Moderna Inc. (Nasdaq: MRNA), a clinical stage biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines to create a new generation of transformative medicines for patients, received a modification to its Biomedical Advanced Research and Development Authority (BARDA) contract, adding up to $472 million more to support late stage clinical development, including the expanded Phase 3 study of the its mRNA vaccine candidate targeting COVID-19 known as mRNA-1273. This is on top of its earlier BARDA award of $483 million giving the company access to a total of $955 million of public money. With such public finance commitments, more transparency is probably a good thing. Key executives continue to benefit from strong investor demand due to the promising technology, promise of the company and federal support; recently the CEO and President earned nearly $50 million via standard pre-arranged Rule 10b5-1 trading plans.
With so much money flowing out of the federal government and into various biotech and related medical technology companies, TrialSite provides a breakdown of this latest injection of tax payer-originated monies. TrialSite observes that European public monies are starting to flow as well into COVID-19 vaccine developers but apparently, at least in some cases, in the form of low interest loans.
Why did BARDA give Moderna access to so much more money?
Well, according to the press release, the first capital injection of $483 million was to help the company with scale up of mRNA-1273 and clinical development but with a smaller forecasted number of participants (e.g. clinical trial volunteers). This was based on ongoing discussions with the U.S. Food and Drug Administration (FDA) and consultations with Operation Warp Speed, the effort created by the Trump Administration to consolidate efforts to develop a COVID-19 vaccine by January 2021,
Hence, it became apparent that there was a delta between what was planned when the first federal allocation occurred, and the present moment. By amending the contract and nearly doubling the amount of money, now totaling just under one billion dollars, such gaps represented in the imminent forthcoming Phase 3 is now closed.
What is the essential difference between the old and new Phase 3 clinical trial, requiring such a difference in federal capital outlay?
Now Moderna’s clinical trial will be far larger at 30,000 and perhaps include other governing provisions.
Is this matter connected with the delays caused, purportedly by differences of view between Moderna’s scientists and government scientists?
TrialSite cannot be certain about that, but it certainly could be connected.
What will the Phase 3 study be called? What are core details?
The Phase 3 COVE study will be conducted in collaboration with the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH) and should commence July 27, 2020. The company reported in its recent press release that the protocol was reviewed by the FDA and is aligned with the agency’s guidance on clinical trials for COVID-19 vaccine studies. This randomized, 1:1 placebo-controlled trial is expected to include up to 30,000 participants at the 100 µg dose level in the United States. The primary endpoint will be the prevention of symptomatic COVID-19 disease. Key secondary endpoints include prevention of severe COVID-19 disease (as defined by the need for hospitalization) and prevention of infection by SARS-CoV-2.
How involved is the federal government via NIAID and Operation Warp Speed & What do they want accomplished?
Closely, as NIAID/NIH has completely reorganized the government agency’s clinical trial site networks, merging four into one to consolidate, centralize and streamline infectious disease investigational networks into one cohesive collaborative unit called the COVID-19 Prevention Trials Network (CoVPN). As there are many vaccine trials vying for participants, this federal operation better ensures that clinical trial volunteers are directed to the COVE study.
A key underlying theme in the reorganization and government thesis is diverse participation. This means that the government is interested in ensuring that an acceptable cross-section of the American population is represented in this trial. For example, African Americans, at least in some cities, are dying at two to even three times the rates of others. Hence, the importance of ensuring diverse participation. This goes for at risk workers as well such as those involved in health care or first responders or the elderly for that matter, which represents a horrific situation with COVID-19 as the TrialSite has explained.
Moderna, of course, shares these goals in theory but as a relatively small company it doesn’t have the financial wherewithal to organize and orchestrate vast trial site networks as does NIH, NIAID, now of course operating under the umbrella of Operation Warp Speed.
The public monies are premised on the “at risk” manufacturing of the investigational vaccine product (meaning the company starts producing the vaccine before it knows whether it will receive approval from the FDA). Is Moderna still on track for this commitment?
