Moderna, Inc. (MRNA) Earnings Call Transcript & Summary

Good morning, everyone. I'm Alan Carr, analyst at -- research analyst in Biotech at Needham & Company, and welcome to the second day of the 19th Annual Needham Healthcare Conference, and of course, our first virtual health care conference. I've got Lorence Kim, CFO of Moderna, with us here today. How are you doing, Lorence?

Doing very well, Alan. Thank you for inviting us.

All right. So you had a long day yesterday. I figured we might start off with maybe a few high-level comments that you have about what was important and new yesterday from your vaccine programs. And we can sort of touch on COVID-19 a little bit after you go through the day yesterday.

Sure. Thanks, Alan. So yes, yesterday, we had the opportunity to spend the day talking about our vaccine portfolio. This was our first annual Vaccines Day. We set it out back in November, really with the anticipation back then of going through this portfolio of important programs that we had assembled. And certainly on the back of some exciting data from some of [ hyper ] vaccines like CMV, we were pleased to be able to pull together some important key opinion leaders to talk about a number of different aspects of the platform and our beliefs about its future. Maybe I'll highlight some of those first. And then second, I'll come back to some new clinical data that we announced. And then third, of course, a significant amount of time, of course, is spent on the coronavirus vaccine that sort of reshaped this Vaccine Day since we originally planned it. So first, in terms of the vaccine portfolio, we had the opportunity to talk about, one, by inviting Dr. Andrew Lo to speak -- to talk about the overall risk profile of vaccines relative to other areas in drug and vaccine development and talk about the notion that vaccines actually have one of the -- or had the highest probability of success when we look at the -- a robust set of clinical data and getting from Phase I to approval. And that has to do a lot with the nature of viral disease, infectious disease and the nature of what you can discern early in development. And we then also talked about the overall profile and the attractiveness of vaccines as a space to operate in. One, because of the significant unmet needs that still exist out there in the space, being augmented as we know now with the emergence of new pathogens all the time, the ability to create a lot of value in terms of sales potential in the space, the ability to demonstrate that value over a long period of time, and to have a strong margin profile out of these programs. And then we talked about the disruptive nature of mRNA, the technology platform in this space. And that takes on a lot of different facets, and I won't go into all of them here for the sake of time. But it relates to the platform nature of our technology, which enables for this even further risk reduction, speed, capital efficiency, and then importantly, from a technological perspective, the ability to go after viruses in completely novel ways, right, by either combining different mRNAs for specific protein antigens, like we're doing with CMV. So you can take 6 different mRNAs that encode for 6 different relevant viral proteins in CMV and use that as your vaccine or you can combine viral antigens from different viruses into a single vaccine. And we're doing that in the respiratory portfolio. And so we talked about that differentiation of our mRNA technology as well. And then we went to some new clinical data. So for Zika, we were quite excited to present interim analysis out of our Phase I for our other Zika vaccine, mRNA-1893. And at this point in time, what we demonstrated was at 2 dose levels, we had seen in Phase I that we could seroconvert or demonstrate levels of neutralizing antibody titers in 94% and 100% of subjects to these 2 dose cohorts. In short, that was the headline. We demonstrated immunogenicity in this Phase I, whereas in a prior iteration of that vaccine that we had taken to the clinic in the midst of a potential Zika pandemic a few years ago, we had not seen immunogenicity in our initial experience. And what we did was we had a backup construct, it was this construct, which we believe to be significantly more potent. We brought that to the clinic. And with this data set, which we talked about in more detail, we demonstrated that out of 8 viruses now to date that we've attempted to generate vaccines against and have taken to the clinical vaccines, we've demonstrated that against all 8 of those viruses, we can demonstrate this sort of immunogenicity. So that was a really great outcome for us and exciting to demonstrate. And then of course, lastly, we just spent a good bit of time talking about our coronavirus vaccine efforts. And there was a lot to talk about there in terms of where we stand today with the Phase I that we have been enrolling since mid-March, together with our collaboration [ with ] NIH. They are running the study. And we talked about our plans to move forward as quickly as we can in development.

