mRNA Provides Significant Long-Term Investment Opportunities

1. Investment Research Services REPORT mRNA Provides Significant Long-Term Investment Opportunities

2. mRNA Provides Significant Long-Term Investment Opportunities Messenger ribonucleic acid (mRNA) vaccines have the advantage of being faster and easier to mass-produce than traditional vaccines. This feature enabled biopharma companies to produce mRNA-based COVID-19 vaccines on a large scale, which was necessary to combat the pandemic. Now, many biopharma companies are conducting research studies to use mRNA technology for other lines of treatment, such as cancer and influenza, providing several growth opportunities to a diverse set of companies. Benefits of mRNA vaccines over traditional vaccines • Multiple applications – mRNA can be used for both vaccines and therapies. Under its therapeutic application, the protein released from mRNA replaces a defective or missing one in patients with genetic diseases, such as cancer and sickle cell disease. Compared to traditional vaccines, mRNA vaccines have several advantages, such as: • Ease of use – mRNA vaccines only require the genetic code of the virus for the formation of mRNA, unlike traditional vaccines that are produced by growing weakened forms of a virus. • Biosafety benefit - Because mRNA vaccines are developed from an inactivated virus, they are non- infectious. In contrast, traditional vaccines require the production of viruses, which, if done at high volumes, could increase the risks of localized virus outbreaks at the production facility. • Fast speed – mRNA takes roughly a week to develop an experimental batch of a vaccine, while a traditional vaccine can take months. Because of this advantage, biopharma companies were able to quickly produce mRNA vaccines at a large scale, which was extremely critical for a COVID-19 pandemic response. • Versatile design – By making changes in the genetic code of a virus, mRNA vaccines can be adapted for other variants of the COVID-19 virus. 2

3. mRNA Provides Significant Long-Term Investment Opportunities The change in mRNA landscape with the onset of the COVID-19 pandemic In 2020, when the COVID-19 virus hit the world, biopharma companies preferred mRNA technology over the traditional approach due to its advantages of being faster and easier to produce a potential vaccine on a large scale. During the clinical trials, the mRNA- based vaccines, developed by Pfizer (PFE)-BioNTech (BNTX) and Moderna (MRNA) demonstrated 90–95% efficacy. However, traditional vaccines developed by AstraZeneca (AZN) demonstrated only 74% efficacy in reducing the COVID-19 symptoms. In late 2020, the U.S. Food and Drug Administration (USFDA) authorized the mRNA-based vaccine for the treatment of COVID-19. After successfully developing an mRNA-based vaccine for the COVID-19 virus, it has been established that mRNA technology is highly effective in improving the body’s immune response. Now, research is being conducted on whether this technology can be used to develop vaccines for other diseases, such as cancer and Influenza. Preclinical trials of mRNA have demonstrated promising results for cancer. Cancer represents the most prominent therapy due to its high incidence, and clinical trials based on mRNA technology are expected to deliver encouraging results for cancer treatment. Figure 1. mRNA based therapies split by # of clinical trials and development stage (USA) mRNA based therapies/ vaccines by # of clinical trials mRNA based therapies/vaccines by development stage 2 2 4 14 Cancer COVID Preclinical 28 3 Metabolic Disorder Phase 1 Rare genetic disorder Phase 2 4 Phase 3 Influenza 2 Others 19 62 Source: Clinical Trial Data (USFDA), July 2022 As per USFDA, out of 70 mRNA candidates for vaccines and therapy, 28 clinical trials are for cancer, followed by 19 for the COVID-19 disease. Other therapies include multiple indications for infectious diseases. In terms of development, most of these therapies and vaccines are currently at Phase I only. 3

