Ep11: Stephane Bancel

Welcome to The Long Run. This is a podcast for biotech adventurers. I'm your host, Luke Timmerman. Today's guest is Stephane Bancel. He's the CEO of Cambridge, Massachusetts-based Moderna Therapeutics. The company and the man are somewhat controversial. Google Bancel's name and the People also search for window shows famous entrepreneurs like Jeff Bezos, Elon Musk, and Elizabeth Holmes of Theranos infamy. Each situation for those entrepreneurs is different, and the comparisons don't hold much water, but a few common themes do stand out. These are people with big technology ideas, they've attracted big investment, have lofty rhetoric, and a penchant for keeping a lot of crucial technology details secret. They are all lightning rods for critics. Now, the idea at Moderna is to turn messenger RNA molecules into drugs themselves. Inject the mRNA code, allow it to get inside cells to produce full-functioning proteins, and voilà. As Bancel likes to say, it's like software code that enables humans to become their own protein drug factories. Dazzling, right? Tantalizing as the concept is, it has long been dismissed as sci-fi. mRNA, for starters, can't get into cells and make fully functioning proteins without triggering autoimmune reactions, to raise one common objection. Yet Moderna has been able to convince enough investors and partners to throw $2 billion behind its efforts over the last 8 years to create this new modality of treatment. Most of the money arrived before Moderna had any data in humans. And for years, it divulged little about its technology or its preclinical data at scientific conferences. That naturally bred suspicion and, truth be told, some envy. In this episode, I talk a lot with Bancel about his life, career arc, and influences that shaped the way he thinks about Moderna. In the latter part of the show, we talk about some of the particular ups and downs and lessons learned at the company. This episode was recorded at the recent JPMorgan Healthcare Conference in San Francisco. And I'll say, Bancel has a French accent, and I occasionally misunderstand a word he says here or there, but I don't think you'll have any trouble listening and understanding what he says. Before we dive in, a word from the sponsor of The Long Run, Presage Biosciences. Subscribers to the Timmerman Report newsletter know that I write a lot about cancer R&D. All of the CEOs I talk to are under pressure to get clinical data as soon as humanly possible. Investors demand it, and patients deserve it. Phase 1 clinical trials have traditionally been the very first time that data from patients becomes available. And we all know data from patients is what really matters. Presage is working to improve this approach. I've covered the company since its early days. They have been working on creating a way for researchers to obtain human data on investigational therapies a year or two before they could with a traditional Phase 1 trial. The business is simple. They're working with biopharma companies to use PreSage's patented device that enables intratumoral microdosing of experimental cancer drugs. And here's the thing, it lets researchers assess several drugs at once against a single tumor while the tumor is still in the patient. The device is being used in a clinical trial right now. To learn more, go to presagebio.com. Lastly, thanks to you for listening. If you work in biotech and like this show, tell your friends. Please leave a comment on iTunes, your favorite podcast app, or on social media. If you like these interviews, you'll also love reading The Timmerman Report. Individuals can subscribe there for $149 a year to get original analytical, thought-provoking articles that I produce year round. Groups that would like to obtain internal sharing rights can also get a group discount. Go to timmermanreport.com/subscribe to learn more. Now join me and Stephane Bancel for the long run.

So I'm here at the JPMorgan Healthcare Conference with Stephane Bancel, the co-founder and CEO of Moderna Therapeutics, messenger RNA therapeutics developer. Welcome to The Long Run.

Thank you. Thank you for having me.

So Stephane, you and I have been at this conference, I think we've met informally over the years, probably 4 or 5 years now. It's a tradition, I guess.

Yes.

And this is always an opportunity for companies like yours to kind of lay out some goals for the year, but also reflect a bit on what you accomplished in the past year. So what's your story here at JPMorgan in 2018?

Yeah, so I think the big story for Moderna is the company transformed tremendously in 2017. We put 6 new drugs in clinical trial. So today we have 10 drugs in clinical trial, which is a great number and represents, I think, amazing work that the team has done. And we have 9 additional drugs, so a total of 19, 9 additional drugs that are on the way to move to the clinic. And so the big stories around therapeutics, I think, as you know, we built Moderna going one vertical after the other. We started in vaccines back in 2015, our first vertical to move to the clinic. But '17 was really a big year for therapeutics. We had our first phase 1 for therapeutics that was successful with AstraZeneca for VEGF in the heart, met primary, secondary endpoint. This is moving to phase 2 any week now. We had our first oncology therapeutics moving to the clinic. We had our personalized cancer vaccine moving to the clinic. And we enabled drugs to be delivered inside the liver. which allow us to do a lot of genetic disease that are undrugable today. And so that's really— therapeutic is a big world for Moderna in 2017. Okay.

So before we get into some more of the specifics of the Moderna story, you're high profile, you got some controversy, you've had some ups and downs. We'll cover that. But first I wanted to ask just a little bit about you.

Sure.

Where, you know, people may tell the accent, you're from France.

Yes.

Tell me about where you come from. What did your parents do when you were a kid?

Yeah, so I was born and raised in the south of France in Marseille, so on the sea. So I literally, the first photo of me after the clinic is on a sailing boat, in a little bassinet, you know, in the cockpit of a sailing boat because my dad is a selling junkie. And so I grew up, you know, my mom is a doctor, she's retired now, and my dad was an engineer, also retired now. They both are cancer survivors. And so I just had a great childhood, you know, super fun to live in the south of France. You know, you can go sailing anytime you want or to a beach, you know, windsurfing. You get in the car, 2 hours and you're in the Alps. So like you can ski pretty nicely. And close to Italy and Spain. So a lot of kind of long weekends in Italy and Spain. So, so, so great childhood.

Do you have siblings?

Yeah, I have a younger brother. He's actually here too this week. He's running a biotech company in Paris.

Okay. Okay. So it runs in the family.

He doesn't. He just happened to be like this.

So how did you get excited about science or the pharmaceutical business?

So it's interesting because I took a very strange road in the sense I really fell into IT as a kid. I used to code when I was 12, 13 years old.

So we should say how old you are here. You're mid-40s, right?

Yeah, 45. Okay.

So that puts your childhood in the '80s.

