In a March 5 research note, ROTH Capital Partners analyst Yasmeen Rahimi reported that a site visit to Moderna Inc.'s (MRNA:NASDAQ) manufacturing facility, Norwood, showed how the biotech streamlines processes and uses artificial intelligence (AI) to enhance work flow.
Rahimi highlighted that at Norwood, which opened in 2018, the Cambridge, Mass., company carries out the five key components of manufacturing messenger RNA (mRNA)-based drugs. Those elements are plasmid, messenger RNA, lipid nanoparticles, fill/finish and quality control.
She noted and provided supporting data to prove that by using an array of high technologies, Moderna improved efficiency, speed, scalability and cost over the past few years and continues to do so now.
For instance, the biotech decreased its cost per batch by 65% between 2017 and 2020 and increased speed by 40% since 2018. With its cytomegalovirus vaccine, the company scaled up from 5 grams to 75 grams to 150 grams.
Further, the biotech delivered an mRNA vaccine, mRNA-1273, against SARS-CoV-2 in only 42 days, which is "the perfect example that highlights Moderna's streamlined discovery and manufacturing process at Norwood, allowing for quick production of a high-quality clinical batch," noted Rahimi.
Next, the analyst listed the various digital and artificial intelligence tools Moderna uses and how it uses them, "to enhance decision-making and minimize human error from preclinical to clinical development and how this can be a key differentiator from other biotechs in mRNA medicine," she described. The technologies include the following:
1) For the research phase, Moderna uses digital tools it developed for designing mRNA sequences and for choosing options for different nucleotides and codons. It also uses AI algorithms to help select the best mRNA based on back translation. These have helped the biotech increase production.
2) To maintain accurate inventory, Moderna employs digital systems for ordering, applying bar codes to and tracking various items, from raw materials to finished products.
3) In its manufacturing process, the company runs quality control test results through an AI-based system, which recognizes batch record exceptions in real time. Since being used, this process alone resulted in an 85% drop in manual batch recording errors and cut review time to three hours from three days.
4) Moderna uses more than 24 tools for data visualization and analysis, which ultimately decrease human error and allow for data comparison between batches.
5) The biotech uses AI to streamline its clinical work flow. Its AI-based clinical trial dashboard outlines the team's responsibilities, summarizes operational milestones and provides key updates. "We are especially compelled by Moderna's use of AI for forecasting trial enrollment, which can track patient enrollment, detect any issues with enrollment, monitor trial size and predict enrollment speed," Rahimi noted. Digitization also assists in identifying the sites where enrollment is happening the fastest and, thereby, helps expedite trial enrollment.
Also, Rahimi described in detail Moderna's manufacturing process and reviewed the substance of two white papers Moderna prepared in advance of its Manufacturing and Digital Day. One covered what can be achieved at Norwood. The other explained how Moderna's use of digitalization in the research and early development phases increases speed and quality and, thus, decreases development costs.
ROTH has a Buy rating and a $33 per share price target on Moderna, the stock of which is currently trading at around $29.61 per share.
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Disclosures from ROTH Capital Partners, Moderna Inc., Company Note, March 5, 2020
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Within the last twelve months, ROTH has received compensation for investment banking services from Moderna, Inc.
ROTH makes a market in shares of Moderna, Inc. and as such, buys and sells from customers on a principal basis.
Within the last twelve months, ROTH has managed or co-managed a public offering for Moderna, Inc.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
