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

Hey, everybody. Welcome to a great session here at the Jefferies virtual London healthcare conference. I am virtually here in London as evidenced by my background there. And my good friends at Moderna CEO, Stéphane Bancel; and Lavina Talukdar, who heads up IR here with me, probably, in Boston or wherever they're at. But great to have you with us. We also may be joined by CFO, David Meline, to talk about revenues as well, which is always an important topic for the audience. So when he's here, we'll bring him in. Well, first of all, I mean, I just wanted to start off, Stéphane. Congrats on everything to date. I think everyone is hugely proud and happy with the results recently and really happy with all the execution.

I just wanted to start off by asking from a high level to talk about the profile of your vaccine. And I don't want to get into differentiation thing, but just talk about the profile of your vaccine, and what the next steps are here. You've got the results and everyone breathes a bit of a sigh of relief. But really, there's still a lot of work to be done. So maybe you could just kind of comment about the next steps, what has to happen and the plans for rolling this out because everyone's wondering what happens from here.

Great. Good morning, Michael and everybody, and thank you, Michael, for having us. So in terms of a vaccine, just to remind everybody, it's the first interim analysis. We need to have a few more cases to get to the final analysis, which I expect to happen really soon. Talking days, not weeks.

Okay.

So what we announced on Monday is we had 95 cases reviewed on Sunday by the independent NIH-led DSMB. And basically, what they informed us on Sunday is that of the 95 cases that they reviewed that have been adjudicated for disease, 90 were participants that got cases were on placebo, and 5 were on mRNA-1273, leading to the 94.5% efficacy. The p-value is very strong. So we feel very confident about that data set. The other piece that I think is almost as important in my book, Michael, is the severe cases. The severe cases of disease, we had 11 cases of those 95. And of those 11, all 11 were on placebo. We had 0 on active. And so when you put those 2 data together, Michael, what it tells us is that we what we know so far, let's wait for it to be confirmed. But if this holds, it would mean that if you get a monoclonal vaccine, you have around 95% chance of being disease-free if you get infected naturally after your vaccination. And in those 5% chance where you get disease, you will get a mild disease. You will not get severe disease. If you think about what's happening in terms of people getting severe disease, getting hospitalized, the worst one getting to ICU, the worst one dying. If we could get rid of that tail-end risk, that's a game changer in terms of the impact on psyche, the economy, lockdowns and everything and of course, human lives. So that's a bit where we are in terms of the data. So what we expect now is in matter of days to reach the 151 case, which is what we set up from the beginning with the FDA approval as our final analysis case number. When we will have that, a bit like Pfizer has done in the last 10 days or so between the interim last Monday and I think this morning, their final analysis, we get all that out there and as soon as we can, i.e., days, as Pfizer is doing, we will file an EUA to the FDA. And at the same time, we will file -- the same file will drop into regulatory agencies in Canada, in the U.K., in Switzerland, in Europe. As we have communicated, we started rolling submission because those agencies have to catch up with the FDA because the FDA has already seen the preclinical data, the Phase I, the Phase II. They have seen a lot of CMC file because one of the things we've done with the FDA, and they have been really remarkable, is to file on the go. Actually, we technically filed it into the IND because there's no BLA file yet. All the manufacturing files, so that manufacturing was not in critical path of approval, of course, because we need a vaccine out there as soon as possible. So everything plays well. By the end of November, early days of December, I could anticipate getting the data, filing the EUA. And then of course, the FDA is going to have to set its process. As we have said publicly, they will run their VRBPAC meeting for mRNA-1273. It is hard to know at this stage. It will be, of course, the FDA decision, not a company decision. Is it the VRBPAC meeting? Or is it one for the Pfizer vaccine and one for the Moderna of vaccine?

Are you talking about an AdCom -- like an AdCom meeting?

AdCom, sorry, yes. That's the name of the AdCom for vaccines.

Okay.

