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

Hi. Good afternoon. I'm George Farmer, senior biotechnology analyst at BMO Capital Markets. Thank you for attending our afternoon session today, our Virtual BMO Healthcare Conference. With me today, I'm very pleased to have Stéphane Bancel, the Chief Executive Officer of Moderna, to speak with us in a fireside chat format. We'll talk about Moderna's very exciting RNA therapeutic vaccine pipeline with, I think, most focus on 1273, the coronavirus vaccine that is currently in Phase II development, and as we all understand, is about to begin Phase III. So thank you, Stéphane, for being here.

Thank you for having me, George.

Yes. Very good. So perhaps you can just give us an overview, for maybe people who aren't entirely familiar with what Moderna is doing, about the overall Moderna platform and how it applies to vaccine development.

Sure. So at Moderna, since we started the company, we thought that messenger RNA to be a great new way to make new medicines. And here, the idea is that we make a synthetic messenger RNA in our factory, inject into humans and then use their own cell ribosomal machinery to make proteins inside people's body. And there's basically 2 big approaches to what we do. One is on the therapeutic side, where we basically use human DNA as our raw material. Basically, encode that instruction for one of several human proteins we make in a human, that we do in oncology for example. And the other one is vaccines, where basically we use genetic sequence coming from either DNA or mRNA of a virus, and we basically, same thing, code into our messenger RNA, the cells; however, the instruction of one or multiple proteins from a virus to be made in the body. In the case of a virus, we basically make the protein through a messenger RNA in your own body so that it will trigger an immune response. Of course, we do not give you a virus, like older vaccine technologies. So that if later on, you get natural infections, your immune system is already trained. And what we love about vaccines for this technology, and I would say of our particular setting, is that when we mean a natural infection in the sense of if you got an infection from a virus, the virus will get into your cells, hijack your ribosomal machinery, make proteins to self-replicate and then do it again and do it again. And so if you think about it from a 3D structure, from a cost [indiscernible] modification of those very technical aspects of what happen in the cell, it is exactly a very similar, identical copy of what is done through a natural process which we think is much more perfect than doing it with a recombinant that we inject and just go and turn it in [ blood ].

Okay. Great. Thank you for that overview. And so you're obviously applying this technology to vaccines, and I'd like to transition to mRNA-1273 and your progress there. So can you tell us a little bit, describe this vaccine in particular. And maybe you could talk about the Phase I data that you [indiscernible] or that NIH has developed?

Sure. And so the piece where we got lucky when this pandemic started is a few things. First, we have this fully amazing platform where we use information as a raw material. Two, this was not the first vaccine. We had done before that 9 vaccines with clinical testings. So we had a chance over the years to optimize the manufacturing process, to invent a new family of lipid, which is biodegradable, which we think is very important for tolerability and safety. And we have been working with NIAID, so with Dr. Tony Fauci's team at the NIH, around a few emerging pathogen, and one of them was MERS, the Middle East Respiratory Syndrome, which most people here know what it was a few months ago, but now everybody knows it's a slow coronavirus. And so we've done almost 2 years of work looking at several challenge models, looking at different proteins of the virus to find out which one was most immunogenic and how would you design such a product from using a full-length protein to using fragments. And what we came to understand through very deep scientific work with [ MERS ] is that in our beliefs and our scientific experience, the protein spike has a full-length spike as for the SARS-CoV-2 is actually a 4.3 kilobytes of -- 4,300 base pairs, a very, very big protein that we encode the full structure into our product. We're able to move very quickly to the clinic. We're happy to report recently interim Phase I data. I'm waiting any week now for the paper to come out with the entire data of the first 3 cohorts: The healthy adults; 18 to 55; we'll see later on data for elderly. And what we saw in the interim data, which was basically the data cut as of May 14 of what the NIH gave to us. So as you said, they are running the study, we are not. So we basically ship them our product, and they run the study. They collected blood samples. They run all the assays. And so what is very interesting is we saw in all the participants for which we have data at the time, binding antibodies. But what is very important, George, as you know, is neutralizing antibodies, those antibodies that are supposed to bind to the virus, to prevent the virus from getting inside the human cells and replicate. So it was early data, it was small data sets. It was 4 subjects in the 25 microgram, the low dose. And 4 subjects at the mid dose of 100 micrograms. That's all we had at the time. Because, as you know, when you run a Phase I vaccine study, you always do a sentinel cohort, a few subjects, then you pause and then you keep going. And the reason we have a lot of binding data, a small set of neutralizing data, is because the binding assay is very quick to run, it's just a few hours it's analyzing; whereas the neutralizing assays are live virus assays, which takes much longer, takes days and days to run. And so what we are happy to observe is at the low dose and the middle dose, again in that small data set, what we had is we had neutralizing antibody that are either at or above convalescent sera, which is the antibody that people that have the natural infection still had in their blood. And this is not surprising to us. If you look at the totality of our vaccine and the data we have, we have seen neutralizing antibody for all of our vaccines except for the first Zika vaccine that we did. And we know why; we didn't do any research work at the time. It was in the early days of a company when the pandemic -- the epidemic was happening in Brazil. But if you look at all the vaccine, we always saw neutralizing antibodies. And what is very interesting in this technology, which I think some people don't always appreciate, is because we, as a lipid, deliver the nucleic information. You have a very small error of hours between people with the lowest developing neutralizing antibody and people with the highest development. And so what we don't see in that COVID vaccine technology is you have 20% or 40% or 50%, people who don't respond. We do not see that. I only see most people responding or nobody responding. We don't see something in the middle. We're consciously optimistic and which is also why we said we are very happy with the data, because I would anticipate as we get more data from the Phase I in the near future. And then as we get the Phase II data, you should see a very nice way to scale its performance across the bigger end.

