name and unproven approach to drugmaking. Most in the industry who did know Moderna Inc. MRNA -4.90% doubted its prospects. Investors barely had interest in the company, which had yet to produce a medicine.

Moderna and its staffers were dealing with other pressures. For nine years, chief executive officer Stéphane Bancel nurtured a high-stress environment at the Cambridge, Mass., company, characterised by high expectations, sharp critiques of workers and heavy employee turnover, according to current and former staffers. Mr. Bancel’s admonitions of some underlings in group meetings motivated some to do better, and others to leave.

Today, Moderna represents one of the world’s best shots at stemming a historic pandemic. It’s a front-runner in the hunt for a coronavirus vaccine, vying against industry heavyweights with proven track records. The question is whether Moderna’s vanguard science and tough management style is the right recipe for a vaccine breakthrough.

This summer, the U.S. government plans to fund and conduct decisive studies of three experimental coronavirus vaccines. Moderna’s will be first, starting later this month. Its lead status in the vaccine hunt is the reason the company’s shares have soared more than 200% this year.

“I think the world is going to change tremendously,” says Mr. Bancel, referring to the company’s coronavirus vaccine as well as the experimental drugmaking technology being used to develop it.

A 47-year-old native of France, Mr. Bancel says Moderna’s vaccine could be available for emergency use in health-care workers as soon as the fall with a full rollout next year. Eventually, he adds, the company could produce dozens of drugs and vaccines “for diseases for which there is no solution.”

The bold promises of Mr. Bancel and his colleagues have long struck some in the pharmaceutical industry and on Wall Street as hubris. No company using the same experimental approach has managed to pull off a successful drug. Moderna has more than 20 experimental drugs and vaccines for cancer, infectious diseases and other conditions in development, but none are close to being commercially available to patients.

“It’s always been a battleground company,” says Brad Loncar, head of Loncar Investments and creator of an exchange-traded fund that holds Moderna shares. “For some reason people get emotional about it.”

Skepticism has dogged Moderna since its creation in 2010. Noubar Afeyan, a Beirut-born biochemical engineer who runs Cambridge, Mass., venture-capital firm Flagship Pioneering, wanted to form a company that would turn a patient’s own cellular machinery into a personal medicine factory.

Moderna’s manufacturing facility in Norwood, Mass., in February.

The tool for this effort is a piece of genetic code known as messenger RNA, or mRNA. Normally, this code carries the instructions from a person’s own DNA telling cells what to do. Moderna aimed to synthesize mRNA with instructions for attacking a disease or pathogen, and then give it to patients.

Mr. Afeyan wooed Mr. Bancel, an engineer by training who was a manufacturing executive at drug giant Eli Lilly & Co. and then led diagnostics company bioMerieux. “I saw in him a level of intensity, curiosity and impatience,” Mr. Afeyan recalls.

Mr. Bancel greeted the interest with doubts. “I looked at the science and said, ‘It’s impossible,’ ” he recalls. He took the job in 2011, though, after becoming convinced the approach could work and that Moderna might eventually be able to develop hundreds of medicines.

The startup began with just $2 million, which made it hard for Mr. Bancel to persuade top scientists to join the fledgling company.

Some nights, he came home from work frustrated. “This will never work,” Mr. Bancel recalls telling his wife one night.

The industry largely agreed. A key question was whether Mr. Bancel and his colleagues could get the mRNA, an unstable molecule, into human cells (once it was there the process by which it creates disease-fighting proteins was less difficult). The company spent several years refining a solution to use microscopic capsules known as lipid nanoparticles to ferry the mRNA.

Nearly a dozen contract manufacturing companies turned down the opportunity to produce an early version of a Moderna flu vaccine. “Even if it works you will run out of money,” one told Mr. Bancel, who was forced to turn to a 20-person Portuguese drug manufacturer.

Moderna saw its work on the vaccine as a way to test its technology, and didn’t advance testing of the product because the flu strain it targets doesn’t circulate widely.

