BIOCHEMICAL engineer Noubar Afeyan likes wildly improbable ideas. In 2010, he co-founded a company to turn the body’s own cells into tiny platforms for producing drugs. Few thought it would work.
That company, Moderna Inc, turned into one the most high-flying biotech startups in decades, and is now valued at almost US$80bil.
Best known for its Covid-19 vaccine, Moderna is extending its messenger ribonucleic acid (RNA) franchise into the lucrative cancer market alongside partner Merck & Co, with high hopes for the companies’ personalised skin cancer vaccine sending Moderna’s shares up more than 500% so far this year.
The stock slipped last week, when positive trial data on the vaccine was leaked that investors read as more narrow than they’d expected. Oncologists, unveiling the data at a conference this past weekend in Madrid, heralded it as a major advance.
Many entrepreneurs would be happy to have a single spectacular success.
But for Afeyan, Moderna is just one of dozens of startups backed by his venture creation firm, Flagship Pioneering, that he says could have similar transformative potential.
Long shots, “that’s all we do. That’s what we’ve done for 26 years,” said Afeyan in an interview at Flagship’s Cambridge, Massachusetts, headquarters.
“It’s really hard to envision extraordinary outcomes unless you do unreasonable-seeming things.”
Unlike most venture firms, Flagship doesn’t spend most of its money developing other peoples’ ideas.
Instead, its team of about 600 employees comes up with their own far-out concepts that are often funded by Flagship for years before bringing in outside investors. Even then, the firm will hang onto a big chunk of the equity.
The unconventional approach can lead to huge returns when a startup thrives, but also leaves Flagship on the hook when things don’t work out. The large number of companies Flagship creates spreads the risk, Afeyan said.
Last year, Flagship deployed US$737mil into 11 new companies, and 29 existing ones, Afeyan said.
The firm and its related companies now employ nearly 10,000 people and occupy more than three million sq ft across Cambridge, Boston and neighbouring towns, equal to almost 9% of all of the area’s currently used lab space – a huge share given that most major pharmaceutical companies have a local presence.
“We only invest in crazy ideas that no one else is doing, and we kill a lot of them because they’re crazy,” said Yvonne Hao, the former Massachusetts economic development secretary whom Afeyan recruited to Flagship last year as chief operating officer. “Then every now and then, some of those turn out to be good.”
Early investments
Born in Lebanon to Armenian parents, Afeyan’s family emigrated to Canada when he was 13 during the Lebanese Civil War. After graduating from McGill University in Montreal, he earned a PhD in biochemical engineering from the Massachusetts Institute of Technology (MIT), and eventually became a US citizen.
He founded his first company, lab equipment maker PerSeptive Biosystems in 1989, and took it public a few years later. PerSeptive sold to Perkin-Elmer Corp for US$360mil in 1998.
Afeyan founded Flagship, originally called NewcoGen, the next year. It was an early investor in Acceleron Pharma Inc, which went public in 2013 and eventually sold to Merck for US$11.5bil.
It also backed brain disease drugmaker Denali Therapeutics Inc, whose drug for Hunter syndrome, a rare pediatric condition, was approved in the United States in March.
Though the firm started its own companies from day one, around 2009 it began focusing more on its own scientific breakthroughs rather than using ideas from outside labs, Afeyan said. Now, it does that exclusively.
Instead of working on a single disease or medicine, Afeyan prefers to develop companies focused on what he calls “platforms” – broad technologies like mRNA that can lead to a whole series of treatments, if they pan out.
One company that fits the bill is Generate Biomedicines Inc, which uses artificial intelligence (AI) to design protein-based medicines. It went public in February and is testing treatments for severe asthma and ovarian cancer.
The company’s shares are down about 23% since they started trading, versus a 17% gain for the Nasdaq Biotechnology Index during that period.
Generate chief executive officer (CEO) Michael Nally joined Flagship in 2021 from Merck, where he’d been the chief marketing officer for human health.
“I remember people thinking I was out of my mind,” to leave Merck for a small startup, Nally said.
But after talking to Afeyan and Moderna CEO Stephane Bancel, who famously left a CEO position at a French diagnostics company for the then-untested startup, he came away convinced he could have a far greater impact at Flagship.
Another closely held Flagship-founded company, Lila Sciences Inc, is using AI to try to turbocharge the rate of scientific discoveries. Bloomberg reported in June it was in talks to raise US$2bil at a valuation of US$8.5bil from investors.
A third company, Sail Biomedicines, aims to use nanoparticles to deliver RNA into the body to treat autoimmune disease.