I'd like to talk about those, because so far, you've shown us on the 100-microgram dose specifically, 4 patients have developed neutralizing antibodies. You announced that you've enrolled 350 patients in the Phase II trial. Some of those patients will have had either 50 or 100 [indiscernible]. And then you're moving into a 30,000-patient volunteer Phase III trial using this 100-microgram dose. But all we've seen is 4 patients from the Phase I. So what gives you confidence that this is the right dose to deploy?

Yes. It's a great question. And trust me, George, we spent days and days agonizing about the dose decisions. We had a lot of discussions within our team, with our scientific advisers. And of course, with the NIAID team of Dr. Fauci. I think a few things. First, we said in the interim data that we saw a dose response. And we said that already at the 25 microgram, everybody was at or above neutralizing antibody from convalescent people. And if you look at the dose on the Phase II, 50 and 100 microgram, it kind of indicate to you that as we were designing the Phase II, as the Phase I was literally just started, we thought we will end in 1 of those 2 dose. I believe we could have gone with 50. But the reason we pushed the dose to 100, which, of course, come at a cost of less mass of material from a manufacturing standpoint, which, of course, is a big challenge with this pandemic, is we are shooting for the best efficacy we can. We believe some of the technology is looking at some non-human primate data published, also human data published with some companies using, for example, adenovirus, is that those products might not have a very high efficacy, because of how the technology work. As you know, technically, it works like gene therapy. Because you use a virus as your vector, some people respond well, if you have never been exposed to a virus or similar virus. Some people will not have an immune response to the vector, and they will not express viral antibodies. And so as we thought about the different vaccines that are racing against this virus, we said, "We think we have a shot of getting a very, very strong efficacy out of this vaccine." And we thought that if we think about the different populations that needs this vaccination, at the national level, from an epidemiologic and public health standpoint, having a vaccine at 50%, 60% efficacy will be great, because we've clearly not done R0. And for people that are very high risk, the elderly, health care worker, people with comorbidities, we felt the market needs a very high efficacy vaccine. And so as we were kind of broadly struggling with this 50 to 100 microgram decision, given the tolerability profile of the 100-microgram is very good, we said, "Let's just make sure we have enough of a dose," because at least when you go and you basically inject the first injection, you already have very nice titers. And then if you look at the other vaccine we have, at the second dose, i.e. at the boost, you always kind of get around a lot more antibodies, and you get much longer duration. Another piece that we are still ignoring as a scientific community is how long those vaccines are going to last on protection. And so again, looking at the -- that we know that most of the time cannot be re-dosed, we thought, if you think about the marketplace, the ability to be able to re-dose and to enhance the neutralizing antibody and to get a longer duration should really differentiate our product, and we think we have a potentiality to have kind of one of the best vaccine in the market. And given this is actually the first product of Moderna, we thought it's a very important piece for the company to come out of the gate with our first vaccine through a Phase II with the highest efficacy as we can. So as we look at the trade-off between tolerability and efficacy, we thought that the 100 microgram was a very nice spot.