And assuming this gets approved quickly, what we're working in parallel is we have been stockpiling for quite a while. We're making as much product as we can as we are adding more manufacturing line, both in the U.S. and outside the U.S. at our partner, Lonza. And we've said that between now and the end of the year, we think we will have around 20 million doses available to ship as soon as we get approval. And we are on track next year to have between 500 million dose and 1 billion dose manufactured. There's still a big swing at this stage, Michael, because we have the GMP space to make 1 billion dose. We have the equipment to make 1 billion dose. We have people to make 1 billion dose. The swing factor is from raw materials because as we make pharmaceutical products, as everybody will understand, if we are missing one ingredient because a supplier is tight on delivery, we cannot start making the vaccine. And because we are running 24/7, if on the Tuesday morning or in a Wednesday night shift, there is one component missing, we cannot start making the product until that product arrived. So it could be a day, 2 days, 3 days. So the way we think about it at this stage is what we know and we control. We feel very comfortable about hitting the 500 million doses.

Yes.

We're working as hard as we can to get to 1 billion. Everything is there to get there. But it's just too early. There's too much risk in the system. Because if you think about it, last year in 2019, we made, what, 50,000 doses, Moderna. I was talking about making 1 billion dose. So as you can imagine, some of the suppliers were not ready for that tsunami.

Yes. That makes sense. What is the -- so you get the - you're going to have a -- probably have an AdCom panel. There was news today that it could be December 8 to the 10, so presumably, you've cleared your calendar out for that. But...

I'm not traveling anywhere.

You're not? I don't know if you have meetings on that day.

We moved them.

You do that and EUA approval would come shortly, sometime after that, I don't know how fast that would be. And then we start rolling it out. Have you given guidance or will you give guidance in terms of the capacity you have by quarter? Or do we just wait for revenues? Maybe just -- I put out a note we estimate it by. But one of the things, as you have contracts, should you maybe talk to the next steps in terms of contracts and how that's rolling out? I mean, do you get phone calls every day trying to sign contracts. How does that all work?

Yes. So that's a great question. So we have been talking to governments around the world since May. And as you have seen, Michael, we've done quite a number of deals, of course, with the U.S., 100 million doses sold to the U.S. government. They have the option to buy several tranches of -- by increment of additional 100 million doses. So we see what they do there now given they have a Phase III data in their hands. And so the race has -- against the virus has moved a little bit because some vaccines, as you know, have taken a bit of delays and so on. So I think being in the first pack could be useful, we see. We have signed us up with Japan. So for Japan, because we have no presence in Japan, we've done a partnership with Takeda. We gave wonderful 50 million doses secured for the Japanese government. We have ventured on Switzerland, Israel, Canada and quite a number of countries that we've not announced yet. Actually, we got the U.K. Monday, to your question. The data came Monday morning. We were discussing with U.K. for quite a while. And during the day on Monday, they say, "Are you ready to sign before..."

Right here, there's the House of Parliament right behind me, okay. Yes.

Exactly. So we sign the U.K. on Monday. And we have negotiations ongoing with Europe for an initial 80 million doses, 8-0 and the option to get another 80 million doses as well.

Is the pricing ballpark all pretty much on the scale of volume? And how do you figure out, it doesn't matter because it's got to be, just from an investment standpoint, and I won't say investment standpoint, from a distribution standpoint, revenues times that. But how do you actually figure out where to go to? I mean, the administration probably wants all of them, first few hundred million. But how is that action?

So what we've done back in February, when decided to get really [ bathes ]. As we observe their own masks and ventilators, really, a lot of issue to move products across countries, a lot of nationalism and we're worried about that. And so what we did is we set up a supply chain in the U.S. and a supply chain in Europe. The amount in Europe is met at Lonza in Switzerland. Not only Lonza is a great company with a great track record, but also Switzerland, with 8 million or 9 million people, we had a very small chance that we're going to haul 0.5 doses in Switzerland, Swiss people. And so that's kind of how we're dealing with it. In terms of price, so your question, the early deals we've done earlier, because there's very little data. Where at the $32 products price. When we got a bit more data through the summer, the price moved to $37. And the way we talk about it with other countries is, basically we're giving you now a discount to unapproved products because there's a risk because of lack of data. So as were the product risk decrease with data, we give less of a discount to a potential commercial price. That's as far as more volume order, a few million doses. And for large orders, like the U.S. government, it's a 25 box per dose when you include the funding of BARDA. So that's basically the price range that we have being working on. As I've said all along. We have not solved for press release announcements. What we solve for is getting a fair price. We're not, of course, trying to maximize profits. We have said it all along. We want to be responsible because it's a pandemic. When you think about the price, I mentioned, they're on the low end of the flu shot. You saw the Prevnar. That's $700 per treatment. And we will also solve for some cash payment upfront to help us with working capital for raw materials. And so as you know, we reported, I think, $1.1 billion, David, correct me if I'm wrong, of prepayment that we got from Governments already on the balance sheet.