In the '80s, exactly. So I had an Apple IIc as one of my first computers, which was a big deal because it was super expensive. And so I already got into, I would say, technology with a capital T through the door of IT. And I think because my mom is an MD, I kind of didn't really study biology much in high school. I had pretty bad grades actually in biology in high school.

You were a bit rebellious.

Kind of, yes. And so I went to engineering school and I loved chemistry. I just loved chemistry. And so I love biochemistry. And when you do a lot of biochemistry and you do that in the early '90s, you do a lot of genetics. And so I went back into biology through genetics, through molecular biology. So on the side, so I was in engineering school in Paris for undergrad. On the side, I took a lot of classes in genetics at the University of Biology and Medicine next to my engineering school in Paris. And then I came to the US to do a Master of Science at Minnesota in biochemical engineering. So basically, I grew antibodies in CHO cells, E. coli, yeast systems at the bench. I realized I was not made to do research. It was just the cycle time, the speed clock was not really made for me. And so I just went for a master's and then I went to work.

It was too slow.

It was too slow.

So you got your master's and then what?

So then I had, in the meantime, I had been to Japan for an internship and I fell in love with Japan. And so I found a job in Japan. And so I went from Minnesota straight to Tokyo and I lived in Tokyo for almost 4 years. I started for a company, diagnostic company called Biomérieux, which later on, I'm sure we'll get to that, I ended up being CEO of. But so I started to work for that company as a sales rep in Japan, selling medical equipment to food and pharma companies in the QC labs to make sure you don't get bacteria in the food you eat or in the pharmaceutical products.

Selling in Japan. Do you speak Japanese?

I used to speak pretty good Japanese, yeah. I know, like anything you do in life, you just need a certain set of vocabulary because it's always the same stuff and the same words you use. So I had worked really hard during my undergrad in France, my engineering school. I actually spent most of my time not studying engineering but studying genetics and learning Japanese.

So you're not intimidated by these difficult subjects, I guess?

Yeah, I'm a believer that if you just work hard at something and you spend the hours, you can get pretty good at it. You don't have to be great at it, you can get pretty good at it. And so what happened when I was in Japan, very quickly, because I was generating a lot of sales, I was allowed to hire a couple of reps. So I built a team in Japan. And then because Japan was doing really good, I was allowed by the head of Asia Pacific to actually start operations in South Korea, in Shanghai in the '90s, in Australia, in Singapore. So basically, I ended up still running Japan, but running then the region, still based in Tokyo. And after a few years doing that, I said, maybe it might be good to get a bit of business education because it was again still this South of France, Marseille engineer who was doing sales and marketing in a fast-growing region because in the '90s, Asia was just rocking. And so I went to business school.

Where did you do that?

At Harvard. I wanted to go to the US because being European, I thought there was not a lot of value for me, or not the same value if you want to do it in Europe. And so I thought it was going to be great to both learn and just to be able to just be back in the US again. And so I applied only to US business schools.

So you quit Biomérieux?

Yeah, so I quit Biomérieux with great discussion, nice transition, because it was with school, it was all planned. So I quit Biomérieux. I went 2 months traveling in Asia. We're backpack, and then I went to business school.

So you do that for a couple of years, and what's your, what's your goal there at, uh, HBS?

I think, I mean, my goal at school was just learning. I mean, I felt super privileged to be in a, in a, in an environment where, you know, you have super smart people coming from all industries, all line of works, from, you know, clinicians to lawyers to bankers to consultants to I mean, you're really at everything. And so I just feel very much like a kid in a candy store and just learning, learning, learning. I'm a very curious guy, so it was just fun to be able to do that. Sometimes I joke with my wife that I wish I could go back again just for the fun of spending 2 years and learning stuff and being with smart people. And so what is interesting is I was at HBS, I graduated in May 2000. Which, as you know, is when the Nasdaq peaked. And so what was very funny time at the business school is that everybody wanted to be a dot com entrepreneur. Of course, as they always say in the press, you know, just look where the HBS grads are going, and most probably that's the worst place to invest because it just becomes you know where everybody goes. And so, so I thought about it a little bit, and then I think it's the contrarian side in me. And I love healthcare. I really love my years at Bumayu. I love you know. What I've learned in grad school and so on. And so I said, if everybody's going to the tech world, and plus I started to build a bit of understanding of the healthcare industry, I said, why don't I stay in healthcare? Nobody's going to healthcare. So it was a very funny time because all the big pharma companies at the time were recruiting on campus, but nobody was going. And so I talked to a few companies like Pfizer, Medtronic, and Lilly. And I ended up at Lilly just because I loved the people there. I think I had a bet. I don't remember exactly, but I think I had a better offer at Pfizer. But I just loved the people at Lilly. I loved the products they had, and so so I joined Lilly.

So were you the only member of the HBS class?

I think we were two. It was two of us. Uh huh. Usually, like, yeah, maybe recruit ten or fifteen a year. I think that year was two of us.

Usually there's investment banking, consulting. Those are popular as well as dot com entrepreneurship. But at that time, the genome, the Human Genome Project was in the news a lot and coming down the home stretch. But pharma wasn't really using this kind of information.

No. And the thing that was interesting is I intuitively initially wanted to go to a small company. And then my uncle, my mom's brother, who has been my mentor all my career, he made his career in the tech world. He told me, don't go small. He's like, go big. I'm like, why would I go to a big company? He said, it's going to be boring. VMware was still at 2,000 or 3,000 people at the time when I was in Asia working for them. It was not startup, but still small. And he said, look, you have a lot of things to learn. You're going to learn a lot of things in big companies. You're going to have great bosses. You're going to see big problems managing scale. And that's something that you're going to use all your career. You can always go small. You just need to decide to go small. And at any stage, you can go small. And so I only look at the end at big companies, which was kind of a bizarre thing for me. Sometimes Uğur Hafeyan, who is a co-founder and chairman of Moderna and CEO of Flagship, always laughs at me. He's like, I have no idea what you did in big companies for 10 years. You must have driven them totally crazy, which I did sometimes, yes.

But it's a learning opportunity. This is something I sometimes say to younger people who ask for advice. I think when you're starting out, you want to go someplace where you can learn a lot and not be pigeonholed. So what was your experience there at Eli Lilly?