It signed a deal with Johnson & Johnson potentially worth more than US$3bil in July. “That is a whole new field,” Afeyan said.
Afeyan was among the first biotech investors to do venture creation on a large scale, said Jeffrey Leerink, founder and CEO of investment bank Leerink Partners.
Although others have adopted similar models, what sets Flagship apart is the “ability to go it alone for a long time,” he said. Afeyan will “launch it and then fund it by himself for a long time before he’ll let others get a piece.”
Even when outside investors come in later rounds of financing, Flagship typically keeps a 40% to 50% – or greater – stake for itself.
When the process goes well, as it did with Moderna, that means an equally hefty slice of the returns: Since Moderna and Merck announced in August that their vaccine was successful in preventing the return of deadly skin cancer, Moderna’s shares have more than tripled, even after the recent dip.
Flagship still owned 1.16% of the company’s stock as of the most recent filing, equal to over US$900mil at last Monday’s closing price, according to data compiled by Bloomberg.
It can also produce spectacular results for Flagship’s limited partner investors. Flagship’s fourth fund, started in 2010, received shares of Moderna and returned 48.6% annually after fees through the second quarter of this year (2Q26), according to a person familiar with the numbers.
More recent Flagship funds have had annualised rate of returns ranging from 14% to 71%, through the 2Q26, the person said.
Stealth mode
But not all of its startups are so successful. Several once high-flying Flagship companies have folded when their drugs couldn’t be proven before funds ran dry.
Rubius Therapeutics Inc, which went public in 2018 at close to a US$2bil valuation, shut down in 2023 after trial results fell short of investor expectations.
Kaleido Biosciences Inc, meanwhile, wound down its operations in 2022 after it was hit with a US Food and Drug Administration warning letter, among other issues.
And Omega Therapeutics Inc, a cancer drug developer, filed for bankruptcy and was liquidated in 2025 after running into a severe cash crunch.
Many more never make it past stealth mode, an industry term for the early stages of a startup’s inception when its products and plans are kept secret and often operate under a code name.
At Flagship, those projects originate within a 100-person unit known as Flagship Labs, located in a lab space across the street from Flagship’s headquarters.
Every year, Flagship explores 75 to 100 possible company ideas, according to Flagship Labs head Avak Kahvejian, a biochemist by training.
A small percentage of them show enough promise to become prototype companies, which get a code number, a handful of employees and a few million dollars to prove their concept.
Moderna, dreamed up in a conversation between Afeyan and the MIT biomedical engineer professor Robert Langer, according to Flagship’s website, was originally called LS18.
Of that group, an even smaller cohort emerge from stealth mode, and are given official names and tens of millions of dollars or more in additional funding.
This year’s crop includes Serif Biomedicines, which is using US$50mil to create modified DNA-based medicines, and Iris Labs, which has US$20mil from Flagship to develop AI chatbots for personal wellbeing.
The ideas coming out of the lab extend beyond health: About 30% of Flagship’s companies have operated in other areas, including AI and sustainable agriculture.
Corporate partnerships with drugmakers have long been a staple, but Flagship is now also looking to link up with Big Tech on future joint ventures, chief operating officer Hao said.
Last month, Flagship announced a five-year US Defence Department agreement to develop treatments against biological threats, part of a broader push to win government contracts.
Boston economy
Flagship has placed the headquarters for most of its more than 100 companies “within a bicycle ride” of its Cambridge headquarters, as Afeyan puts it.
The firm’s success is particularly critical to a Boston economy that’s seen meager job growth over the past half-decade. Statewide, biopharmaceutical headcount fell for the first time in decades last year.
The region largely missed out on the AI boom that’s fuelling growth in San Francisco and New York, even though many of that sector’s top founders attended Harvard University and MIT.
Afeyan has acted as a leading spokesperson for the region’s life sciences industry, warning of the dangers posed by the US President Donald Trump administration’s federal research funding cuts.
Now, Afeyan is looking to expand Flagship outside of Massachusetts.
The firm has small offices in London and Singapore with a handful of employees, and Afeyan said he plans to “essentially recreate Flagship’s capabilities” in one or both of those places by hiring teams of researchers and scientist-entrepreneurs. Wherever it ends up, Afeyan’s mandate will be the same: do “unreasonable-seeming things.”
“I’m amazed at entrepreneurs who have the self-confidence that they will out-execute other people,” he said. “The only place that’s a bigger advantage is if I go chase uncertainty.” — Bloomberg