Yes. $1.2 billion.

Thank you, $1.2 billion. And that number is going good. That's the last number reported as of the end of Q3.

The $1.2 billion there, some of that's already been paid upfront and that's there. And the point it is depending on which country that is coming from that -- from either Switzerland or from U.S., that's all.

Correct. Correct. For example, the U.S. was...

From the write down as how many are coming out each factory but the total of it, that's how it works. It's not being shipped overseas.

Correct.

Can I ask you an important question? Yes, these are related to the next steps. Do you see - what are the 2 or 3 differentiation things, if any, between the 2 mRNA compounds? And do you expect to see clinically meaningful differentiation across the profiles from the next ones coming? And this is important because I have said, I think I did say on CNBC, that I don't know who really would do 85% versus 95%. Is the price of a couple of cups of coffee really worth the difference of 10 out of 100 people catching COVID? But whatever that difference is, what do you foresee could play out? Or what are the differentiations if the efficacy for these are all the same?

Yes. So we continue to believe, based on the neutralizing antibody data that we published in the New England, that one of the advantage of our vaccine is in the elderly. So we'll have to see as we get the data from our vaccine and the other vaccine in the final analysis. But I continue to believe scientifically that because the antibodies are so high in the elderly, where we don't have a drop from the young people, a lack of a vaccine, that all vaccine could have a lot of benefit. And again, we need to get the data to prove the benefit, obviously. One, of course, is around storage and distribution. I think one should not underestimate, and I say that because I used to be in big pharma. So -- and I used to be in manufacturing some jobs times ago. And so I've dealt with this at the call phase. We worked really hard over the years and invested a lot of capital to get the manufacturing process to get the lipid in a place where our long-term storage at minus 20 Celsius, not minus 70. And they are commercial products that are minus 20, meaning the McKessons of this world have freezer at minus 20 today. And the second piece, which we announced on Monday, which we got real-time stability data actually literally last Friday, that we have now 2 to 8 Celsius stability for a month, for 30 days. And that's very important. Why? Because that's typical fridge temperature like insulin. So every pharmacy or most pharmacy under the sun have 2 to 8 Celsius fridges. And when you think about deployment, that's a big deal. And then also, of course, the product can be stored 12 hours at room temperature. So you take your vial out.

Let me highlight those. First, just to be clear, on the efficacy profile, although Pfizer did make a comment about elderly today, a very nice result, we suspect you will also eventually -- because you haven't really said anything about old people. But the neutralizing antibodies were very high. But when these all come out, make sure that we know the efficacy level in old patients, particularly for non-mRNA-based platforms, where their antibody levels were not as high, point number one. That's an important population. Number two, on handling, that is a differentiation for mRNA but not necessarily for non-mRNA. Are there anything to consider there to think about, other than the fact that they're coming later or I don't know.

So another piece, adjuvants. Adjuvants, of course, provide benefit, but they come at the safety cost. Some people don't want to get a vaccine with adjuvant. Some of the anti-vaxxer movements over the years have been around additives like adjuvant or mercury or other products. In vaccines, no, we have no adjuvants. Also handling some products, we need to have the adjuvants added on site. So a vaccine, adjuvant mixed up. I forgot about the Pfizer product and our product. We do not need dilution on sites. The Pfizer product needs dilution. That's again another step.

What is it 5 dilutions per vial for them. Someone needs to do 5 of them, and they have to wrap it up if they don't do all 5, right?

And ours, just put a syringe, pull out.

Versus one for each one. Okay.

No dilution. And so that's also a step at the site of injection, which if you think about the mass vaccination we have to do, it's time for nurses and doctors that they're going to have to wait to do dilution. Of course, it entails risk as well of making a mistake because human makes mistakes. So that's some differentiation.

Does that work for the adenos, too? How are those done?

On the adenos, I don't remember. I don't, like, if you recall, I don't recall.