I just loved it. Again, company culture was amazing, very, very people-driven. Sometimes I used to joke that Lilly was not in the drug business, they were in the developing people business. And so I worked in the UK. I had a very quick stint in Indianapolis just to get trained after HBS. Then I went to the UK because I wanted to go to manufacturing of all places. And I wanted to go to manufacturing because as I'd been reading the journal for 10, 15 years before business school, I had noticed that every pharma company ends up having manufacturing issues, all of them. And it was the most bizarre thing. And I'm like, this must be preventable. So I wanted to go learn. I wanted to learn about the FDA, about CFR, just to learn the GMP environment. And so I told Lilly, I said, I'll come, but I need a manufacturing job. And they looked funny at me at the time because they wanted to give me a marketing job. And I said, but I want to be in the plant. I don't want to be at corporate just looking at files and folders and so on. I want to really be at the action where it is. And so they sent me to the UK. It was a great experience. I had a great team there. And then with a funny, true, funny story, Lilly had a big issue with FDA when I when I was in the UK, but in Indianapolis. And so at the time, it was a time where Lilly had a lot of biologics that were ready to launch, great clinical data. And because there was a warning letter on the injectable side that was making insulin, Okay. all the biologics needed to be injected as well. So there were planned to be coming out of the same plant. And the FDA basically told Lilly, until you fix the problem on insulin, because it's a public health matter, because then it's Novo and Lilly at the time owning most of the supply of the US market, you won't launch any product.

No biologics.

No biologic launch. Where the CEO had been selling to the street for years and all those cool biologics are coming, FDA said none are launching. And so I was—

Manufacturing was important. Fix the brass tacks of how you make insulin first. And then we can talk about this other cool stuff.

Exactly. And it was exactly the right thing to do from a public health standpoint. FDA was taking care of a patient as they should. And so I was asked, like several other people that were posted in plants around the world, to basically just move to the US and help. And so I moved to Indianapolis. And so it was 2 years of craziness helping the team kind of deal with manufacturing issues. I had a great boss. Who went into a small world biotech and pharma, who was brought by Henri Termeer to fix the Genzyme issues after the Genzyme, as you know, ran into manufacturing issues too, almost 10, 15 years later. A great gentleman of the name of Scott Canute. And so I helped the team there. And then I told Lilly at the time, hey, I'm happy to do one more job in manufacturing, but I really want to go back to the business. And so they said, deal, you come, you help, if everything works well, You go back to the business. And so then I ended up becoming country manager for Belgium. And so I moved with family from Indy to Brussels. And it was a great experience. I was very close to the customers. I was in the field with the reps like a day a week. And we launched new products like Alimtino for cancer, Simbalta for CNS. We launched Cialis, which was a really fun product to launch. Because Viagra was, of course, the only product at the time on the market. We had a lot of pricing issues with the government. Belgium has variable prices. We spent a lot of time negotiating prices, even for breast cancer, the indication of Genzyme breast cancer. It was like a year and a half fight just to get it reimbursed, which was crazy. It was the only country in Europe that was not reimbursed. So a lot of learnings there. And at that time, it was one of those funny things that happen in life. where Alain Mériaux, who was at the time the chairman of Biomérieux and the founder of Biomérieux, called me out of the blue one day. We just kept in contact, like Christmas letter, and he said, I'm coming to Brussels to see my family. I mean, can we have lunch? I'm like, sure. So we have lunch and literally very French, we talk about politics and business and what's happening in the world and so on, the whole lunch. And literally between cheese and dessert, He just dropped, hey, we are looking for a new CEO. I've been advised to, you know, throw a very wide net. Of course, you are way too young.

Yeah, how old were you?

I was 32 at the time.

32.

To have a chance.

And all you were at this point was sort of the bright young French sales guy who had some success over there in Japan. I mean, it was kind of a strange— it stood out, I'm sure.

Yeah.

In his mind, but You know, I got an HBS degree, did some Lilly work.

Yeah. So it's interesting because— so I went through the process. I mean, of course, history, just to move fast. I ended up getting the job. And when I got the job, I asked him, I said, why are you giving me the job? Because I'm sure you had much more experienced, senior candidates for the job. And he said, you guys have very similar skills on most things like business, finance, sales, and so on. The thing that stood out was manufacturing. You are the only candidate that has manufacturing experience and we're making medical devices. By the way, at the time that I joined, I was aware BioMérieux had a warning letter on the US site. So I had the chance to read the warning letter on the FDA website before saying yes for the job because I wanted to know how bad it was.

Wow.

Because sometimes it's so bad that it's going to take you 5 years to dig yourself out of a hole. And so it was bad, but not too bad. And so I took the job and week 2 in the job, I was in a plane to EOS to site because I wanted to see for myself. And I surprised the team because I went to see the utility room, you know, on the roofs everywhere. And the team was surprised, like, the new CEO is in the utility room of a plant. What is he doing?

Yeah, I mean, manufacturing. I mean, I'm sure there's a reason why there weren't a lot of candidates with that in their background. Not a glamorous set of tasks that, you know, I don't think a lot of people raise their hand early in their career to try to, you know, get into the nitty-gritty of this.

Yeah, and it's funny because again, at the end of the day, we're all here to make medicines. And of course, you have to invent the medicine, which is, you know, super hard research. Then you have to, you know, develop it in the clinic and so on. But to be able to make consistently a high-quality medicine for a long time, that you really build the process and the infrastructure and the culture, is really important. And most organizations don't understand it.

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Okay, so you go to Biomérieux and it's— you're there for a number of years, you're the CEO. It grows a lot. From what to what?

Oh, I don't remember numbers now. Look, what I remember is we grew 10%, excluding foreign exchange rates, every year for 5 years. Uh-huh.

Uh-huh. And in terms of like global operation?

Yeah, so it was a global company with presence in 42 countries. So we had teams in 42 countries, I think 10 plants around the world, 10 or 11 labs, R&D labs around the world. So truly global company, publicly traded. So it was kind of a big jump.

Yeah, so you're in the deep end of the pool, you start this job at 32, you end up in, you know, 37, your late, late 30s. How did you make your next So it's interesting.