Well, let's talk about COVID-19, and a little bit about that. Did have a chance to catch up with Stéphane on a call, maybe a couple of weeks ago to go through that in-depth over an hour. It's still very fluid, but with -- overall -- [ is it ] everything with COVID-19. But the latest on your expectations from NIH is, obviously running because we don't have complete control over this. But your latest thoughts on how they -- when the information from that trial be disseminated? And your plans for a Phase II and Phase III?

Sure. So we're quite pleased. Enrollment is going well in that study. Last week, subjects at the highest dose of the 250-microgram dose began enrolled. As you know, this is a study that's enrolling 45 healthy subjects in a couple of different sites, 1 in Washington, 1 down at Emory. And we're looking at a 25-, 100- and 250-microgram dose level. This is being administered at time 0 and at 28 days. So 2 different vaccinations, serving as a prime and a boost. And the key immunogenicity readout will be at day 57. So 1 month after the second vaccination. We're looking forward to collecting and disseminating that data as it comes. Now importantly, safety data is also being compiled from this study. And what we've talked about is that will be the key gating item to our initiation with Phase II trial, which we are actively planning as we speak. We've been making the clinical trial material in our manufacturing facility already for some time now. And so the intention would be to file an IND and get that Phase II study running ourselves in the not-too-distant future, again, gated by the safety clearance from that Phase I study.

Assuming safety's fine, which it has been for your other vaccines, what sort of design are you thinking of Phase II? More immunogenicity? Is this a different -- enrolling different types of subjects in this? What might change?

Sure. So what we've talked about, if you look at typical vaccine development, one of the key elements, as you go from Phase I to Phase II to Phase III is, of course, numbers. And so in our Phase I, we're seeing tens of subjects. In our Phase II, I think a reasonable expectation is going to be hundreds of subjects, of course, to expand our database on safety and tolerability, importantly. And then, of course, the expectation in Phase III would be thousands of subjects, again, with a consistent goal of continuing to assess the safety of the program. As far as end points, what we would be looking to do is further expand our understanding of immunogenicity of the vaccine, on top of that safety profile that we've continued to characterize. And so further exploration of that would be key. Really looking ahead after that then the question then turns into demonstration of vaccine efficacy. So prevention of infection in relevant populations, and that's where there's also active planning going on for Phase IIb or Phase III studies to select relevant populations and to begin those studies as soon as we can [indiscernible] efficacy.

So Phase II is another several hundred immunogenicity trial, then a Phase IIb and/or III to look at prevention?

Correct.

So what about -- I'm curious what in your discussions with regulators, others in HHS, when you're talking about a larger trial, could a Phase III have a dual purpose in the sense of potentially enroll a wide range of relevant subjects that may be at higher risk of infection? So in one sense of Phase III might be intended, obviously, to establish prevention, but it might actually also have a dual role of reducing the risk of -- potentially reducing the risk of infection in that -- the target group. Could it happen to dual role?

Well, I think what you're pointing out is really selection of the subject population for that study. And I think that's an important future to recognize, which is that, in the time frame that we're talking about later this year, the -- this is part of the reason why the Phase III could actually run very quickly. When you think about what a Phase III is intended to demonstrate in terms of vaccine efficacy, it's prevention of infection. And the critical factor in thinking about the sizing or timing of that study is going to be event rate. How frequently do you observe subjects becoming infected with coronavirus. And so by selecting populations that are higher risk for whatever reason, whether they're on the front lines or whether they're in hot zones, potentially either in the U.S. or around the globe, you would then presume that those event rates would be quite high. And as a result, if one has an efficacious vaccine, demonstrating a signal in that population actually requires much fewer subjects than is typically seen in a Phase III vaccine study and would require a much shorter period of time. I think that's what you're getting at, perhaps, which is by going into these higher-risk populations, one can design a study to go quite quickly.

Yes. I can imagine that you might want to do a Phase III or a Phase IIb focused on the health care workers versus maybe the elderly or some other risk factors, that sort of thing. But at the same time, you might also want to get a broader safety population involved in that too. So I'm just wondering how big of a Phase III this might be or might it just be targeted? I suppose these are things that all need to be settled in the future. I'm just kind of curious what sort of top line thoughts you have at this point.

