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

Good morning. My name is Ted Tenthoff. I'm a senior biotechnology analyst at Piper Sandler, and welcome to our Virtual Health Care Conference. Moderna is the leading developer of messenger RNA, or mRNA technology. The company has become a household name around the globe, thanks to their tireless efforts to develop and manufacture SARS-CoV-2 vaccine, mRNA-1273. I'm pleased to introduce my good friend, CEO, Stéphane Bancel. Thanks for taking the time out of your very busy schedule to speak with us today. Congratulations on all the success this year.

Thanks so much, Ted, for having us, and thank you for the kind word. It has been a long year. I've been really amazed and very proud of the team. It has taken a village to get this to a finish line or almost to a finish line. We have EUA filed on Monday and filing also to Europe. So thank you.

Yes, absolutely. And I know the focus is going to be on 1273 today, but you do have a rich pipeline. So I want to make sure that we jump in to cover as much of the story as possible.

So maybe you can start off, Stéphane, by describing mRNA-1273. What is it? And remind us about the positive Phase III COVE data that you reported?

Yes. So mRNA-1273 is a vaccine coding for the Spike S protein that is injected intramuscular, like a regular vaccine. It's a 2-dose vaccine, a prime and a boost 4 weeks after. The data that we communicated on Monday was that out of a 30,000 person, 50% placebo control Phase III study run in the U.S., we have shown a 94.1% efficacy rate. 196 cases. The final analysis was scheduled by the protocol at 151 cases, but because there are so many infections in the country, we had 196 cases by the time we are done with analysis and adjudication. And the -- actually, the data that actually got me the most excited on Sunday, Ted, when I got the data from the team were the severe cases. We had 30 cases out of the 196 cases that were severe. And of course, all that data I'm describing has been adjudicated and reviewed and QC-ed many times, and now filed to the FDA. But 30 of those 30 cases were on the placebo group. We had 0 severe case on the active group, which when you think about this virus and the disease and the impact on severe disease, turning into hospitalization, turning into ICU, turning into death, for all the worst case of -- all the cascade I described, if we could really have people who got this vaccine, regardless of age -- I remind people, we have 25 people above 65 years of age. So regardless of age, regardless of comorbidity factors, and if you look at our study versus other study, we had a very high number of severe cases, which I think demonstrate that the team has done a very good job at Moderna to get people at very high risk into the study. And so I feel very excited about that data. And we are very pleased with the fact that we sent the file to FDA on Monday, they confirmed received; was sent to the EMA in Europe, they confined received through a press release Tuesday morning their time. And we filed also in Canada, in Switzerland, in Israel, in the U.K., in Singapore and as such we are really reassured.

Yes, really incredible study and just fantastic results. And I agree with you. It looks like the vaccine is not just preventing infection but also ameliorating disease. One question that we've gotten a lot and came up in the panel that we hosted yesterday is about the durability of these antibodies and really the duration of protection. What do we know? And is there anything we can extrapolate from earlier studies and/or animal models that might give us an idea of how long these antibodies are active.

Yes. That's, I was going to say, the million dollar question, maybe it's a billion dollar question, I should say. We -- nobody really knows with the different vaccines. And it's mostly because it is such a new virus. It's really hard to know. The animal model are interesting, but it's tough to translate direction in a mouse that's going to live a year versus a human who's going to live 80, 90 years. So I think we just have to be all a bit patient, which I know is not a forte, at least it's not mine, to wait for the clinical data. What is good is, if you recall, we had the Phase I data started on March 16. So we start to have more data. Our goal is to present that data soon. And we're going to continue updating the data of all of our studies. I anticipate we should have good duration. I don't know yet what it means, Ted, in terms of commercial implication. Does it mean that an elderly person is going to need a boost every 2 years but a young adult is going to need a boost every 5 years, I don't know yet. And I don't think anybody can claim they now because nobody has the data, it is just too early.

No, absolutely. And you mentioned the filings in Europe and around the globe and in the U.S. I believe you have an FDA review meeting on the 17th and then also in Europe in early January. Walk us through sort of what the regulatory process is here. What are the steps for emergency use authorization? What does that permit you to do? And then what are the steps for full approval?