So when I was at Biomérieux, one of the things we did is we did a lot of acquisition of technology companies, like early stage, kind of trying to plug the holes to complement our internal R&D. Biomérieux was investing a lot in R&D, and that's what I learned from Biomérieux. I always think about Biomérieux very similar from a culture standpoint to Roche. She's family, majority shareholder, several generation long-term view on things, has been in science for several generations before. So I've learned kind of the hard way that science takes time and biology is hard. Monsieur Mayor used to joke, say, yeah, all the projects, they ended up taking twice as long and costing twice as much as what we were told at the beginning of a project. It's like, that's just like this biology, Stephane. You just have to get used to it.

Yeah.

And so what was interesting is—

So this Mr. Miriou, he would have been like the chairman of the board?

Yeah, he was the chairman of the board.

Working with you as the CEO?

As the CEO, exactly. And so we meet regularly, talk about the business and so on. And it was great for me because first, he had a lot of experience. He started the companies 40 years before. So he saw a company from day one. He had a lot of experience because of different age. He had his name on the company name. I did not. So it was kind of a very great thing to me in terms of coaching and mentoring. And it's funny now, I went to visit with him just before Christmas because I happened to be Christmas in France this year. We flip with my wife being American, one year in France, one year in the US. And I went to see him in Lyon and I told him, I said, you have no idea the number of things I've done at Moderna. Because of what I learned from you, how you built and the culture you had at Biomérieux. So anyway, so we did a lot of acquisitions at Biomérieux, 10 if my memory is correct, so kind of 2 per year. And technology, so early-stage stuff to plug the holes we had in R&D or to complement what we were doing in R&D. And through that process, we must have looked at, I don't know, 40, 60, 70 companies, you know, You look at a lot of stuff before picking the ones you like. We made our share of mistakes, obviously. We made one or two acquisitions I wish we had not made. So we just cleaned our mess after. But through that process, I got to meet a lot of VCs in the US because 2 further companies we bought were in the US. And so I got to meet a lot of VCs and get to see them regularly. And then the phone calls started to ring. Say, hey, Stephane, we have this super cool company. Would you be interested in running it?

Not just buying it.

Yeah, running it. So that became an interesting discussion. And it was initially mostly on the diagnostic side. And then people realized that through the Lilly years, I spent quite a number of years in pharmaceuticals. And so then it started to be on the biotech side where people say, hey, we have those cool molecules and so on. And most of the phone calls were interesting, but they were mostly kind of a typical biotech company, one or two products. I'm not a gambler. When you look at the probability of technical success of molecules, one or two assets, the chance that you go home with nothing is pretty high. I'm like, oof. So I was always kind of declining politely. And one day clearly changed my life. It's the day when Noubar called me.

Noubar Afeyan, Flagship Ventures.

Yeah. So I'd known Noubar for a few years. We actually been on the board together of one of Flagship companies. And Noubar called me and he's like, come and see me. And so I went to see Noubar. It was easy. I was a few blocks away from Noubar. And he showed me the first experiment, which was going to become Moderna, which was an experiment coming from the Rossi Labs at Harvard showing that they had injected mRNA-encoded human EPO in a mouse muscle. And they had found in the mouse blood human EPO, which you can differentiate because the amino acid is different from mouse EPO. So it was really the human version, not the mouse version. And the red cells of the mouse were going through the roof, like if it was an EPO from Amgen. And I remember looking at the data on the table and telling Nobhar, this is fake, this is not possible. And I told him, we have all been trained in grad school that mRNA will never be a drug. It's super unstable, it's immunogenic, It doesn't look like a cool drug. And Noubar was very, very good. And I'm thankful that he was very good because I might have just walked away from what became Moderna. He told me, look, Stephane, you're a big company guy. You spend your time saying no because your teams have more ideas than you guys have money to invest. It's true of any company in the world. But our job here at Flagship is to invent the future. We don't like to do things that other people do. We like to do things that are Really, you know, super innovative. Of course, it's more risky. And we love platforms. So I'm not asking you to believe this is true. But just because you're here and out of friendship, nobody flipped me like a pancake, or I should say a crepe, actually, by saying that, because I let my guard down. And he said, what if this is true? What does he mean if this is true? And then Nuba, you know, kind of very humble, low-key, undermining, he went, look, because he knew my background. Nuba and I are both chemical engineers. I mean, biochemical engineers. And so he knew my background and he said, what if this is true? And then we went crazy because I let my guard down and we said, look, if this is true, we're going to be able to do protein that nobody can do because they're inside the cells. Because the ammonia gets inside the cells, makes a protein right there. So we're going to be able to do a lot of protein that nobody can do. And around 2/3 of a human protein, the proteome, are intracellular protein. It's only a third that goes into the bloodstream, like insulin and EPO, where the biotech industry has been able to drug in the last 40+ years. So I'm like, wow, it's going to be a massive product opportunity. So then it's going to be a true platform. And when you think about it, in this industry, unlike other industries, we really never had platforms. I mean, people use a lot of the word platform because it's very nice marketing-wise for investors. But for me, a platform is not when you automatize and robotize that you can do a lot of the same thing. That's not a platform. That's industrialization. For me, a platform is like in the tech world where if you have one product, you change a few little things and you get another product very quickly with very, very low risk between product 1 and product 2. And so because mRNA is nucleic acid, He was very clear to me, he's like, geez, if this is going to work, it's going to be really hard to make the first drug in every application you're going to go after. But the second and the third and the fourth drug are going to be just changing the sequence of letters on the message and you're done. And then it's going to be less risk than making a small or large molecule. And the good thing that I had at Lilly, I was super lucky, is Lilly had both biologics and small molecules. So I learned both the pluses and minuses of those 2 things because when I was in manufacturing, after my time in the UK when I was at corporate, I spent most of my time working with development guys to make sure that we had the right manufacturing technology to be able to accommodate the products moving to development and moving to commercialization. So I spent most of my time with development.

So not only is this theoretically a platform in which, as you say, you can change a few nucleic acids here and get a different protein, a different drug. But you don't have some of the same concerns with manufacturing. You don't have to spend the years and tens, hundreds of millions of dollars in biologics manufacturing, which is complicated and difficult. Essentially, the body becomes the drug-making factory.

Which is one of the many elements that Noubar and I, again, as both bioengineering engineers, were looking at each other. We said, geez, it's the same process for everything. Because again, it's only the order of the letters that changes. So the way we do today as Moderna, you know, the vaccine, you know, for flu or the vaccine for Zika or the VEGF for the heart for AZ, same process.

