Fall 2022: Moderna and Vir Biotechnology

Deal Team

• From: Madrid, Spain

• Indiana University, Kelley School of Business | 2026

• Majors: Finance & Accounting

• From: Memphis, Tennessee

• Indiana University, Kelley School of Business | 2026

• Majors: Finance & Accounting

Adrian Nunez

Ben Sharabi

Presentation Agenda

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Executive Summary

Company Overview

Macroeconomic & Industry Analysis

Strategic Rationale & Synergies

Valuation

Strategic Alternatives & Comps

Appendix

Executive Summary

Moderna Situation Overview

• Moderna has been committed to global healthcare since its founding in 2010

• The company has achieved impressive growth in recent years thanks to its successful COVID-19 vaccine, and as a result, has a cash balance of $9B

• Among Moderna’s top priorities is to seek for attractive external investment opportunities that would add new medicines and technologies

VIR Situation Overview

• Founded in 2016 and Headquartered in San Francisco, VIR was originally backed by ARCH Venture Partners and Bill & Melinda Gates Foundation

• The Company takes on HBV, HDV, Influenza A, HIV, and COVID-19

• After being awarded the fastest growing company in North America on the 2022 Deloitte Technology Fast 500, VIR sales are forecasted to decline drastically in 2023 due to the end of COVID-19, but has a very robust pipeline in large infectious diseases with a very promising outlook that would add significant value in the median term

Industry Highlights

• After the Pandemic exuberance, the market has returned to sobriety: DJ US Pharma is up 30% versus pre-pandemic, and the NASDAQ Biotech is also above pre-COVID levels

• Pharma’s fundamentals remain good: Global drug sales forecasted CAGR of 6% 2021-2028

• IPO’s have fallen to a trickle, and new FDA drug approvals have slowed

• Historic set of patent cliffs in the next 10 years and Pharma companies will also face price pressure from new regulation

• M&A activity reviving and coming to the sector’s rescue

FIR Recommendation Rationale for Moderna’s BOD: VIR Acquisition

• VIR meets Moderna’s top priorities by adding new medicines to leverage the platform and adding new techniques and capabilities

• Complementary to Moderna’s core business: Vir’s sotrovimab COVID-medicine will enhance Moderna’s top COVID-Vaccine solution

• Great timing after recent much stronger-than-expected results from Vir’s clinical trials

• Promising addition to Moderna’s team: Vir’s management team is full of highly experienced and skilled professionals in the pharma industry who have transformed a start-up into a $2B revenue business in 5 years

• Very relevant synergies expected in Sales & Marketing, Technology, R&D, Cost Savings, and Sales Cross Synergies

• Given MRNA’s current situation, FIR recommends the Acquisition of Vir Biotechnology at an implied equity value of $3.54B

Presentation Agenda

1.0 Executive Summary

3.0 Company Overview

2.0 Macroeconomic & Industry Analysis

5.0 Valuation

6.0 Strategic Alternatives & Comps

7.0 Appendix

4.0 Strategic Rationale & Synergies

Macroeconomic Outlook

Last 12 Months Highlights

• Russia Invades Ukraine

• U.S. New Covid Cases Peak

• Crude oil reaches $124/bbl

• Fed raises its policy rate for the first time since 2008

• The 2-year 10-year curve inverts for the first time since 2019

• The Fed hikes +0.75% for the first time since 1994

• Crypto markets lose $200B

• U.S. avg gas prices hit $5/gal

• U.S. unemployment rate reaches lowest point since 1968

• Inflation hits a four-decade high at 9.2% YoY

• Euro reaches parity with the U.S. dollar

• U.S. dollar peaks

• U.S. mortgage rates surpass 7% for the first time in 20 yrs

• FTX files for bankruptcy

• A record number of CEO survey respondents expect a U.S recession next year

U.S. CPI Month-over-Month

The FED Hiked Its Policy Rate By 0.50% Yields Across The Fixed Income Landscape

Source: J.P. Morgan

Oil Prices Have Fallen To Their Lowest Level In 2022

Pharma Industry Overview: Fundamentals Remain Strong

Worldwide sales at risk from patent expiration (2014-2028)

• After a bill was signed into law in August, pharma companies will face drug price negotiations with the US government;

• Medicare will negotiate price down for top-selling drugs by 2026 by 2026, rising to 20 by 2029

• Rebates on any Medicare drugs while prices rise greater than inflation

• Estimated cost for the industry of $270 billion over 10 years and a chilling effect on

• Pharma’s fundamentals remain good.