Yes. Thanks. So basically, from filing the EUA on Monday, we have been having interactions with the FDA, answered their questions because they are now cranking through all of the data. We had been working very closely with the FDA on CMC, on manufacturing for now months. We've actually been filing all of our PPQs and all the documentation into the IND as per their request because we needed a conduit. There was no BLA because we're going for an EUA first. As you know, there have not been EUAs for vaccine before. So this is new for the FDA as well. And so we tried to get all of the CMC questions out of the way. They, of course, have seen the preclinical data. They have seen the Phase I, the Phase II. So what they are already looking for now is to crank through the data of the Phase III, of course, safety, efficacy by subgroups to prepare the briefing book. As you know, usually, when there's an AdCom meeting, usually 2 days before, the data is put online for the public and the medical community, and I'm sure, in this case, the financial community, to review in detail the data. Then there is the AdCom meeting. And the advisory committee, of course, is a recommendation to the FDA. They don't have to follow the recommendation. It's going to be interesting, obviously, because the Pfizer one is going to be on the 10th. So you know what I'm going to be doing on the 10th and what a lot of people on my team are going to be doing on the 10th. And so what we anticipate is if the AdCom is on the 17th for Moderna, I would anticipate a 24 to 72-hour floor on the back of that. So again, I don't control the FDA process, obviously. So it might be a different time line. But given we are losing, I think we lost 2,000 Americans yesterday, the FDA is highly aware of that. We have been in contact with them since the beginning of chasing this virus. And so we, of course, have to do their job, which is to ensure the safety of the American public. We ensure the efficacy is robust, the analysis is robust. I'm sure knowing the FDA, we're doing all the analysis as we speak based on our data, which is great for everybody. And so that's for the EUA. We have been working very closely with Operation Warp Speed so that as soon as we have EUA, the trucks will be literally pulled back to load the vials on the trucks. General Perna is on the record saying that his goal is to start vaccinating physically people within 24 hours from when the FDA give us approval. The General is on 24/7 around the clock. And so that's what's going to happen. Then once we have the complete Phase III in terms of safety data on the entire population, you remember, the EUA Plus criteria that came in the fall that got a bit of coverage in the news was for asking the manufacturers for 2 months of follow-ups on the median. So 15,000 people in our case in the study, which, as we communicated, will reach in the second half of November. As you know, we completed on October 22, the full enrollment of a study, over 30,000 people in the COVE study. So you put the clock 2 months, you are then at December 22 for having everybody in the study with at least 2 months of safety. For those that did not attend the VRBPAC meeting a few weeks ago, the reason for that is that 99% of the side effects in vaccines, if you look at all the vaccines that have been approved by FDA, happened within the first 6 weeks after the boost. And so by putting a 8 weeks window, the FDA wanted to ensure, which I think is good because we work out the [indiscernible] safety to ensure that there was very low probability of a severe or rare event happening. Because, of course, when you go from 30,000 people in the Phase III to hundreds of millions of people, which is what's going to happen in '21, you want to make sure that you have not missed a rare but real safety event. So that's the process. And so when we will have a full data set, we file a BLA. We anticipate the BLA to be reviewed pretty quickly. There, of course, will not be not as same urgency because this product will already be on the market. So I don't think that the exact timing of the BLA changes a lot. We anticipated that the EUA will be approved for adults above 18 years of age because that's what we have in the study. So I don't anticipate at this time that the EUA will be restricted. I think they will do that through the AC proclamation that happened yesterday. That's also well documented in the media in terms of priority of the groups. The FDA, of course, has full prerogative to say, I'll only give you an EUA for, let's say, 50 and above and medical worker, they could do that. I don't think they will. I don't think it will change a lot of things for us commercially because, again, every dose we're going to be making, when they put on a truck as soon as it's QC and sent it to the U.S. government. As most people know, the U.S. government has ordered 100 million doses already. So that's to cover 50 million lives in the U.S. And so even if the label was restricted from the EUA, which again can happen, my opinion is it will -- has no impact on sales and timing of sales because just of the size of the U.S. population.

Yes, absolutely. And it is. It's an incredible accomplishment. I mean, not just by all the people on Moderna, but the agency and the sites to get these people vaccinated and enrolled in the study. So really hats off to that. As you mentioned, the U.S. has ordered 100 million doses. I think you guys have already received almost $2 billion in cash in the third quarter. Walk us through some of the other big partnerships or orders -- preorders from countries and really what that means financially for Moderna.