So he plants the hook, so to speak, here. He gets you to let your guard down. This would have been what year? 2010?

2011.

2011.

2011.

Okay. So You decide to quit Biomérieux. What did your wife say about this?

So it's funny. So first I had to convince myself. So I just told her that it was a crazy idea from Noubar and so on. She had heard the name Noubar a few times before. So first I had to convince myself. So I took a few days off from Biomérieux because of course it's a publicly traded company. So we do things by the book, obviously. Took a few days off. I go to the Rossi Lab at Harvard. I go talk to a lot of people that are coming together as a company that is being formed. So Ken Chen, who is a gentleman who came up with the use of VEGF mRNA, with Jack Stotka, who is Nobel Prize of Medicine 2006, who is the chair of our— sorry, 2009, who is the chair of our scientific advisory board since day one and still is as of today. So I talked to a lot of scientists, I go to the lab, I try to just figure out what am I missing. And so when I start to not find what I'm missing, it doesn't mean— I was very clear in my head that I might still be missing something. I'm just not seeing it. And so, yeah, so I started talking to my wife, and I have an amazing wife. I've been very lucky in life in many ways, but I have a really amazing wife. And she's a photographer, so she doesn't understand science very much. And so I tried to explain to her what it could mean if this was going to be true and it's going to be working. I make sure to tell her all the risks that everybody until now thought that mRNA will never be a drug. So it's kind of really pretty steep mountain we're going to be climbing. But she also understands the impact on patients it could have by being able to drug all those diseases. And the example I used with her at the time, which we are now doing, is the genetic rare disease. Because for somebody who doesn't understand science, understand that if a gene is damaged, If you can make the mRNA coding for the protein of that gene, give it to a kid, then in theory you should be able to get the kids being healthy again.

Yeah, well, it's a form of gene therapy, you could say, without the viral vectors.

Though without viral vector, without getting into the nucleus, so a lot of nice things that we liked. And so my wife said, yeah, you have to do it. Actually, Svenja flipped it. She didn't say, I'm okay you doing it. She said, you have to do it. I'm like, why? I remember, I live in Boston, as you know, we're in a bar having a bottle of wine because every time we made big decisions together over the years, we usually have a babysitter coming, taking care of the kids. I have 2 daughters that are a bit older now. And we just go out and spend a calm 4 or 5 hours just chatting with a bottle of wine. And so she said, you have to do it. I'm like, why? She's like, you're so stubborn that if this thing can't work, you'll find out a way to make it work.

So, um, you take the leap, become an entrepreneur, um, and this is 2011. Uh, this is very stealthy. Flagship's not saying anything publicly about this. Maybe there's like one paper from the Rossi lab published, I think. Um, and I remember writing one of the first stories, but you kind of came like this bolt out of the blue with a deal with AstraZeneca, $240 million upfront. to develop mRNAs against something like 40 different indications, cardiovascular, metabolic, and a couple of other things.

Oncology.

Oncology. I mean, people looked at this and said, who the hell are these guys? And why are they getting so much money? What? You can't make mRNA as a drug. What just happened here?

Yeah, so, so first, almost Almost 2 years of work happened in between. So we started truly operations and scaling up and hiring people in the summer of '11. And we focused initially on trying to ask very hard questions first. So again, coming from the pharma world, I was paranoid about safety. I was already freaking out about, is that thing going to be safe? And so we ran rat tox study very early to pushing the dose at very high levels. We go into monkeys very early because I've never been too much excited by mice. Again, I learned that at Lilly. And even to the surprise of some of my board members at the beginning, because as you know, it's very expensive to do monkey experiments. And so the idea of using a very raw early technology, totally untested to go into monkeys, people thought there was kind of crazy. And actually, we tried 2 drugs in monkeys at the same time, because I told myself, if we do only one, everybody's going to tell me, both investors, potential investors, and Big Pharma, everybody's going to tell me I just got lucky. So I said, I need a second one. So we did 2 drugs in parallel in monkeys, we did a rat tox study. And we did set a crazy challenge for the team who totally thought that was crazy, is I asked them to do 100 different proteins in mice.

100 different proteins in mice?

Yes. And I picked 100 just out of my ass. It's just thin air. 100 is a nice, it's a big number. And so the team had to make all the mRNA by hand at the time. Now we have robots making everything, but at the time it was pipetting by hand. And then they had to develop all the ELISA assays to read those proteins in animals. So it was just a massive amount of work, people working around the clock and so on. And so we did that. And then the other thing we did is, it was very clear to me, I love history. It's one of the good things about French education or European education is they teach you a lot of history. And so I ended up learning to like history and to really value not reinventing the wheel. And so if you study biotech history, and I really mean biotech history, going back to kind of Genentech, and then, you know, Amgen and all the companies that followed, none of those companies made it alone at the beginning. Now, we all think about Roche when we think about Genentech, but for all of those of us that are old enough, it was Lilly.

Eli Lilly with insulin.

And growth hormone.

Yeah.

The first 2 drugs, the first 2 biologics approved by FDA, you're correct, was insulin first and then growth hormone made with Genentech technology for Lilly. Lilly had global rights, commercial rights for those 2 products. And then Roche was a smarter company, did the big partnership US-OUS with Roche and then ended up buying the company. Amgen had the deal outside the US with J&J. And that kind of made Amgen.

To make EPO.