Stéphane, I mean again, thinking about the last press release you put out announcing the Phase II design. You said that you had enrolled just 350 patients at Phase II over a 13-day period. None of those volunteers would have received a booster yet, right? So again, kind of going -- moving forward with this 100-microgram dose, is there anything else that might be out there that's really kind of giving you this confidence, even before these patients, the volunteers, get their booster? I keep saying patients, I mean volunteers.

Yes. I make that mistake all the time. We've been making drugs for too many years. I think 2 things that are very instructive for us, that were very, sorry, instructive for us, one is -- and it's the [indiscernible] platform. One is the RSV clinical trial, where we have healthy adults and healthy elderly. And if you look back at this data, which surprised a lot of people in the field when they look at it, which is the neutralizing antibody titer, the construction of antibody in the elderly, was very similar to the healthy adults. And so we feel confident with what we have seen in the technology now that it's not only 1, but 2 vaccines. We have good translation into the elderly. The other piece, too, is if you look at the CMV data and you look at the Zika data, if you look at the portfolio of a single mRNA vaccine, we think in the 100-microgram dose, even what we have on the platform now, is rolling with this type of technology where we get into kind of a nice sweet spot.

Okay. So you've talked about the other vaccines that you've been working on, CMV, Zika, RSV, EBV, and you point to the success that you've had in those programs as being maybe a proxy for the success with the 1273, but those are all very different viruses, different antigens. What is it about those programs that really gives you this confidence [indiscernible]?

Yes. I would say a few things. First, on the clinical side is the neutralizing antibodies, which is, as I said, on CMV, on Zika, we saw very high construction of neutralizing antibody. On CMV, just again for people that are not familiar with the data, I mean we made 10x more neutralizing antibodies into seronegative, i.e., people naive to a virus, versus with seropositive in the same study with the same assay. None of us expected that. If you look at the CMV vaccine from Merck, and of course, Merck is a great vaccine company. They decided to move to Phase II with a vaccine having 0.9 of the seropositive in -- with the vaccination of a seronegative. And so as we look at the data, saying, look, the field believes that if you can provide as much antibody as a seropositive, in the case of CMV, you would protect the transmission to the baby. So I think Merck, with a 0.9, was comfortable going. And we were hoping with the team to get around 1, maybe a 1.1 would be great, because we have Merck, a great company with a lot of commercial vaccine under their belt, was comfortable with 0.9. We got 10x. If you had asked any of the executives the day before the data, are we going to get 2x or 3x, we'd say, "Ah, we don't think so." How confident that we'd make more antibodies than a natural infection? And this is exactly what we saw. And then there's the animal models. Again, many of us have spent too much -- too many years in -- on the therapeutic side, especially in oncology work. Animals models won't tell you much. You have to do them, you check a box. But any of us make a big investment on animal data, in mice? Answer is no. But infectious disease is very different, because what you can do in infectious disease, you can -- in mice, especially in non-human primates, you can vaccinate the animals that are healthy and you can give them a very high dose of a virus. And literally, you're just putting it in their nose. And you just press, and you give them a lot of copies of the virus, much more, sometimes by several logs, what you will get from a natural infection. And we showed in many models that we published, that are available on our website, through a peer-reviewed paper, that we have no disease, and in some models, we have no virus copy in the lungs. And for 1273, we just had the manuscript put online, which is going through peer review right now, which has been done with the NIH, where we showed the same thing in mice. The primate data is going to come out soon. But in mice, we show that we have full protection of the mice, meaning you shovel a huge quantity of virus into the mice's nose and you cannot find copies of the virus in their lung. Of course, in the placebo group, you get crazy amounts, 10 to the 4, 10 to the 5, 10 to the 6 copies in terms of viral load into their lungs. That is starting to give you a sense. And in infectious disease, this is very predictive. The same in flu. We've run challenge models where the animal that are getting the virus are dead after 5 days, all of them are dead, on placebo. The animal on the vaccine, they are alive, with no disease symptoms. So that kind of gives you a kind of -- some confidence that the technology is working.