Many of those things you described are under consideration on the topic of much discussion and it's all quite fluid in terms of all the objectives you described. How do you get into various high-risk populations? How do you get into potential geographies that need it? How do you establish a right safety database? And that will be the discussion of much conversation with health authorities in close collaboration.

One other thing I wanted to ask you about was how things are coming along in terms of an animal model in order to get a better sense of what sort of immune response is needed from a vaccine to confer protection. And I think you all talked about this a bit yesterday. There might be a threshold for an emergency use authorization, having safety and immunogenicity data in hundreds, right, an X number of subjects in clinical trials and then combining that with data from an animal model. So where do you think you stand with animal models? Which roles are best estimate of when something might be available for the FDA and you're going to work with?

Sure. That's also moving in real time and in parallel and is also very fluid. I think that the relevant thing to note is that none of these were ready or available at the time when all this work started just a few months ago. And so when you think about the different work streams in progress, things like neutralization assays to judge the antibody titers that we'd be looking for in the clinic, those are all in the midst of development right now. Animal models in the form of challenge models in different species are also in the works whether that's in mice or other species. Basically here again to [ lose ] data that involves vaccination of animals, and then subsequent challenge with virus that will propagate in that species to determine that you can achieve prevention of infection, and so on and so forth. These are all going in parallel. These will all be -- experiments are being run with our vaccine in those models, and we would find the right time and place for talking about those data in connection with what we're seeing out in the clinic. And that's again, all in collaboration with NIH and others.

Okay. Now before we go on to some of these other categories of products in the Moderna pipeline like oncology and rare diseases, I wanted to spend just a few more minutes on vaccines. Obviously, this experience with COVID-19 I think helps give the general population a better appreciation for their importance. So and maybe you want to comment on that both from a public health perspective and then you can maybe wander into the commercial opportunities that exist for some of these other diseases like MPV and PIV3, that sort of thing and CMV for that matter transitioning to those. And give us a sense of how those programs have come along to minus the time lines there.

Sure. Well, I think from a public health perspective, the need to establish the frameworks to be responsive to this and future threats is clear. We've been -- we have the benefit of collaborating for instance with BARDA on the Zika program now for a number of years and that's been quite productive. And when we thought about Zika prior to this coronavirus pandemic emerging, the view was, look, Zika has been around for decades and it went away after 2016 but the thought was that would easily come back at some point in the future. And I think that's the -- it's a good time for us to consider the potential reemergence of many of these viruses that have been described, discovered in recent decades to think about what would our response be going forward. Clearly, the world's resources are focused on coronavirus now, and we will get through this at some point and we will emerge and the question is what we do about future emerging infections and how do we respond to those quickly. I think anything that we do today, we'll also keep in mind what we could do for the future in terms of the technologies whether it's an mRNA technology or other vaccine technologies and the infrastructure capabilities to be responsive down the road. So I think that investment is going critical. Just like we're doing for the -- for coronavirus, it's going to involve public/private partnership importantly, to be ready going forward. Now as it relates to the rest of the vaccine portfolio, what we've described as our more commercial vaccine portfolio where those investments have been going on and there are meaningful unmet needs, we have continued to progress those programs. So CMV, for instance, is one important one that -- where the clinical data have emerged both last fall and then earlier this year. And the urgency of that need is also quite clear. As a reminder, CMV is the leading infectious cause of birth defects. And so we've been in a Phase II study. That study is ongoing. There's been some disruption from this COVID -- from the COVID pandemic in terms of the ability of some subjects to receive doses of the vaccine, but right now, our expectation is that the overall integrity of studies are intact. And we will continue to provide further updates on that, but we're looking forward to the Phase II data and rapidly progressing to Phase III. Certainly COVID has changed nothing about the urgency of the need for the world to have a CMV vaccine that prevent these birth defects. And so we've been proceeding with our planning for that Phase III and getting them up and running.

You're thinking for a Phase -- just as a reminder, you've been thinking about starting the Phase III next year, right?

Yes. Yes. Our...

So you saw a bit of a buffer there even with this COVID-19 business?