• Global drug sales are forecasted to continue their steady rise with an expected CAGR between now and 2028 of 6%

Worldwide total prescription drug sales (2014-2028)

Source: Evaluate Pharma

Pharma Industry Overview: Relevant Clouds Remain

• Uncertainty has led IPOS to fall significantly; there were barely a dozen listings on western exchanges during the first half of this year, a fraction of 2021’s haul.

IPOs virtually disappear in 2022

• First-half approvals are well below 2020 and 2019 levels.

FDA new drug approvals slow:

• After the pandemic exuberance, the market has returned to sobriety.

• The Dow Jones index of US pharma stocks is up almost 30% since prepandemic.

• The Nasdaq Biotech index already rose past its pre-Covid-levels, almost as if the 27-month roller-coaster ride never happened

Pharma Rises as Biotech Peaks and Falls

3 year stock comparison chart

• M&A is reviving as pharma wakes up to the potential sales losses facing it over the nect decade and puts to work the estimates $500 billion cash at its disposal

• Pfizer, flush with Covid cash, in August announced a $5.4B takeover of GBT, whose next-gen sickle cell disease treatment is in phase 2

• Expire of Bristol + M&A: Coming to the sector’s rescue

Dow Jones U.S. Pharmaceuticals Index (^DJUSPR) - Index

Source: Evaluate Pharma

Presentation Agenda

1.0 Executive Summary

3.0 Company Overview

2.0 Macroeconomic & Industry Analysis

5.0 Valuation

6.0 Strategic Alternatives & Comps

7.0 Appendix

4.0 Strategic Rationale & Synergies

Moderna Overview

Commercial:

Moderna COVID-19 Vaccine, mRNA1273.222 and mRNA-1273.214

Phase 3:

COVID boosters, Flu, RSV, CMV

Respiratory Vaccines:

• COVID variant boosters launched

• Older adults RSV in Phase 3; Pediatric RSV in phase 1

• Flu (mRNA-1010) in phase 3; Flu (mRNA-1020/-30) in phase 1/2

• Flu + COVID, flu + COVID + RSV and flu + RSV in phase 1/2

• hMPV +PIV3 in phase 1b age de-escalation study

• RSV + hMPV, Endemic HCoV in preclinical

~3,700 Employees

Moderna has been committed to global health science since its founding in 2010, leveraging the power of mRNA

Committed to bringing forward at least 15 pathogens into the clinic to help prepare for any future pandemics

Phase 2: PCV, Zika, VEGF-A, nextgeneration COVID booster 48 development programs

Latent Vaccines:

• CMV in Phase 3

• EBV, HIV in Phase 1

• HSV, VZV in preclinical

Public Health

Vaccines:

• Zika in Phase 2

• Nipah in Phase 1

th

Sharing the mRNA platform with collaborators worldwide through mRNA Access Building regional manufacturing facilities to be able to respond to regional outbreaks worldwide

mRNA therapeutics: 15 medicines in 4 therapeutic areas

• 5 immuno-Oncology: PCV in Phase 2; KRAS, Triplet, IL-12, Checkpoint in Phase 1

• 7 Rare Diseases: PA, MMA, GSD1a, in phase 1/2; PKU, CN-1, CF, OTC in preclinical

• 2 Cardiovascular Diseases: VEGF-A in Phase 2; Relaxin in preclinical

• 1 Autoimmune Disease: PD-L1 in preclinical

Moderna’s Priorities

Reinvest in the business & accelerate investment in R&D, manufacturing infrastructure and company buildout

Seek attractive external investment opportunities (licenses and/or M&A) to further expand the reach of Moderna’s technology

Return capital to shareholders

• Phase 3 trials: Flu, RSV, and CMV

• 48 development programs

• Disciplined approach to evaluating investment opportunities to advance medicines for patients; Consider attractive strategic opportunities in the following areas:

1. New Medicines that leverage existing platform(s)

2. New technologies and capabilities in existing platform(s)

3. New platform expansion, e.g., genomics

• Repurchased 7 million shares in Q3 2022 for $1.0 billion; Q3 year-to-date repurchased20 million shares for $2.9 billion