To make EPO. And so seeing this and knowing how expensive it costs and how long it is and how difficult it is to make medicine, which again is a good thing of being at Lilly. I was not like— I think sometimes people can be a bit naive in biotech that, you know, with 10 people and a dog, you can really get a drug to market. When you know all the things you have to do in terms of both discovery, process development, analytical, again, to get good product in manufacturing so you don't get stuck with a not approvable letter. When you have good phase 3 data, that's pretty bad. And so, and the capital. So I was very fixated, almost obsessed by I needed to get a deal done. And so in September of 2012, so the company is around a year old, at one of the board meetings, I asked the director, I said, look, I would love to get your okay to go partner cardiology. And the reason is I'm like, look, cardiology is very hard. A lot of easy targets have been already done. The cost of development is obscene. So we're never going to do in the next 5 to 10 years a cardiology drug with our own capital. We're not. So this asset is worth zero to us. We're going to do nothing with it. So I said, can I have your okay to go get a deal done? Because anything I can get, we might have more shots on goal, more learning, we might get a bit of cash upfront. And so the board said, sure, go try to find a way to partner in cardiology. And so I get on the road and I talked only to the big 5 guys in cardio because one of my premises was if I do a deal with a 20th company in cardiology, first, they won't have the scale or the capabilities to help me. It won't have the same brand impact in terms of positive brand to Moderna to have the 26th player versus one of the top players. And so I talked to the top 5 Companies, I want to protect the innocence, but one company I called, I got connected to the chief scientific officer via Bob Langer, who is co-founder of Moderna, and of course knows everybody. And so I called this gentleman and he's like, don't even get on the plane. We don't do preclinical new technology stuff. So save a plane ticket, save a day, don't come even see me. I say, okay, well, thank you very much. So this crossed on the list, we're done. And so we started to get a lot of traction with the AZ team. And I realized this was serious when in the middle of August, Martin Mackay was at the time the head of R&D of AZ, came with his entire staff. So Martin came first. I think BIO, it was BIO that year that was in Boston in 2012. 2012. And Martin came introduced by Ken Chen, because Ken has known Martin for years. Ken, cardiologist, MGH Harvard. And tell Martin, you need to see that thing because that's really, really cool. Ken was working on VEGF, of course. So Martin came and we showed him a lot of data. He was clearly impressed. He said, look, I've never seen something like this. And by the way, he said, I've never believed in platforms. A lot of biotech companies say they have platforms. And they don't. It's like, this really looks like a platform because molecular biology. And so Martin said, my team has to see that. And he really surprised me because I think BIO was in June. In middle of August, people are on vacation, right, left-hand corner. He comes with his entire staff, everybody. Manier was there, Bai Jie was there, the entire team was there. And we show them all the data a bit more because we had 2 more months of data. And then we had very good feedback and Martin said we should send a bigger team. And so they sent a team of 30 people.

30?

Yeah, 30, more than we had employees at the time, to really get their head. They wanted a buy-in, big company stuff, buying of your organization. It was not due diligence, that came later. It was much more fun. It was just, again, talking, showing the data, talking about the science, ordering the CD and so on. And so they ended up at a stage where they were very serious. And so I asked Martin, so what do we do? And Martin said, well, if you are willing to partner all of cardiology, I'm interested to partner all of cardiology. And so we discussed, it was quite interesting discussions. And at some stage I told Martin, so in the meantime, Soriot, Pascal Soriot, the CEO of AstraZeneca, arrived as CEO of AstraZeneca.

He was new in that job.

He arrived around October. So we started this journey in June, August, October, Pascal Soriot arrives. And one day I remember we were talking with Martin about the deal. And I asked Martin, I said, how much can Pascal approve a loan for a deal? And he tells me $100 million. Why? I said, well, I need to meet Pascal now. And he's like, why? Because Pascal will have to defend the deal to the board because he will be in awe of $100 million.

This is pretty audacious. You're thinking a big dollar amount. You saw Martin was excited.

Not only Martin was excited, but everybody was excited. And what I remembered from Lilly, which is, again, I could never have done this deal if I had not been at Lilly, because what I learned there. In big companies, it's everything by committee. Everybody's protecting their hiding. And so what I always told my team as we were preparing and thinking about the next step for the negotiations. So we need to figure out, they're in a big meeting room, there are 30 of them, you both have management and some very strong scientists, experts, and people are going around the room. Hey, Luc, what do you think of the Moderna technology? And you're going to say what you think, and you're going to say some good stuff, and you're going to be cautious.

You can always find 100 reasons why it won't work.

Correct. And then they're going to look to the guy next to you. And Martin, if he's now the head of the company, would ask, hey, Joe, what do you think of Moderna? And so what I told the team is we need to get to a place where everybody gets comfortable that it's risky, but it's a risk worth taking. So I told the team, don't oversell it, don't push it. Be very honest about what we know and what we don't know, because they can only do this deal if they trust that we have told them everything that we know. And that the team is capable and honest, trustworthy, that we can work together because it's going to be hard to make medicine. Again, another thing I learned at Lilly. And so going back to Pascal Soriot, so one day, so when we had the discussion with Martin, he said, okay, so, and so he set up a breakfast in Gettysburg with Pascal in December of 2012. And so I met Pascal for the first time. We have breakfast for 3 hours. And I need to give Pascal a lot of credit. He got it in 20 minutes.

Mm-hmm.

Like everything, like everything kind of crystallized in his head. I saw it in his eyes. He got everything. And then we finalized negotiation, which was ups and downs. So I think this deal, Noubar would tell you, this deal almost failed 10 times where we were in big dead ends. couldn't resolve it anyway, we had to pedal back and renegotiate and so on. And so we got the term sheet, okay. And then we had the due diligence, which was fun because we sent so many people because it was for a quarter billion dollars.

It was a lot of money. It made a big splash. Now I want to kind of fast forward through, like, a whole series of dominoes fell after this. Like, you started lining up partners like Merck and Alexion and DARPA. A lot of people from a lot of different parts of the biomedical enterprise got very interested. Once AZ was in there in a big way, you raised a ton of money. I mean, I don't even know, it's over, over $1 billion of equity. $2 billion.

So it's $2 billion, but $1.1 billion of equity so far.

$1.1 billion equity, and then $2 billion total when you factor in all the partner upfronts and near-term milestones and all that. So this, you know, made you a unicorn, a privately held, a preclinical for a long time, billion-dollar, multi-billion-dollar valuation. And a lot of people said, this invited a lot of skepticism, a lot of scrutiny. You hadn't published, you know, hadn't told people much about how you were solving some of these mRNA challenges.

Yeah.

And it turns out, you know, the immunogenicity, that is a hard one that I know you're continuing to work through. I don't know if you ever Google yourself, No, I don't.

I should maybe.