We do. We do. And again, we would continue to provide further updates on that time line as we proceed. I'd expect the next updates on our first quarter call.

Sure. Anything on your other respiratory -- or your respiratory infection program, hMPV or PIV3, or /PIV3?

Yes. Sure. So that program, we had begun -- late last year, we'd begun our Phase Ib study, which was an age de-escalation study. We had completed the enrollment of the adult portion of that before we went down into toddlers. Because of COVID we have elected to pause enrollment there given the risks involved of exposing subjects to COVID to come in for their dosing. And so at this point, that's -- we're going to -- we're doing the prudent thing on that program, but we'd be looking forward to getting that back up and running when it's advisable.

Okay.

It is -- continues to be an important commercial asset for us. Yesterday, at our Vaccines Day, one of our advisers, Dr. Flor Munoz, came in to talk about the urgent need for these pediatric respiratory vaccines, whether it's for hMPV or PIV or RSV, which as we talked about, we intend to combine as a third viral antigen in combination with hMPV and PIV. And so again, the unmet need is enormous there, and we are very focused on getting that back on track when we can.

Okay. Well, let's talk about the other disease areas. You've got some efforts on oncology and also in rare diseases. We've got about 10 minutes left. Maybe we can spend a little time on those both -- you can spend a little bit of time to it with respect to COVID-19 impact, but maybe some top line thoughts on both of those efforts and where they stand. I know you don't guide to -- on next events for some of these, but to the extent that you are providing some general indications that wouldn't -- without expecting what that might be.

I think we'll be providing more detail -- we can provide more detailed information on the impact of COVID on the oncology studies as we go. Right now we -- of course, COVID is having impact broadly across clinical studies. As you know, we have 5 different clinical programs ongoing in our immuno-oncology portfolio: we have the personalized cancer vaccine that's in Phase II; our randomized study in adjuvant melanoma; a Phase I for the KRAS cancer vaccine; as well as 3 intratumoral clinical trials for our so-called Triplet that we're running ourselves; as well as our OX40 ligand program. And then IL-12 is operating [indiscernible] AstraZeneca in a Phase I study in an intratumoral setting as well. We'll provide further updates on those programs as we go. With respect to the rare disease portfolio, and I think the important update was we had 2 open INDs for rare genetic disorders, methylmalonic acidemia and propionic acidemia. We had previously enrolled a subject, the first subject in our MMA study, but given COVID and consultation with our investigators, in terms of risk/reward trade-off, it was decided that it was not prudent to bring that subject in for dosing. And so likewise, we've paused enrollment in both the MMA and PA studies to be mindful of the pandemic.

You had some challenges enrolling patients prior to COVID-19, and your feeling was tied a lot to the minimum age range the FDA was -- had said. Where do things stand on those discussions? And do you feel that the FDA has been flexible enough so that when COVID-19 hopefully moves on, enrollment rate might accelerate for both of these? What do you think about that?

So I think the key there -- I mean, obviously, COVID-19 draws a bit of a pause into that whole set of discussions. I think one of the key elements was getting the initial subjects enrolled and starting to amass a set of experiences around dosing and what effects that we could see. So I think that's going to have an interplay with the dialogue with the FDA about these age limitations and what, if any, impact those are going to have on an ongoing basis for future subjects in enrollment. And so I think right now, given COVID, it's just -- I think it's very hard to speculate about where we pick up in that conversation once everything starts to come back to some semblance of normalcy.

But you're thinking was after that regardless, after the first 2, 3 patients that are going to get -- will be based on the design of the trial?

Yes. Well, exactly. So after the first 3 subjects, the age limitation goes down to 1 from each. And so even in a base case design, we will have a lot more ability to go down to the patients where the unmet need is greatest. As you recall, MMA is a disease that most impacts newborns. So it is these extremely young patients that are most impacted and have the most urgent need for a therapeutic. So I do think that the dynamics of that disease will help once you get past those first 3 subjects.

Okay. So you do have a remarkably broad pipeline, but -- and you continue to announce new candidates. What do you think investors should be looking for next beyond those that -- the core assets for the company? You started to announce a few early stage programs. What's next for Moderna? Anything in there that's particularly big that you think investors should be getting excited about, spending more time on in the -- for the future pipeline?