Okay. Good. Let's talk more about Phase III. I was curious as to the endpoint, the primary endpoint of the study. I guess COVID-19 symptom-free, something to that effect, right, rather than SARS-CoV-2 infection as an endpoint, primary endpoint. What is the reason for that? And does that -- could that results potentially be obfuscated by other illnesses that might be happening at the time of readout, say, the flu or other respiratory viruses that may confuse whether someone has COVID-19?

Yes. That's a great question. So let's start on the mix-up potential. As you know now, there are FDA-approved respiratory panels, PCR-based, where you can literally run on the same assay flu and HSV, and the hMPV/PIV and RSV, all respiratory panels you want to think about. So I think that risk is low, given the technology available today, that, of course, we're going to be using. But in terms of why using disease versus infection, is, at the end of the day, all the clinicians, all of us, the FDA cares about disease. What you want is people not to get sick. As we've seen in this pandemic, there are a lot of people that are documented who have infection that have no symptoms. And as you think about it, the thing we're all trying to solve with this vaccine is make sure that somebody who gets a vaccine, doesn't get disease. The second -- one of the secondary endpoints is lack of infection, which is just a much higher bar. But we agreed with the FDA and with NIAID, as we discussed with all of them, we have very good robust dialogue, this is the right endpoint for this vaccine. And it's not only from Moderna. I would anticipate, given the harmonization work that is being done by NIAID and by the Operation Warp Speed in the FDA, that the bar is going to be the same for everybody. We just happened to be the first kind of starting the Phase III. But that's exactly, I think, what you're going to see from the other vaccine makers.

Okay. And then what about safety? The old vanguard of vaccine developers say that we need at least a decade, 8 years, whatever it is, in order to really give us confidence that a vaccine is both efficacious and safe. You've been very aggressive publicly lately saying about when you think we could have a vaccine, a Moderna vaccine on the market. What's giving you this confidence that we will have ultimately a very safe product? [indiscernible]

Yes. So I go back to how the science works, which is if you think about how does mRNA work. So there's 2 components. Let's say there is the mRNA molecule and the lipid. So let's start with molecule. The mRNA molecule, we have shown 2 very important features. And we'll, of course, review those with the FDA over the years. One is the half-life of the mRNA is around 4 to 5 hours. So very quickly, you can prove that the mRNA is gone. It's literally cut into pieces by each nucleotide, that by the way, we use its [indiscernible] cells because they're all natural. They all exist in your cells. Number one. Number two, we've shown with outside academic labs that our mRNA does not get into the nucleus. It's very important for risk of reintegration. So if you just look at the mRNA molecule, the long-term risk, I don't understand what will it -- probably explain it scientifically. Look at the lipid now, all lipid have a 2-hour half-life. The lipid we use to -- to use in our first vaccine technology where a 6-day half-life. So this one has 2 hour half-life. As soon as it delivers the cargo inside the cells, you literally -- the chemical matter falls apart. It is all biodegradable components. And so we think that there is a safety risk with our product. And there's always risk. I mean 0 risk doesn't exist in making medicine. We think it's in the first day or 2 of the injection, just because of how the science work. And if you look at the totality of the data and we've dosed almost 2,000 people with our vaccine technology so far, you will see that the type of side effect locally at the site of injection or systemic side effects like fever or nausea or chills, they happen in the first day or so. Now with some vaccine, we put our first vaccine in the clinic in December 2015. So we have 4.5 years of cumulative data, again across almost 2,000 people. The side effect we see, which are very typical to vaccines and vaccination, because as you know, we're trying to activate an immune response, which the immunologists will tell you sometimes a bit of fever or a bit of redness by the site of injection is actually a good sign. Those things happen in the very short time lapse after the injection of the prime or the boost. And we always see a bit more local side effect and systemic side effect at the boost, which when is not surprising because you go back usually 3 or 4 weeks after the first injection, we've, again, attacking the immune system and priming it. And so we're not surprised to have a bit more, to have felt more [indiscernible] at the boost, which we have seen consistently across the products.