But I did before this interview, and you may be pleased or chagrined to see that when you Google Stephane Bancel, you get 4 other people that people also search for: Elon Musk, Jeff Bezos, Daniel Ek of Spotify, and Elizabeth Holmes. Now, some of those folks I imagine you might admire and read about and study. Others represent more cautionary tales in entrepreneurship, shall we say. You've heard this comparison, right, to Theranos, people wondering, is this just a bunch of smoke and mirrors that you got there at Moderna? So how do you— you're in this period where a lot of people got excited about mRNA, but then there's some disillusionment. Maybe it's not living up to that Really exciting, imaginative set of possibilities. What do you do to manage this thing through these years?

Yeah, so I think one of the things I've learned, and my wife always reminds me when it's a tough time, and there have been a lot of tough times over many years, not only Moderna, pre-Moderna, her advice is always put the head down and do the work. And so I mean, we know who we are. We know what we have. We knew what we knew at the time and what we didn't know. And so we've decided very purposefully to not publish at the beginning, just to protect the company. It was very clear to us, as we talked about partnership before, with Amgen and Genentech and Allergan and so on. It was very clear to me that to build this company to the vision we have of Moderna, it's going to take a lot of money, much more than $2 billion. And so one of the things I worried a lot in the early days is a CEO of a big pharma company to get it.

And chasing you down like a dog.

And to put $200 million on it when I had— because pre-AZ, remember, for 18 months, we had no money. The first round of Moderna, everybody forgets, was $2 million. The A of Moderna was $2 million. The B was $7 million and the C was $25 million. Okay. That was all pre-seed, A, B, C. So the A is really the seed round, if you want. And so we were at a time where I was worried that if Big Pharma CEO were to put $200 or $400 million and the team, I had no team, and a team of people who know what they are doing on it, they would just kill us. And that was one of my big paranoia. And so we had no website, as you said earlier, until the AZ deal came. And the funny story, if you want to know why did we do a website, is because one day I woke up in sweat. We had to prove a term sheet. I'm like, geez, one of the AZ board members is going to go and Google Moderna. They won't find a website. And at the board meeting, when Pascal is going to go for a quarter billion dollar ask to his board and say, what is that? There's a company with no website in today's world. We're going to give them a quarter billion dollars. And so that's why we did a website.

Put up a bare-bones site.

Yeah, it was like a 10-page or whatever. We just rushed doing it because that was my worry, is a board member will derail the deal in the boardroom because we had no website. Which was just going to be so ironic for me trying to protect the company by having no website before. And so we spent the time where we say we just want to do the science right, which is why we didn't want to go public. When I see, for example, the CRISPR company all out early, I'm like, this is crazy. Science is hard. You have to get great people. You have to make mistakes. You have to break things. It's not a linear process. Doing scientific research is never a linear process. It's 2 steps forward, a step back. To step forward, a step on the right, 2 steps on the left. And you have to do that all the time. And you need to be able to do that where you only have to tell your board and a few investors. And we have had our ups and downs. We've had our technical challenges, trust me. But every time we had, we just put our head down. We had enough capital because we always wanted to have a lot of runway. And that was important for us because we said, when we're going to have technical challenges, We need to be able to see them through.

What were the big technical challenges that maybe you didn't fully appreciate in the beginning?

So a lot of them. One thing, and it's a bit ironic for a biochemical engineer, making mRNA super pure is really hard. It's really hard. You have to do— we have to invent everything, not only how you make it, but how you test for it. How do you test for purity, for potency?

New assays.

Everything, new assays. You don't have 40 years of industry where papers are published and patents filed and then expired that you can go reuse, where you have guidelines from FDA. You have none of those things. So you have to go invent everything. So that took a lot of work, a lot of time. On the biology side, a mouse is not a monkey. And in vitro is not in vivo. And so it's funny when we have employees joining Moderna now, sometimes they get very excited with in vitro data and they come to me with this new cool in vitro data. And when they do, I'm like, that's really interesting. Show me monkey data.

Now, there's also this question of focus. Whenever you've got a true platform that can do a lot of things, now no company can do everything.

Correct.

No matter how much money you've got.

Correct.

You have to focus. And I know that you tried to create these kind of little silo-type companies that would focus on, say, oncology or infectious disease or something. And then after a while, you scrapped that and folded them all back up under the Moderna tent. What did you try there? What did you learn from that experience?

Yeah, it was very interesting. So, this was post— so, after the AZ deal, which happened on March 13th, We decided to raise more money, which was a bit of a totally contrarian move at the time. It was one of those crazy genius nobody. So we raised another round, $125 million, I think. And then we did the election deal. So if you think about Moderna, we went from March 1st, 2013, with literally $20 million in the bank to January 15th, JP Morgan, 2014, $500 million in the bank. So it was like a massive transformation of a company, at least on the balance sheet.

Yeah.

Because we had to hire the people and so on. And so at that time, we started to think about, which we do a lot at Moderna, we love to play the movie backward. One of our favorite strategic processes is describe Moderna 10 years from now, or a version of what Moderna could be, because there are so many versions you can think of Moderna. And play the movie backward to understand what needs to happen when so that you have a chance to get to that endpoint. And in one of those exercises, after having half a billion dollars, we said, geez, is there a world where we can do all those drugs in one entity, in one company? And at the time we thought, geez, we might not. And so we came up with that idea to kind of have those dedicated teams that will be doing R, Indeed. Across one of our verticals. And so we put in place those ventures, as we call them, and we hire people, staff them, and so on. And what we learned, which we explained when we unfolded them last summer, in summer of '17, end of the summer, is we've learned that because the platform is still so raw, the technology is still so raw, Because when you think about it, we've only been at it 6 years and most technology takes a 20-year time cycle to mature. The most important interface was not between R&D within a vertical. It was between the platform R, the platform discovery, and the biology discovery. That was the interface that was the most important and we totally missed it. And so when we realized this was missing and that was actually slowing down Moderna, We just decided to bite the bullet and to fix the mistake we created. And so we remerged everything back into one entity and we just moved forward.

It's the biology.

It's the biology.

Yeah. Now, you raised a lot of money. Was there too much money? Does too much money sometimes feed a lack of focus? focus or discipline?