4. mRNA Provides Significant Long-Term Investment Opportunities Key beneficiaries of the growth in the mRNA technology Biopharma Companies mRNA vaccine manufacturers create their LNPs using a set of four lipids: The mRNA technology provides huge growth potential to biopharma companies that are engaged in the development and production of vaccines for the COVID-19 virus and cancer. • An ionizable cationic lipid that encapsulates the negatively-charged mRNA • A PEGylated lipid that helps in regulating the particle life and size Under the cancer vaccines/therapies, MRNA and BNTX are the leading companies using mRNA technology to trigger the immune system to target specific cancer cells. MRNA currently has two cancer vaccines in clinical trials (partnered with Merck–MRK). The most advanced of these, mRNA-4157, is currently being evaluated in Phase II, in combination with MRK’s Keytruda. It is a personalized vaccine that delivers neoantigens selected from the patient’s tumor for treating melanoma, a form of skin cancer. MRNA’s leading vaccine pipeline other than cancer includes Phase III candidate, mRNA-1345 (respiratory syncytial virus-RSV) and Phase II candidate, mRNA-1073 (COVID and influenza). BNTX has several candidates in the development and early-stage clinical trials for distinct types of cancers. • Distearoylphosphatidylcholine (DSPC), a phospholipid that supports in forming the structure of the LNP • Cholesterol that aids in the structure of LNP Under the COVID-19 vaccines, MRNA and PFE-BNTX launched mRNA-based vaccines in late 2020 and generated sales (from these vaccines) of USD18bn and USD37bn, respectively, in 2021. MRNA and PFE expect the mRNA-based COVID-19 vaccine sales to be at least USD21bn and USD32bn, respectively, in 2022. The USFDA has already authorized booster vaccines of PFE-BNTX in September 2021, providing further support to the company’s sales target. Alongside these two companies, other biopharma players, such as Sanofi and CureVac, also have a few mRNA-based COVID-19 vaccines under clinical development. Lipid suppliers and technology providers Lipid - The underrated mRNA vaccine element The delivery of large, fragile mRNA strands into the target cells was a major obstacle in the development of mRNA vaccines. The human body quickly breaks down the naked mRNA, which may cause an unfavorable immunological response. The creation of LNPs delivery systems is partly responsible for the recent success of the mRNA vaccines in SARS-CoV-2 clinical trials. The genetic material of mRNA is mixed with a complex mixture of lipids by vaccine makers to create LNPs, which deliver the genetic material to its target cells. 4

5. mRNA Provides Significant Long-Term Investment Opportunities Figure 2: LNP structure for mRNA delivery Source: CordenPharma Currently, only a few companies in the world have the required tools and infrastructure to make LNPs or the special ionizable cationic lipids, which is the most complex lipid to produce. Key lipid developers globally are Croda (through its acquired Avanti Polar Lipids business), CordenPharma, Merck KGaA, Acuitas Therapeutics, and Evonik. and development projects. Since the outbreak of the COVID-19 virus in 2020, the demand for lipids has increased dramatically. Several specialty chemical companies and contract manufacturing organizations (CMOs) are now expanding their lipid systems capabilities to capitalize on the rising demand for mRNA therapies like cancer immunotherapies, gene-editing therapeutics, and protein-replacement therapy and the rollout of the COVID-19 vaccines. Only a few years ago, lipids were only required in gram quantities for particularly specialized medications Table 1: Lipid-related investments made in H1 2022. Company Name Investment Date Deal Brief Croda USD133mn 06-28-22 Expansion of the lipid system capacity New lipid production facility to produce lipids for mRNA-based therapies in the U.S. New LNP formulation, development, and production in Italy Agreement between GC Biopharma and Acuitas Therapeutics for LNP delivery system Evonik USD220mn 06-02-22 CordenPharma USD11mn* 06-02-22 Acuitas Therapeutics 04-28-22 Croda USD40mn* 03-31-22 Development of high-purity lipid systems To scale up Exelead’s LNP technology over the next 10 years Collaboration with PFE to expand the use of LNP in mRNA vaccines and therapeutics Merck KGaA USD557mn 02-24-22 Acuitas Therapeutics 01-10-22 Source: SGA Research (*Investment amount converted to USD) 5

