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Msg  34456 of 34546  at  9/16/2020 7:39:39 PM  by

CHM_760


Jefferies on MRNA news AH - Buy with $90 Target

Credit to R.C. on MRNA board:
 
 

VRTX, MRNA Second Partnership in CF and More Commitment Together...


Date September 16, 2020

Key Takeaway

VRTX 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.

Insights

Big Picture: 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.

For VRTX - 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).

For MRNA - 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.

 
 

Company Valuation/Risks

Moderna, Inc.

Our 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.

 


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