• Completed $3 billion Feb 2022 authorization in October, and began to utilize the previously announced $3 billion Aug 2022 authorization

VIR Biotechnology Overview

Business Overview

• Founded by Robert Taylor Nelsen, Klaus Frueh, Jay Parrish, Lawrence Corey, and Louis Picker on April 7, 2016

• VIR was born with a golden spoon in its mouth to supporting backers such as ARCH Venture Partners and Bill & Melinda Gates Foundation. It was launched to cure, prevent and treat antibiotic-resistant severe infectious diseases worldwide.

• The company is led by industry expert George Scangos, previously CEO and board member of Biogen (BIIB), a $40.82 billion largecap stock.

Pipeline

Target Disease

• Hepatitis B: Approximately 300 million people in the world live with chronic HBV

• Hepatitis D: ~12 million people with HDV infection; represents ~5% of HBV-positive people; no approved therapy in the US

• Influenza: 500k deaths from influenza globally each year; Vaccines are only 10-60% effective, depending on the year

• COVID-19: ~2.1 million sotrovimab doses delivered to date; in 3Q2022, 230,000 doses were delivered, all to countries outside the US

• HIV and Innovation: 1.5M new cases every year; High unmet need for a vaccine for the billions of individuals who are or may become sexually active.

HBV

VIR-2218+PEG-IFN-a Treatment (siRNA)

VIR-3434+VIR-2218+PEG-IFN-a Treatment (siRNA + antibody)

VIR-2218+BRII-179

Treatment (siRNA)

VIR-2218+TLR8 + PD-1 Treatment (siRNA)

HDV VIR-2218+VIR-3434

Influenza A VIR-2482

COVID-19

HIV

Treatment(siRNA +antibody)

Prophylaxis(antibody)

Sotrovimab Treatment (antibody)

Sotrovimab Treatment (antibody)

Sotrovimab Prophylaxis (antibody)

VIR-1111*

VIR-1388

Prophylaxis (T cell)

Prophylaxis (T cell)

Sources: VIR Company Website

VIR Financial Overview and Catalysts

VIR’s Performance Summary

❑ VIR had a feeble early performance on the stock market post its IPO on the 11th of October 2019. However, the company already has a profitable portfolio since the Fiscal year end of 2021; $917.2 million in sotrovimab collaboration revenue in 2021 and $2.1B expected in FY22. Strong balance sheet. Resources we believe will save lives, build more value;

➢ As a result, VIR was awarded the fastest-growing company in North America on the 2022 Deloitte Technology fast 500, a testament to the capability of VIR’s management team

❑ Although healthcare sales are predicted to decline drastically in 2023, VIR is part of multiple collaborations in various research phases that could drive strong sales in the long run.

❑ Pursuing a robust and diverse pipeline in large infectious diseases: COVID-19, hepatitis B, and D, influenza A, and HIV, with multiple clinical value drivers in 2023

Presentation Agenda

1.0 Executive Summary

3.0 Company Overview

2.0 Macroeconomic & Industry Analysis

5.0 Valuation

6.0 Strategic Alternatives & Comps

7.0 Appendix

4.0 Strategic Rationale & Synergies

Strategic Rationale

• Strong fit with Moderna’s top priorities; Vir’s acquisition would:

- Add new medicines to leverage its existing platform, especially encouraging the hepatitis B treatment

- Add new techniques and capabilities in T-cell, siRNA…

• Additional and diversified growth avenues in a moment of strong uncertainty of COVID vaccines transition into a commercial-stage

• Complementary to Moderna’s core business: Vir’s sotrovimab Covid-medicine treatment solution will enhance Moderna’s top Covid-vaccine solution for healthcare providers

• Great timing after recent much stronger-than-expected results that are leading market analysts to increase their financial forecasts for VIR.

- Recent very promising Vir-2218 Hepatitis B medicine data from clinical trials

• Additional impressive talent: Vir’s Management team includes a group of highly experienced and skilled professionals in the pharma industry that have shown impressive capabilities by showing highly selective financial sponsors, Alnylam Venture, and the Bill & Melinda Gates foundations by transforming a start-up into a $2B revenue business in 5 years. VIR is also cheap right now with an EV/EBITDA of 0.9x and is down 30% on the year.