I think it's about discipline and focus is about culture. And so, I mean, the way we think about the problem is in the following way, which is what do we need to fund to do it well? We need to fund the platform, give or take $100 million per year. That includes process innovation. It's just kind of Technology formulation and so on. Drug discovery, $100 million per year. Why? Because we say we want to try the technology in a few different areas. And now we have 5 articles as we speak. Then drug development, as you know, it's a very expensive endeavor. Then G&A, just last year, to give you a sense, $14 million of IP prosecution.

$14 million?

$14 million of just prosecution, just filing patents. IT. So we're investing a lot in digital, which is for another day, another discussion. But we, I think, yeah, it's around $50 million of just IT expenditure.

I want to come back to this point you raised about culture. We've talked about this before and how it relates to patents as well, that I think you have this kind of somewhat unusual view that patents, I mean, they're important. Obviously, you're spending money on them. You're Putting together an estate across a wide variety of areas, but they can be a little overrated. And that culture and a speed of learning, like a company that is like relentlessly in forward body lean mode.

Yes.

Uh, and, uh, has that, that, that Silicon Valley kind of killer instinct. I know you've gone out there and studied this. What have you learned from that experience and tried to instill in Moderna to kind of create a company that can almost fly above IP in some respects.

So I want to be careful. Let's talk about the IP for a second, then I'll go into what I learned from Silicon Valley, because we are big believers in IP, because we have to respect people's intellectual property. The piece that I think is unique about Moderna is because we are at the beginning of an S-curve, what we invented last year might be irrelevant this year, just because of how quickly we learn and we progress with technology. So that's what we meant in our previous discussions that we had together, is that sometimes what has been crazy is we look at a patent we filed a year or 2 ago, and some of them we look at and say, yeah, that was cute.

Old news.

Totally irrelevant. Exactly. Useless, irrelevant. Because of how much we have improved technology. But no, we take patents very seriously. And if you want, I didn't have a similar strategy at Biomérieux because we were on the top of the S-curve at Bumerang, because he was diagnostic, all industry and so on. But here what was very interesting is exactly that, which is what we invent now makes what we invented 12 years ago irrelevant. So on the Silicon Valley side, the piece that was giving me angst in the post-AZ, post-election, the kind of early 2014 timeframe when We had all that money and we had to scale the company. So if you want, having been at Lilly and at Biomérieux, I had a very clear idea of where to go, kind of what functions to add, how to add critical mass in different departments and so on. But the piece that gave me a lot of angst as we started to recruit a lot of people is we had basically almost no HR function, we had no training function. And the company was learning so much because we just spoke about the S-curve and just the velocity of the learning. And you had people joining the company, and either they came from industry and they barely knew how to spell mRNA, or they came from academia and they knew a lot about mRNA, but they knew nothing how to make a drug.

They had not been through that experience of being at a ride like this where they went up that S-curve.

Correct.

Maybe they were at the top before, or maybe they're at the very beginning before, but not climbing it.

Correct. And the piece that started to give me a lot of angst is I told my team, we are not setting our new employees for success because they need so much basics about the science, company processes, culture, and so on. And they're just learning on the fly and that's not good. And the analogy I took with the team at the time, I say, it must feel to a new employee, because there's so much to learn, like jumping on the Shinkansen with it not stopping at the station. It must not be a nice feeling. And so I talked to a few new employees who actually echoed that we need to do something about onboarding. And the pace at which we were going made me realize that what is done traditionally in biotech or pharma company was not very relevant to the hypergrowth mode we were in, in terms of hiring. I mean, we were doubling the company every 6 months or 12 months. I remember The first hiring class of January 2014 was more new employees in that room that day than we had 9 months before when we did the Easy deal. It was just crazy. And so I went to the Valley to try to think about and to learn about how do hypergrowth companies do it? How do they onboard people? And so I went to a few companies like Google and Facebook and Netflix and a couple more. And I went with the same questionnaire. So in the plane going to San Francisco, I just wrote a set of very simple questions to ask myself. And I went to see all of those companies and ask exactly the same question to everybody. And I spent several hours there meeting both people in line management, in HR. And it was fascinating first how different the companies were doing it. Like you went from Netflix where the onboarding was 2 hours. where you had Facebook where it was 5 weeks. So I was just blown away. They took employees 5 weeks from the day they joined, take them 5 weeks before they go start to work. And there was a week in, I think week 2 or week 3, where it's just a culture week. So for a week you just have people coming and telling stories that represent the culture of a company. and what they care about. And so with all these different thoughts and ideas, I came back and so I shared my learnings with the team and we started to put in place a plan that we have always worked on and improved on and always do that, where anybody who joins Mondana usually joins the first Monday of the month because that's the hiring day. If I'm in town, I always do the welcome. We have some videos for onboarding before, on the secured website that they got access to once they signed the offer. And they spend at least 4 days just full-time just getting to see, and they see the whole enterprise, they learn about the science, the products that we have in the company, the diseases that we care about, and stuff like that.

Being the culture guardian is a big part of being the CEO. I get that. So I know we got to wrap up. I just have one last question. Now that we think about, you know, it's the beginning of the year, it's 2018, you look ahead at JPMorgan, what's the What's the headline that you would like to be able to write in your press release next year?

I think next year is about a few things. It's about focusing on the execution of a development pipeline, 19 products now, and '18 is going to be the year of Phase 2. As we just said, AEC is going to start their Phase 2 any week now for the VHF program. I think we will continue to see an explosion of development candidates because of the platform. And we're going to focus mostly on rare diseases now that we cracked how to get the mRNA inside the liver safely and you can repeat it. Building the infrastructure, I mean, Norwood, we're building a massive plant. It's a $125 million investment in Norwood, 10 miles south of Boston. It's going to be a gigantic plant. It's going to be built for the next 20 years. It's super automated. We use the best technology that's available out there. So those are kind of the big things for the Moderna team for 2018.

Well, it's great to speak with you, Stephane. Thanks for being with me today on The Long Run.

Thank you for having me.

Thanks for listening to The Long Run, a production of Timmerman Report. Pedro Rosado of Headstepper Media was the producer and editor. Music comes from D.A.

Wallach.

Thanks to Presage Biosciences for Thanks for sponsoring The Long Run. Next on The Long Run, David Schenkin, the CEO of Ageos Pharmaceuticals. He says something very few biotech CEOs today dare to say, that he wants to build the next Genentech. Get a much deeper sense of what he means by that in the next episode of The Long Run.