From the beginning, Mr. Bancel brought a level of intensity that made some staff uncomfortable, former employees say. Sometimes, in meetings of 15 to 20 people, Mr. Bancel singled out employees if he thought their progress on projects was lacking, such as not enrolling patients in clinical trials quickly enough, in ways some found demoralising.

In a group meeting several years ago, he told one staffer, “You have no idea what you’re talking about. Have you given this any real thought?” according to a former employee who was present.

Resulting tension may be part of the reason many have left Moderna, current and former employees say.

“It is a demanding culture,” Mr. Bancel says. “It is not an unfair culture.” He says he made his share of mistakes, such as not being more upfront with new hires about how difficult the work would be. “I was trying not to kill the company,” he says.

Mr. Bancel says turnover has been lower than some other biotechs in recent years, though higher than large drug companies.

After joining the company in 2013 as president, Stephen Hoge, a former New York City physician-turned-management-consultant, emerged as a calming influence in the office, former employees say.

Dr. Hoge says he and Mr. Bancel “have always functioned as partners. We have different strengths, and we balance each other really well.”

Some credit Mr. Bancel with pushing the company forward amid early disappointments, and say he was hard on staffers because he sensed Moderna could achieve something big.

“What’s not tolerable is to do sloppy science,” says Marcello Damiani, Moderna’s chief digital and operational excellence officer, who has overseen the company’s adoption of artificial intelligence in its drug design. “Stéphane is very rigorous, and he’s very demanding at the same time.”

Mr. Bancel, a skilled salesman, sought funding from larger drug companies and investors. A turning point came in 2013, when he persuaded pharmaceutical giant AstraZeneca PLC to pay $240 million for the rights to drugs arising from Moderna’s research. Moderna later formed a partnership with Merck & Co. to develop vaccines for cancer and other things.

‘It is a demanding culture,’ Mr. Bancel says. ‘It is not an unfair culture.’

In February 2018, Moderna raised $500 million in new financing from Geneva-based Pictet Group, Arrowmark Partners, Viking Global Investors LP and other investors that aren’t known as health-care specialists.

Some who focus on biotech were unwilling to invest, partly because they felt the company didn’t publish much about its results and was less transparent about its progress on various drugs than some rivals.

Mr. Bancel says the company was open about sharing information with prospective investors and partners.

Moderna went public the first week of December in 2018, raising more than $600 million in the largest biotech IPO. But by the end of that year, shares had fallen 34%.

[Moderna CEO Stéphane Bancel, Dr. Julie Gerberding, chief patent officer at Merck and Dr. David Reese, executive vice president of research at Amgen discuss the race for coronavirus drug development at WSJ Tech Health.]

In recent years the company has focused on an experimental vaccine against cytomegalovirus, a virus that can damage organs and can be harmful to people with weakened immune systems and to babies whose mothers were infected during pregnancy. Moderna thinks it could generate as much as $5 billion in annual sales. The company also is developing vaccines against Zika and certain respiratory viruses.

At the start of 2020, Moderna wasn’t expecting to have a product on the market for another two to four years, frustrating some investors. Some were disappointed Moderna had begun emphasising vaccine discovery, a crowded and challenging field seen as having limited financial potential.

By then, some of Wall Street’s largest investors had sold the stock, even those who were previous fans. Viking, a $29 billion hedge fund, owned 5.2% of the company’s shares at the end of 2018, after it went public. It owned just 0.3% of the company by the end of March. A Viking spokeswoman declined to comment.

In early January, Mr. Bancel was on vacation with his family in France when he read news about a mysterious virus spreading in China. He emailed a National Institutes of Health vaccine researcher about working together on a potential vaccine, he recalls, which eventually led to a collaboration.

Back at the office, Mr. Bancel pushed colleagues to focus on the new virus. “How do we accelerate our vaccine?” he asked one.