Yes, according to their press release. They state clearly that they are on track to be able to deliver approximately 500 million doses annually and possibly up to 1 billion doses in a year starting in 2021. This has been made possible with a strategic collaboration with Switzerland-based, contract manufacturing organization Lonza.
Additionally, the company secured another contract with Catalent for a large-scale, commercial fill-finish manufacturing of mRNA-1273 at the contract outsourcer’s Indiana facility.
How is Moderna paying for the at risk manufacturing?
Moderna declared in their press release that “initial funding” totaling $1.3 billion was raised by their recent public equity offering in May 2020 for the purpose of producing mRNA-1273 supply at-risk. It is not clear what is the ration for At-risk exposure between the company and the taxpayer.
So there is no clear breakdown of exactly what is “at risk” versus what the federal government is subsidizing?
Not fully. But based on SEC disclosures, for example, Moderna disclosed that the first $483 million covered “the advancement of the mRNA vaccine candidate to potential licensure, including clinical studies of the candidate and the manufacture of the candidate for use in these studies.” This means that the first $483 million tranche includes the manufacture of the investigational product. The company raised over $1 billion from investors for “initial funding,” and hence whatever is left over will either be paid for by the U.S. government or investors.
Does BARDA publish deal terms? This is public funding at work so shouldn’t there be transparency?
No, they do not publish deal terms. Yes, this is use of public funds, and there should be more transparency. Some of the contract terms between Moderna and BARDA could include proprietary information that shouldn’t be shared but certainly deal structure, whether there is equity involved, etc. should be explained.
The European Commission (EC) is now allocating capital to biotech companies developing COVID-19 vaccines, however it would appear they are utilizing the European Investment Bank and structuring the financing as low interest loans. Has that been considered by BARDA given the enormous outflow of capital?
TrialSite cannot say. Thus far, there is no real transparency, concerning those that understand the risks inherent in drug development. TrialSite can share that the mRNA-based vaccine developer CureVac, based in Germany, received a €75 million loan from the European Investment Bank.
If the company is taking so much money from the federal government why or how can executives cash out on so much money before the vaccine is even completed?
Executives have been doing quite well as with COVID-19 and the urgent need for a vaccine, investors worldwide have pushed the stock price up. Meanwhile, insiders have standard Rule 10b5-1 trading plans set up so trades are automatically executed. TrialSite reported that the CFO and CMO took home $30 million while the CEO Stephan Bancel just took home under $25 million a couple weeks ago, and as disclosed to the SEC, Stephen Hoge took home nearly $22 million recently. Although the timing is certainly off, given there is no vaccine product, lots of public financial support, and the worst public health crisis in modern history leading to tens of millions out of work. The reality is that for those that secured top educations, worked hard and found themselves in the “right place at the right time,” this type of windfall does occur from time to time. The recipients circulate the capital and hence help to stimulate economic activity, cetaris paribus.
What is Biomedical Advanced Research and Development Authority?
BARDA is part of the federal organization created and authorized by Title IV Sec 401 of the Pandemic and All-Hazards Preparedness Act (PAHPA) of 2006. PAHPA was then amended by the Public Health Service Act with the inclusion of section 319L. Part of the U.S. Department of Health and Human Services (HHS) office responsible for the procurement and development of medical countermeasures, principally against bioterrorism, such as chemical, biological, radiological and nuclear (CBRN) threats, as well as pandemic influenza and emerging diseases. BARDA reports directly into the Office of the Assistant Secretary for Preparedness and Response (ASPR) and manages Project BioShield.
An established interface between the U.S. government and the biotech industry, BARDA prepares and maintains an integrated system of medical countermeasures for both known or unknown, and re-emerging or novel types of public health emergencies, including diagnostic tools, therapeutics, such as antibiotics and antivirals, and preventative measures such as vaccines.