Okay. Good. And then also on Phase III, I'm thinking about geographic locations and looking for hot spots of infection. Is this in flux? I mean because as we're seeing now, the virus seems to be hot in one area and then it dies down and it's hot in another. Are you going to have, say, any more sites in South America versus Maine or Europe or -- and then dare I say, is there an option to maybe enable some sort of human challenge [indiscernible]?

Yes. Those are great question. And again, we spent a lot of time talking about this, and we are still doing. So the thing that is clear, is doing the study with people that are working from home, it's not going to be very useful. Infection is very low. And again, to get efficacy, the placebo [indiscernible] attacks an infection. And so what we designed, and we've been very closely partnering with NIAID on this as well as our CRO and our clinician is to find geographies, where actually you have much more diversity in the population in terms of the job they do, in terms of ethnics background and in terms of their risk profile. And we literally are doing it all across the country for the U.S. and also a few sites outside the U.S. And so as you say, we don't have to be too smart to know it is going to be in Tulsa or you know what I mean? So we don't have to be too smart of where the next outbreaks are going to be in the fall, but what we need to make sure is that the people that are the most at risk are aware of the study so that they are the one enrolling in the study. If we have a group of teleworker getting the vaccination and then rushing back home and quarantining at home, that's not going to help the vaccine data.

Okay. Good. I would actually -- I'd like to ask you a question about your CMV vaccine and thinking about what market demand might be for something like that. You've shown some -- made a very compelling argument in [ your R&D ] days about the need for a CMV vaccine. What does your market research tell you as far as the demand is concerned? Do you think that this would be widely used throughout the world, throughout specific demographic populations? How do you think about that?

Yes. So as we said in our draft, we've said we believe after all the work we have done, it's a $2 billion to $5 billion annual fixed sales vaccine, assuming kind of a Gardasil average selling price just for the purpose of the model and the orders of magnitude. For those not who are familiar with CMV, CMV is causing the #1 cause of birth defect in this country, in Europe, in Japan, in a lot of places around the world. And so we believe that having women in the age of bearing a child vaccinated before pregnancy through their GPs or their OB/GYN, so that whenever they decide to get pregnant with their partner, they are protected against this virus, is really important and the first place to start. And the second place to start as a second indication is in teenagers, and kind of our target product profile is literally, you get an HPV shot and you get a CMV shot in the other arm, on the same visit. Those vaccines are on the same schedule, which, of course, will help logistics for the pediatrician and the parents, of course. And then another piece that I think is not well understood by everybody is that the reservoir of CMV are humans. Mosquito is for Zika and birds and pigs and so forth, flu and SARS. But this one is human. So like rubella, if we're able to go down in age to toddlers. And we have already had discussions with the CDC last summer, you could see a world where like rubella, the R in the MMR vaccine that is given to a newborn, you should be able to eradicate CMV. And that's why we think that there's a very long tail to this product, that the world industry has tried to make a CMV vaccine for 20-plus years. Everybody has tried, but people have failed because they couldn't do with the old technology the right biology. Again, if you had tell me now back in July, August before I saw the data on Phase I, you would have 10x antibody neutralizing in your seropositive, I say, "George, what are you talking about?" At 0.9, and they were super happy. And having 10x, 1x or 2x would be wonderful. And so that gives us some hope. It is interesting if you think about it, and there's a lot of data that has been described. There might be long-term benefits of vaccinating people as we capture to the toddlers and the adolescent to vaccinating adults that are seronegative. Because it has been documented, people that are CMV positive sometime have 10%, 15%, sometimes up to 20% of their T cells just keeping in check CMV. And there's a very interesting study called the Swedish study that, again, is purely an [indiscernible] but I think it's interesting for people that are curious of the science. That shows that they have run the big study at the national level in Sweden, showing that people that are CMV positive actually live less number of years. They die sooner. They die younger than people that are CMV negative. And when you think about the biology, it can make sense, of course. There's not causation that has been proven for a placebo-controlled study like HPV. That will take time. But we really think that there's a very good rationale for the world to go after a CMV vaccine. And even -- if you think about women and the priorities they have when they want to consider child or the safety of their baby, we think that a lot of women will be interested to not take a chance with this pregnancy just by getting a couple of shots of vaccine [indiscernible].

Great. Wonderful. Thank you so much for your time, Stéphane.

Thank you so much for having us. Stay well. Thank you. Bye-bye.