VRTX, MRNA Second Partnership in CF and More Commitment Together...
September 16, 2020
and MRNA announced a new collaboration to develop gene editing
technology capable of correcting cystic fibrosis (CF). This marks the
second collaboration between the two companies and speaks to: 1) VRTX's
aim to develop treatments for all CF patients, including the 10%
currently not addressed by its oral pills, and 2) provides additional
validation of MRNA's expertise in LNP delivery and mRNA technology.
Vertex and Moderna announced a second partnership for cystic fibrosis
to address and potentially "cure" a proportion of CF pts that are not
treated by current oral therapies. Importantly, Vertex already has
transformative corrector pills for ~90% of the CF market (and next-gen
super Trikafta that we are aware is in mid-stage trials) but 10% of the
population makes no CFTR protein (mostly due to stop codons) and would
not be treatable with small-molecule correctors. For these patients,
mRNA delivery (part of the 1st collaboration) and today's second
collaboration on gene editing, using MRNA's LNP platform, could be one
way to address and potentially cure their disease.
- This is an incremental positive and consistent with multiple
next-generation and innovative gene and cell therapy products that can
drive the next leg of growth after CF (at least 4-5 early/mid-stage
pipeline programs coming) and ensures that VRTX is absolutely on top of
and leading the cutting edge efforts in CF research vs the risk of
competition in the future, which the Street always tends to worry about.
So we feel very good about VRTX's CF business, multiple next-gen CF
technologies and early/mid-stage pipeline of other unmet diseases (AAT,
FSGS, Semma diabetes cell therapy, DMD gene therapy, CF next-gen).
- The big change over the past six months is a clear increase in the
validation of its mRNA and LNP platform that so far proves Moderna can
manufacture, deliver, and express a protein of interest in the body and
so far it is safe and the technology is working. This, of course, is
from the 20K+ that are getting dosed with their COVID-19 vaccine and
possibly over the next year as, hopefully, millions of people could be
safely administered a mRNA drug. The consensus is that traditional
protein-based vaccines are safer, but as more people receive mRNA
vaccines from MRNA and PFE/BNTX, this could change. The bottom line is
the VRTX deal brings more money from VRTX, reflecting further commitment
to and validation of the work VRTX is doing with MRNA and is
progressing well and is particularly interesting given VRTX could have
done a collaboration with any of the gene-editing platforms...
Details of the collaboration
– MRNA will receive an upfront payment of $75M and be eligible to
receive up to $380M in milestones + tiered royalties. MRNA will be
responsible for developing and manufacturing LNPs and mRNA encoding
gene-editing tech. VRTX will be responsible for preclinical and clinical
development and potential commercialization.
price target of $90/share is based on a sum-of-the-parts analysis of
MRNA's clinical candidates in various indications. For each indication,
we build the revenue and cash flow streams out to 2030+ and beyond
before probability-adjusting our DCF. We also ascribe value to Moderna's
technology platform/know-how and estimated cash at the end of 2020.
Risks include: Modernaclinical programs could face delays or fail to
meet the primary endpoint in key studies; safety risks; competition,
payor and pricing risks.