• At current market prices, VIR offers a discount of 54% to our DCF valuation of $49 per share.

2019-2022 Stock Comparison Chart

Strategic Recommendation – Hard Synergies

Description

• With MRNA’s strong sales and marketing channels it will allow Vir to capitalize on its successful sales and marketing processes

• VIR & MRNA can save the costs they would spend on individually marketing both businesses by consolidating their marketing budget to market one brand

• VIR: Phase 2 data from three of the Company’s most advanced development programs – hepatitis B, hepatitis D and influenza A – expected in 2023

• MRNA will have access to Sotrovimab, the first SARS-CoV-2-targeting antibody Vir advance into the clinic; it was carefully selected for its demonstrated promise in preclinical research, including an anticipated barrier to resistance and potential ability to both block the virus from entering healthy cells and clear infected cells

• VIR was awarded the BARDA contract to support infectious diseases; with an initial $1B

• Vir Biotechnology has assembled four technology platforms that are designed to stimulate and enhance the immune system by exploiting critical observations of natural immune processes. It’s current development pipeline consists of product candidates targeting COVID-19, hepatitis B Virus, influenza A, and human immunodeficiency virus

• As biotechnology increases in demand, MRNA will save costs when merged with VIR by obtaining access to new technology owned by VIR. This access can remove the need to replace or purchase new technology

• With MRNA’s future COVID-19 plans, Vir’s commitment to COVID-19 includes: rapid response to the pandemic by leveraging their unique scientific insights and industry-leading antibody platform to explore multiple monoclonal antibodies as potential therapeutic or preventive options for COVID-19

• Vir is continuing to pursue novel therapeutic and prophylactic solutions to combat SARS-CoV-2 and future coronavirus pandemics

• This acquisition allows MRNA & VIR to capitalize on one another’s R&D efforts, which can help them cut R&D costs like training while maintaining quality

• With Moderna’s large, diverse, and talented team, Vir adds an industry-leading management team, board of directors, and scientific advisors with significant experience in immunology and infectious diseases

• Likely savings coming from redundancies, probably at administration and general headquarter functions

• This can also result in a better division of labor, allowing VIR & MRNA to take on more work and offer more services.

Strategic Recommendation – Soft Synergies

Description

• With Vir and Moderna merging, they can absorb each other company’s demographics, which allows them to expand their reach and engagement

• This would be an increased volume for MRNA’s current audience and an entirely new target audience; the two companies can access a higher volume of people to invest in their R&D and vaccines; this increased volume directly results in an increased revenue stream

• VIR in 2022, approximately 1 million sotrovimab doses were delivered, all to countries outside of the US

• There remains a significant unmet medical need for a curative, well-tolerated chronic HBV treatment with a finite duration. VIR-2218 is an investigational siRNA targeting the HBx region of the HBV genome

• Moderna’s access to Vir’s team, departments, and technology allows both companies to streamline their processes

• This will result in the optimization of production, efficiency, and an increase in Moderna’s output

• In this case, Moderna’s business combines with Vir for their technology, immunizations, and research because they are relevant to MRNA’s goals but also different from what Moderna currently offers.

• Providing a new and increased volume of vaccines, research, and technology… will also increase Moderna’s revenue stream

• VIR is taking aim at some of the world’s largest and most serious infectious diseases, infections that are evasive, challenging, or insufficiently addressed by current approaches, including COVID-19, hepatitis B, and D, influenza A, and HIV

• VIR is collaborating with leading companies and organizations to advance their innovative technologies and to enable global access to their future medicines

• With MRNA’s pipeline and VIR’s pipeline, they are able to produce more competitive offerings to give them a competitive edge and obtain higher revenues

• Thanks to Vir’s and Moderana’s complementary products, there will be opportunities to sell Moderna’s products to Vir’s customers, and Vir’s products to Moderna’s customers

• Access to VIR’s solidified customer base can improve Moderna’s sales and return, increasing MRNA’s profit as well

VIR’s & MRNA’s clients receive superior CPO results and higher productivity along with significant savings in labor cost