Some inside the company harboured doubts about pursuing a vaccine against the new coronavirus. The company had been traumatised by its failure to find a vaccine for the Zika virus after a 2016 outbreak, Mr. Bancel says, though it is now developing a backup candidate. Dr. Hoge says he worried coronavirus vaccine work could jeopardise the development of its other products, some with major commercial potential.

“Are we sure we should be doing this?” Dr. Hoge recalls asking in internal discussions.

“This is going to be a big deal, we have to do something now,” Mr. Bancel responded, according to Dr. Hoge.

The company had a “once-in-a-lifetime opportunity” to save lives, says Mr. Bancel, whose mother is battling blood cancer and is immunocompromised.

Mr. Bancel and the NIH, which co-designed the vaccine, set an ambitious new goal: going from vaccine design to a human trial in three months, an unprecedented pace. The company, which counts about 800 employees, is hiring about 150 new workers largely to assist in the effort to scale up manufacturing capacity.

Unlike competitors who are developing vaccines that use a killed coronavirus or proteins from the virus, Moderna’s vaccine uses only a genetic sequence from the virus. The programmed material—mRNA—directs a person’s cells to make proteins that, in turn, trigger the immune system to produce antibodies to the coronavirus.

A potential advantage of Moderna’s approach: The mRNA vaccine can be designed and manufactured more quickly than vaccines based on older technologies, which often require growing the virus or proteins for weeks or months.

Moderna’s vaccine was among the first to begin testing in humans. After producing positive preliminary results in the first phase of human testing, the vaccine started the second stage of studies with 600 people in May. The tests this month will encompass up to 30,000 people, and will determine whether Moderna’s vaccine reduces rates of infection and disease.

The relatively rapid progress, and its soaring shares, have made Mr. Bancel a billionaire, at least on paper. The company is now worth around $24 billion, more than many drugmakers with medicines already on the market.

Some days, news of the Moderna vaccine’s progress has powered the overall market.


Many investors remain skeptical the Moderna strategy will work, though. Nearly 10% of the company’s shares available to trade have been shorted, up from 5% a year ago, as of June 15, according to FactSet, a level that is higher than any health-care stock except one in the S&P 500 index. Investors using this strategy are betting that the stock’s price will decline.

“There are better approaches” to discover a coronavirus vaccine, says Joseph Lawler, a physician who runs JFL Capital Management, a hedge fund betting against Moderna, partly due to the company’s rich valuation.

Moderna’s own executives, including Mr. Bancel, have been selling. This year through late June, executives and directors have sold about $161 million worth of shares, according to InsiderScore, which tracks insider transactions. Flagship, the venture-capital firm that founded the company, sold more than $68 million of shares.

Most of the sales were preplanned, including those of Mr. Bancel, the company says.

The validation of Moderna’s technique could raise expectations for more profitable products in the future.

While many vaccines fail in the trials, Anthony Fauci, the nation’s top infectious-diseases expert, recently said he was “really optimistic” about Moderna’s vaccine. The U.S. government is investing nearly $500 million to speed up testing and prepare for making hundreds of millions of doses.

After the large trial of Moderna’s vaccine starts, similar U.S. tests are planned for a vaccine co-developed by the University of Oxford and AstraZeneca, and one from Johnson & Johnson.

Pfizer Inc. and partner BioNTech SE also are planning to start a large trial this month for an experimental vaccine.

The challenge of developing the first vaccine means even more pressure for Mr. Bancel and his colleagues. On a recent Saturday, manufacturing staffers were told to turn off their mobile phones and take the day off. The team had been working nonstop for a few months on the vaccine.

Instead, staffers spent the day trading project-related emails, as if it were a regular workday. Executives who had issued the stop-work order were copied in and monitored the email exchanges without interfering.

“We’ve always had this hard-charging culture of relentlessness,” Mr. Bancel says. Moderna’s ability to quickly respond to the coronavirus pandemic “is why we worked so hard for nine years.”

Write to Peter Loftus at [email protected] and Gregory Zuckerman at [email protected]