Moderna, Blackstone Find Opportunity in Crisis
The different ways technology is contributing to growth was a major theme from keynote speakers at a virtual event organized by ACG and SAP North America.
Everyone knows Moderna, but that wasn’t always the case.
The pharmaceutical newcomer was not well known before the COVID-19 outbreak last spring, according to Moderna’s CFO David Meline. But thanks to more than a decade of research into messenger RNA, or mRNA, the company was one of only a few companies tasked by the U.S. government last year to supply the country with mRNA-based vaccines.
Moderna has delivered over 132 million doses so far this year, with plans to deliver another 300 million more in the coming months to combat the growing number of coronavirus variants.
Going from a startup to a major pharmaceutical supplier in a matter of months, Moderna is an extreme example of adaptation. Meline told SAP North America President DJ Paoni that a typical vaccine development program would be 10 years in the making. “We started in January [of 2020] and brought it at the end of December—less than a year,” he said at the ACG virtual event “Maximizing the Value of M&A Through Technology” that was sponsored by SAP.
“Fortunately, at the time of the pandemic’s start, the mRNA technology provided success in early trials,” he said.
Thanks to the accelerated development, Moderna began producing its vaccine in July even while it was still in trial phase. “With the cooperation of the U.S. government and governments around the world, we could speed the process and not compromise the scientific rigor or the review process,” he said.
Despite the company’s impressive expansion over the last year, Moderna will continue ramping up its capability due to the global pandemic’s relentless drive. “Until we get doses to the world, we will still see variants developing across the entire globe,” he says. To address this, Moderna is developing booster shots to keep up with the mutating virus.
“We have a portfolio of products in the pipeline for vaccine programs like the flu, the CMV virus which is the largest source of birth defects in the world and therapy drugs against cancer and cardiology and autoimmune disease,” he said. “We think application of technology will be very focused on getting to all proteins in the body while the current solutions can only get to a third of the body’s proteins.”
Betting on Disruption
Technology is expected to be a powerful driver inside private equity powerhouses, as well.
During the first fireside chat at the ACG-SAP virtual event, Martin Brand, director and co-head of U.S. acquisitions for Blackstone Private Equity Group, said his team looks for “long-term tailwinds” in the field of disruptive technology. “We are trying to build a technology flywheel inside Blackstone so that we benefit from all parts of a firm, such as its resources and operating business. Being on the right side of trends and finding technology we want to be behind is important,” he said.
Blackstone seeks what it calls “mobile disruption,” the technology firms that thrived at the start of COVID-19 and shortly thereafter, such as Bumble and LiftOff. It is also looking at sectors that took a hit after the start of the coronavirus lockdown, namely leisure and entertainment that Blackstone believes will bounce back soon.
We are trying to build a technology flywheel inside Blackstone so that we benefit from all parts of a firm, such as its resources and operating business. Being on the right side of trends and finding technology we want to be behind is important.
Martin Brand
Co-head of U.S. Acquisitions, Blackstone Private Equity Group
Another sector is precision medical investment, which Brand describes as particular “bio markets” and how it aids in fighting a specific patient’s disease, especially in the field of oncology.
Blackstone is also looking to transform its own technology, much of which has not changed since Brand started at the PE giant 18 years ago. The firm hopes to go beyond Microsoft Word and Excel and use data with a greater focus.
“We are looking to share [intellectual property] within all different parts of Blackstone so we can see and share information on trends. We use data to analyze companies in due diligence, for example. We have a very strong data science group and we have shared our tools to improve the technology inside Bumble. We are able to add Improvements thanks to our data science groups,” Brand said.
HGGC is a private equity firm focused on technology founded in the middle of Silicon Valley, but the investor brings a traditional ethic that’s helped make it a superstar.
Co-founded in 2007 by NFL Hall of Famer Steve Young, the Paulo Alto, California investor was able to identify the early signs of disruption in industries that were ripe for technological transformation.
The firm has completed over 200 transactions over the last two decades, many of them in industries where opportunities for technological disruption weren’t yet obvious, like automotive, market research, retail and printing, Young said.
By building out technological offerings like data analytics and automation, the firm had an opportunity to get in on the ground level of technological transformation that would drive significant value creation for its companies. With that knowledge, it made sense to partner with a technology provider like SAP, according to Young.
“That goes to our fundamentals, which is we practice old school private equity,” said Young. “But what we’re telling sellers, founders and management teams is we also speak tech.”
While being focused on cutting-edge technology has been instrumental to the firm’s success, Young also said it’s important for business leaders to develop a sense of accountability.
Recalling a moment in his NFL career as a quarterback with the San Francisco 49ers when a bad decision allowed an opposing team to intercept a pass, Young drew a parallel with his career in business by advising leaders to develop a sense of accountability.
Benjamin Glick is an associate editor of Middle Market Growth.
Phil Albinus is Middle Market Growth’s managing editor.