Presentation Agenda

1.0 Executive Summary

3.0 Company Overview

2.0 Macroeconomic & Industry Analysis

5.0 Valuation

6.0 Strategic Alternatives & Comps

7.0 Appendix

4.0 Strategic Rationale & Synergies

Discounted Cash Flow Valuation

Vir Biotechnology

Discounted Cash Flow Analysis

Projection Period

Sources: SEC Filings, Bloomberg, Cap IQ

DCF Valuation Levers & Sensitivity Analysis

Football Field Analysis

WACC Valuation

Vir Biotechnology

Weighted Average Cost of Capital Analysis

Pre-tax Cost of Debt

WACC Sensitivity Analysis

Presentation Agenda

1.0 Executive Summary

3.0 Company Overview

2.0 Macroeconomic & Industry Analysis

5.0 Valuation

6.0 Strategic Alternatives & Comps

7.0 Appendix

4.0 Strategic Rationale & Synergies

Strategic Alternatives

Company Snapshot Highlights

• Founded: Feb 24, 2005

• HQ: London, UK

Mkt Cap: $1.67B

P/BV: 6.9x

EV/EBITDA:(19.1x)

• Sector: Biopharmaceutical Company Description: VRNA engages in the development of therapeutics for respiratory diseases

• Founded: May, 2020

• HQ: Lake Forest, IL

Mkt Cap: $197M

P/BV: 1.5x

EV/EBITDA: 2.3x

• Sector: Pharmaceuticals Company Description: ASRT engages in neurology, hospitals, pain, and inflammation

• 99% Float

• Verona expects to submit an NDA to the FDA in 2023 for COPD;

• COPD has a huge potential customer base of 380M people

• Ranked #1 in Industry by 5 market analysts

• Continuous acquisitions of smaller Pharma Companies

• Consistently deleveraging Balance Sheet

• Diversified product portfolio

• New and Strong development team

Weaknesses Strengths Key Synergies

• Small holding in their sector

• VRNA has not generated any revenue since its IPO due to its primary assets being under development

• High Volatility

• Small Cap

• Little Innovation

• Well-diversified biotech portfolio

• Immune to economic factors

• VRNA has maintained <10x P/BV since IPO

• Strong hard synergies

• Strong soft synergies

Mkt Cap: $979M

P/BV: 3.0x

EV/EBITDA:(6.0x)

• Founded: Jan 1995

• HQ: Watertown, MA

• Sector: Biotechnology Company Description: ENTA focuses on research, development, and creation of drugs for viral infections and liver diseases

• Founded: June 30, 1999

• HQ: Mechelen, Belgium

• Sector: Biotechnology

Company Description:

Mkt Cap: $2.79B

P/BV: 1.1x

EV/EBITDA: 20.5x

GLPG specializes in the development of smallmolecule medicines with novel modes of action

• Primary asset provides solid cash flows and will provide a solid backstop for shares

• Attractive opportunities for oral RSV

• Pipeline will have several positive news in the coming months

• New CEO since April 2022; taking on a new strategy with new research programs and assets

• Jysleca (GLPG’s primary asset) is growing rapidly and has a way to go

• Very strong Phase II data for their new assets

• High risk from faster-thanexpected erosion to revenues

• Limited pipeline

• Material clinical risk

• Strong Balance Sheet

• Low risk

• Strong Synergies

• Attractive Multiples

• Strong soft synergies

• Few hard synergies

• Lack of differentiation with their portfolio

• Uncertainty around the deal target and value creation

• Huge cash holdings that will cover R&D for 6+ years

• Estimated $100$120 million in yearly royalty payments

• Good hard synergies

• Good soft synergies

• VERY strong balance sheet with $4.7B of cash

• Trading at a discount

• Strong pipeline

• Few hard synergies

• Strong soft synergies

Source: Mergent Online

Pharma & Biotech Valuation Landscape

Comparable Companies Analysis

19-Jan-23

• With Healthcare earnings estimated to decrease drastically, our focus for the next 24 months will be on P/BV instead of earnings multiples

• Nonetheless, earnings multiples here show the capability of VIR when their Patents reach the commercial stage in comparison with peers

• Note: NM stands for Not Measurable; In other words, NM is used when a certain price and or earnings multiple is negative

Sources: SEC Fillings & Cap IQ

Presentation Agenda

1.0 Executive Summary

2.0 Macroeconomic & Industry Analysis

3.0 Company Overview

4.0 Strategic Rationale & Synergies

5.0 Valuation

6.0 Strategic Alternatives & Comps

7.0 Appendix

7.1 VIR Comparative Peers analysis

7.2 VIR’s Management Team

7.3 Moderna Valuation

VIR’s Strong Management Team

VIR’s Management Effectiveness includes a return of assets of over 55% and a return on equity of over 75%

George Scangos, PH.D.