6. mRNA Provides Significant Long-Term Investment Opportunities Produce technology LNPs through the jet mixing integral part of vaccine development. The impingement jet technology uses a mixer that has three outlets. It forces lipids from one outlet and mRNA from the other into a small chamber. Due to the high pressure created inside the chamber against an opposite flow of mRNA, the active nanoparticles (LNPs) are produced and flow out of the third outlet. KAUER, a Berlin-based manufacturer of high-tech laboratory instruments, has developed a technique to mass-produce LNPs using impingement jet mixing (IJM) technology. Impingement jet mixing skid has been an Figure 3: Impingement jet mixer mRNA Lipid Lipid Nanoparticles Source: Knauer Deal activity surged since the outbreak of the COVID-19 pandemic After the recent success of mRNA vaccines to fight against the COVID-19 virus, several companies have participated in M&A and fundraising activities in this space. Particularly, noteworthy is Sanofi’s USD3.2bn acquisition of Translate Bio to capitalize on the long-term growth potential in this market. The public players in this market also benefitted from this growth. The combined market cap of MRNA and BNTX reached over USD300bn in August 2021 from USD14bn at the end of 2019. Table 2: Recent M&A activities Date Buyer Acquired Purchase Price Business Jan-22 Merck KGaA Exelead USD780mn mRNA CDMO Aug-21 Sanofi Translate Bio USD3.2bn Clinical-stage mRNA therapeutics platform Environmental Impact Acq. Corp (SPAC) Greenlight Biosciences Inc Tidal Therapeutics Aug-21 USD1.5bn mRNA biomanufacturing platform Apr-21 Sanofi USD470mn Preclinical biotech company mRNA contract development and manufacturing organization (CDMO) Jan-21 Merck KGaA AmpTec Source: SGA Research 6

7. mRNA Provides Significant Long-Term Investment Opportunities Table 3: Recent fundraising activities Date Company Funding Business A development-stage mRNA-technology company developing cancer therapeutics Jul-22 Kernal Biologics USD25mn Series A Jun-22 Vernal Biosciences USD21mn mRNA manufacturing Development of novel mRNA vaccines and other therapies May-22 The University of Auckland USD41mn Apr-22 RVAC Medicines USD140mn Series B Messenger RNA platform Biotech company specializing in mRNA drugs and delivery vector technology Apr-22 Innorna USD120mn Series B Mar-22 Nutcracker Therapeutics USD167mn Series C mRNA therapeutics for cancer immunotherapy Mar-22 RNAimmune USD27mn Series A mRNA-based therapeutics and vaccines Focus on neurodegenerative diseases using its proprietary RNA-based drug and drug delivery platforms Self-replicating RNA (srRNA) immunotherapies for preventing drug resistance in cancer and treat autoimmune and inflammatory disorders and other diseases Enzymatic DNA production (including the use in mRNA vaccines) Feb-22 Biorchestra USD45mn Series C Sep-21 Replicate Bioscience USD40mn Series A Sep-21 Touchlight USD125mn Series B Aug-21 Abogen USD700mn Series C mRNA COVID-19 vaccine Jun-21 Strand Therapeutics USD52mn Series A mRNA therapeutics for cancer immunotherapy Jun-21 Stemirna Therapeutics USD188mn Series B mRNA COVID-19 Vaccine Source: SGA Research Outlook Although mRNA is still in its infancy stage, the fight against COVID-19 has served as a significant testing ground for the technology. The scale of the current clinical development pipeline for mRNA vaccines/therapies has brought tremendous increases in R&D investment and fund- raising activities as well as a spur in the number of acquisition and collaboration deals. The deal activity is expected to increase further as companies continue to explore the possibility of the mRNA platform to treat other diseases. Similarly, the demand for LNPs/IJM is expected to accelerate in the future. 7

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