Sure. So we were quite excited at the beginning of the year because we undertook a strategic pivot here, which was to look at our modalities as they existed, right? We've always undertaken this approach of running the business in these sort of verticals where in terms of groups of these potential medicines, they shared characteristics. We've had 6 of these modalities. When we came into the year, we determined that with the body of clinical experience that we've had, we could designate 2 of them as so-called core modalities. And what does that mean? It means we've gotten a degree of confidence about the performance of the technology in those modalities, both prophylactic vaccines and the systemic secreted therapeutics, where the ability to double down on our investment with new pipeline candidates was there because the incremental investment it would take to bring forward these programs will be that much lower, and the risk associated with bringing forward programs would be that much lower. And so -- just in the beginning, a couple of months of the year, we announced 5 new development candidates. And that included 3 vaccines, one of which is the coronavirus vaccine, but 2 others, this pediatric RSV vaccine candidate, which I mentioned we would be combining with hMPV and PIV, and then an Epstein-Barr virus vaccine candidate, which we're quite excited about as well. If you look at the unmet need associated with EBV, just in terms of causing infectious mononucleosis, we think that's significant. And the industry doesn't have a vaccine for EBV, and so we'll be pushing that forward. And then separately, 2 other development candidates were announced by us in January in this new therapeutic area, autoimmune disease, for us. We had not previously had candidates here. But what we had demonstrated was, in the systemic secreted therapeutics modality, we're delivering mRNA IV. What we could show is the ability to express significant in therapeutical relevant quantities of protein. And so we push forward a program, IL-2, and a program, PD-L1, both of which are -- we're going to take to the clinic for a variety of autoimmune indications. IL-2 is going to go first into healthy volunteers to demonstrate pharmacology. And then PD-L1, we chose autoimmune hepatitis as an unmet need and a significant one at that where we thought that given the mechanism of vaccine, which we don't have time to go into here, we talk about particular relevance to this indication. And so we're quite excited about those. We'll be saying more about them as they progress. But I think to your question, Alan, I think we have not slowed down our desire to continue to expand our pipeline. And hopefully, those 5 new development candidates are a sense for things to come.

And maybe we should wrap up talking about financials and what you see is coming up with respect to events in 2020 that investors should be looking for.

Sure. So financially, we remain in a great position in terms of a strong balance sheet. We mentioned that we have $1.7 billion of cash post the follow-on financing that we did in February. We raised about $550 million of net proceeds from that equity offering. And that provides us with multiple years of cash runway and the ability to invest in our business. We had previously guided to sort of operating cash flow and CapEx for 2020. We'll be providing an update on that on our first quarter call coming up. Very obviously, puts and takes in terms of potentially reduced spend in certain parts of the business, but of course, increased investment to support our coronavirus work. And so we'll give a bit of a sense for how that's all letting out soon. But again, we continue to expect that our balance sheet will be more than capable of supporting multiple years of spend in this business. In terms of the catalyst, for the end of the year, I mentioned CMV Phase II data will be key in terms of how we then take that -- take a dose for the Phase III, design the Phase III, talk to the FDA and look to start that program next year. So stay tuned for details on all those fronts. And that's one place where we have guided. And then, of course, the data on 1273, the coronavirus vaccine, I think, will be coming. And we know there'll be a lot of focus on that in real time as it gets generated.

Very good. Any other -- any topics that we missed that you want to, I guess, conclude with?

Look, I think those are the key ones. We'd encourage folks, if there's time to go to our website and have a look at the materials that we presented for our Vaccines Day yesterday, we really did try to take a comprehensive look at that part of our business from the basics of our technology and its applicability to the current portfolio, to how to think about the future. And so hopefully, that will be a useful tool for people as they get a sense for overall vaccine development, and again, how we plug into that role.

Great. Thanks for your time, Lorence. It's good to see you again, and glad you could spend some time with us today.

It's a pleasure. Thank you, Alan. Really appreciate it.

All right. We'll talk again soon.

All right. Thanks. Bye-bye.