President, CEO & Director

• Joined VIR: Jan 2017 Industry Experience: 30+ Years

• Experience: CEO as a member of the board of directors of Biogen Inc., a publicly traded biopharmaceutical company focused on the treatment of serious diseases. President and CEO at Exelixis, Inc; President of Bayer Biotechnology; Professor of Biology at Johns Hopkins University. University of California, San Franciso. Dr.Scangos received his B.A. in Biology from Cornell University and a Ph.D. in Microbiology from the University of Massachusetts

Johanna FriedlNaderer

Executive Vice President and COO

• Joined VIR: Mar 2020 Industry Experience: 25+ Years

• Experience: President of Europe, Canada & Partner Markets at Biogen, where she was also part of the company’s Global Leadership Team. Board member for the European Federation of Pharmaceutical Industries & Associations. Interpharma and the council of the International Federation of Pharmaceutical Manufacturers and Associations

Aine Hanly, Ph.D.

Executive Vice President and CTO

Howard Horn. Executive Vice President and CFO

• Joined VIR: Jan 2017 Industry Experience: 30+ Years

• Experience: Vice President of Process Development for Amgen, accountable for clinical manufacturing and global supply of clinical trial materials; site head at Amgen’s Cambridge facility, Dr. Hanly led the site’s transformation and staff growth, and, together with the research and development team, greatly increased Amgen’s partnerships and presence within the local Cambridge ecosystem; she also worked for more than 10 years at Pfizer

• Joined VIR: Mar 2017 Industry Experience: 20+ Years

• Experience: Mr. Horn served Biogen Inc. as its Vice President, Business Planning from June 2015 to October 2016, where he led Biogen’s resource allocation processes across all functions and regions. From October 2013 to June 2015, Mr. Horn served as Biogen’s Vice President, Strategic Corporate Finance, where he led Biogen’s corporate capital allocation processes. Mr. Horn received his B.A. in Economics from Princeton University and his M.B.A. from the Wharton School of the University of Pennsylvania.

• Joined VIR: Feb 2018 Industry Experience: 20+ Years

Bolyn Hubby, Ph.D.

Executive Vice President and CCAO

• Experience: Chief Scientific Officer at Agenovir Corporation, a gene editing company we acquired in January 2018. From 2013-2017, where she most recently served as Vice President of Vaccines and Antimicrobials. Prior to Synthetic Genomics, Dr. Hubby served as Executive Director of Vaccines at Liquidia Technologies, Inc. and Head of Discovery Immunology at AlphaVax, Inc.

Sources: VIR Company Website

Moderna DCF Analysis

Moderna

Discounted Cash Flow Analysis

Projection Period

Sources: SEC Filings & Bloomberg

Moderna Sensitivity & Valuation Levers

DCF Equity Valuation Range

Moderna WACC Valuation

Moderna

Weighted Average Cost of Capital Analysis

(1) Interpolated yield on 20-year U.S. Treasury

(2) Obtained from Bloomberg Terminal

(3) Low-Cap Decile size premium based on market capitalization, per Ibbotson

(4) Sourced from Bloomberg

Sources: SEC Filings & Bloomberg

Pre-tax Cost of Debt

WACC Calculation

Comparable Companies Unlevered Beta ValueCo Relevered Beta

WACC Sensitivity Analysis

Moderna Comps Analysis

Comparable Companies Analysis

16-Jan-23

Valuation Summary Statistics

• With Healthcare earnings estimated to decrease drastically, our focus for the next 24 months will be on P/BV instead of earnings multiples

• Note: NM stands for Not Measurable; In other words, NM is used when a certain price and or earnings multiple is negative

Sources: SEC Fillings & Cap IQ

Moderna Financials ($mm)

Sources: SEC Filings & Bloomberg

Vir Biotechnology Financials ($mm)