Moderna's Swiss connection: a story of bankers, biotech and vaccines

This article was originally published in French on Heidi.news. Find the article here: EXCLUSIF – Moderna et la Suisse: la genèse d’une lune de miel

A lunch with private investors in Geneva that will be long remembered. Since 1854, the Hotel Métropole, the only palatial establishment on Geneva's Left Bank, has been the venue for investor conferences. One of them, in 2012, will be long remembered. That day, an independent Geneva banker organised a lunch for private investors and family offices with a French entrepreneur who had left Europe to set up his company in Cambridge Massachusetts, straddling the academic powerhouses of Harvard and MIT.

The head of Moderna Therapeutics. After serving as the CEO of the French BioMérieux at the age of 34, Stéphane Bancel had joined Flagship Ventures, a well-known Boston area venture capital fund in 2011. There, he took up the reins of Moderna Therapeutics, a biotech company that has today acquired unprecedented notoriety during the Covid-19 pandemic. Especially since Donald Trump took a gamble on Moderna's vaccine.

Moderna’s Covid-19 vaccine in Phase III trials with 30,000 people. Moderna's vaccine against Covid-19 is one of the leading six candidates currently in Phase 3 clinical trials, which is the final stage required prior to registration of a new drug or vaccine candidate. Moderna’s trial enrolling some 30,000 people began on July 27th. Along with the United States, Switzerland has pre-ordered some 4.5 million doses of the Moderna vaccine. Moderna is also partnering with the Swiss multinational Lonza to produce up to one billion doses of the vaccine per year, at sites in Portsmouth, New Hampshire and Visp in the Swiss Valais, if Phase III trials are conclusive. But the Boston-based company has an older relationship with Switzerland through investors, particularly from Geneva, who have believed in its technological platform since the 2012 conference at the Métropole.

Ernest Loumaye, founder of the biotech company Obseva, is one of these investors. He remembers perfectly the 2012 meeting at which Stéphane Bancel presented the company for a $40 million Series B fund raising:

"He told us that in two months the company would have the first results of its technology in tests with a growth hormone on primates. And that we could wait for these results to materialise our financial commitment."

An innovative vaccine. Moderna's technology is, in fact, completely new. Essentially, it involves using the genetic information that serves to code the production of specific proteins - such as the distinctive “spike” protein that allows the coronavirus to infect cells. The idea is to introduce this information into cells that produce these proteins, so as to provoke an immune system reaction that leads to the production of neutralising antibodies.

The transport of this information is done by hijacking a mechanism of biology: messenger RNA. It is this RNA that separates from the DNA to produce new proteins. One of the challenges is to protect this information during transport. This is what Moderna has managed to do, using lipid nanoparticles.

Of course, in 2012, there is as yet no mention of Covid-19 and hardly any of vaccines. At this point, Moderna's plan is aimed above all at using this vector against cancers by stimulating the immune system to destroy cancer cells.

A risky gamble. After a successful demonstration of the technology on primates, Geneva investors, such as Ernest Loumaye, enter the venture capital fund - at a time when a single Moderna share worth less than $US 1 (as compared to about $US 70 today). The banker who organised the Métropole meeting explains that the investors’ interest in this very risky technology (none of Moderna's therapies have yet been commercialised) is driven by a fine knowledge of biotechnology. Along with that, there is a sense of cultural closeness to Bancel, the entrepreneur who ran a large, well-known French company in a city just across the border from French-speaking Switzerland; BioMérieux's head office is in Lyon.

"Stéphane Bancel has inherited great credibility and an ability to execute," the banker, who wishes to remain anonymous, explains.

Patience required from investors. The fact remains, investors will have to be patient. Bancel is ambitious. He is going to raise a total of US$ 1.6 billion of venture capital for Moderna in eight rounds of financing. Moreover, like all biotechs, Moderna will go on to experience highs, such as its collaborations with the Pasteur and Karolinska institutes, but also lows. For example, disappointing partnerships with AstraZeneca and Alexion.

Despite this, the relationship has remained intact. According to Ernest Loumaye: "Stéphane Bancel regularly came to Geneva to inform us and received us at Moderna in Boston". During these visits, Swiss investors would learn about how the company was expanding its technology to include vaccines, as of 2014. It currently has 23 messenger RNA therapies in development, 13 of which are at the clinical stage against viruses such as Zika, Epstein-Barr, influenza, chikungunya, cytomegalovirus, etc.

**One of the largest IPOs.**Through word-of-mouth, this ambitious strategy will gradually enable the start-up to broaden its investor base in French-speaking Switzerland. For example, another investor, who joined the company in 2016 via a friend, told us:

"This is the future. There have been some 80 emerging viruses since 1980. Vaccines have become an enormous challenge for both animal and human health".

As proof of this, he cites the swine flu epidemic that went unnoticed last March, even though it decimated the Chinese herd, forcing the country to import pork on a massive scale.

In December 2018, Swiss investors in Moderna will receive the first profits from their wager. That was the moment when Moderna issued one of the largest biotech IPOs in the world, raising US$ 600 million for 8% of its shares, increasing the company's value to US$ 7.5 billion. A value that has continued to grow to some US$ 30 billion currently. This is what has enabled Moderna to join the Nasdaq 100, the index of major American technology stocks. And to continue deepening its relationship with Switzerland.

Big competition. Because now, of course, the big deal is the potential vaccine against Covid-19. In this race, Moderna faces pharmaceutical giants such as Pfizer and AstraZeneca as well as the Chinese state-owned companies Sinovac, CanSino and Sinopharm. The difference in size explains the manufacturing agreement with Lonza. Moderna has developed fully robotised production technologies. Their transfer will enable the production of the possible future vaccine in the United States and Switzerland.

A web of relationships. Moderna's long-standing relationship with Swiss investors probably did no harm in the negotiation of the contract with Lonza. But the company has other links with Switzerland, as well. Its Chief Technology and Operations Officer, Juan Andres, is the former head of global manufacturing for the Basel-based giant Novartis. So he has an important network here to. This probably helped in the choice of the city by the Rhine to establish Moderna’s European headquarters.

Is this web of relationships, which also breeds trust, also the reason why Berne decided to pre-order 4.5 million doses of the potential vaccine from Moderna? We do not know for sure. What is certain, however, is that if this vaccine fulfills its promise, Switzerland will have a serious advantage in accelerating the recovery of its economy as well as diversifying its pharmaceutical industry into the vaccine landscape, where it has been conspicuously absent.