Yes. So the number we disclosed was $1.3 billion up to the year-to-date end of Q3, just for the number to be correct. So in terms of deals, so U.S. government 100 million dose and essentially important to the U.S. as 4 options to buy increments of 100 million doses 4x, so up to 500 million doses. We have 80 million dose with Europe that was announced last week, where Europe has also an option to add another 80 million doses on top of that. We have sold 50 million doses to Japan through a partnership with Takeda who's going to handle all of the last mile in Japan, which is helpful to us, given, of course, we have no infrastructure there. We have also done deals with Canada, 20 million doses and have an option to go to 36 million; with Switzerland, with Israel, with Qatar, with Singapore, with quite a number of countries around the world, the U.K. as well. And then you have countries that have signed but have not disclosed that actually they have a supply setup with Moderna. And we have quite a number of discussions that are ongoing, including some of the countries I mentioned wanting to buy more because if you think about what has really changed in the last few weeks, I think is great data from the Pfizer and Moderna vaccine, obviously. The confusion, I think, that I've heard from the markets -- I mean the customer, I'm talking governments, not the stock market, but the buyers of our vaccine, the confusion around the AstraZeneca data. I think a bit of disappointment that it was only 62% in the full study, the 90% of the realization, it was such a small arm that it was a mistake with different schedule and the fact that it was for people younger than 55 years old, got a lot of people to scratch their head and actually calling us back to get more product. And same thing, I think, the Novavax being delayed twice and still the Sanofi and the Janssen vaccine being quite behind makes, I think, a lot of country realize if they want vaccine in Q1 and maybe in Q2, they actually don't have 6 suppliers to go to, but they have 2. And that I think is a big change to what has happened. Another piece also, I think, that was very important to our success is the fact that I think Operation Warp Speed has done a brilliant job, and I have to give a lot of credit to the government for putting first the operation together. For second, hiring somebody as qualified as Dr. Moncef Slaoui who spent his entire life in vaccines and General Perna who is the highest ranking in the military with supply chain experience for military. I've had the chance to talk to them a lot and work with them a lot. Actually, I'm going to talk to them tonight again. We have a standing Wednesday evening meeting to catch up, but we are always available 7 days on mobile phone and so on. But if you think about what the U.S. government has done, I think it's important for people to appreciate it. They decided to bet on 3 technologies to build a portfolio like you guys, as you buy stock, build a portfolio because they didn't know back in the spring what was going to work best or what was going to come first. And the 3 technology, mRNA, adenovirus and protein plus adjuvant, and in each field, they picked 2 companies only. So they didn't pick 1 because, of course, of execution risk, they picked 2 companies in each, which give you a sense of what's going to happen because not only they helped the companies with funding, but also with purchase agreement. The Pfizer deal was a bit different where they had a higher price on the product, but the total cash out of the U.S. government is the same versus us getting $1 billion for funding the Phase III and the price for the 100 million dose, if you look at the price of the other company, is the same. But what is very interesting to think about is how companies that have not been supported by Operation Warp Speed to muscle this advantage, you have to fund your clinical study, if you can find participants, because another topic that I don't think is talked about enough, Ted, is what's going to happen in the months to come to enroll a placebo-controlled study. First, from an ethical standpoint, how do you have 15,000 people on placebo that have to be, by definition, high-risk to get disease. I mean, as we discussed on Monday, unfortunately, somebody on a placebo arm died on our study because he or she, I don't even know the sex, developed severe disease, then was hospitalized and passed away. And the study is still ongoing. So think about how do you convince people to enroll in your studies if you are not in the front of the pack when they can get under an EUA a product with 94% chance to get no disease and 100% chance to get no severe disease.

Yes. That's a great point.

It's a big, big ethical question first. And then for those companies that are behind, it's going to be, I think, a big business question. Even in terms of pace of enrollment, as you said that, we started the study, Phase III, 30,000 people July 27. October 22, we are done.

Yes, incredible execution. That's true. So Stéphane, how many vaccines do you have ready for shipment on emergency use authorization? And how many will you be able to manufacture with Lonza? I know this has been a big focus for you.

Yes. So we have not disclosed the number of what we have on the shelf right now. I can just tell you it's millions that are ready to go if we were to get EUA tomorrow. What we'd said is that we are still on track to have around 20 million doses before the end of the year. So whenever the date of EUA happens, our goal is, by the end of the year as we close on December 31, we'll have around 20 million doses that will have been given to the U.S. government for them to allocate across states and different health care systems. Next year, as we've said, we are still tracking between 500 million and 1 billion doses. There are just so many factors in play, both from execution, yield, raw materials availability and so on that it's just impossible to be more precise at this time. As the year goes by, of course, we will disclose and tighten the range. I expect everybody knows that we are working as hard as we can. And we are lucky to have a very experienced manufacturing team, which I think is one another differentiation for Moderna. You have Juan Andres who is running manufacturing, used to run manufacturing for all of Novartis and Sandoz and Alcon worldwide. He had 140 plants reporting to him. He spent 30 years in GMP manufacturing. I happened to know him because he was my colleague at Lilly 20 years ago, we had the same boss, we were on the same team. And I just know how Juan is good, and so I convinced him to kind of leave Novartis a few years ago to join us. And I would say, thanks a lot, Juan was with us because, obviously, we didn't have in the business plan of 2020 to chase a pandemic and to build capacity to produce up to 1 billion dose. And if I had the typical kind of biotech experience team, I will have been in trouble. We would have been in trouble collectively because we are not Pfizer. But what is remarkable, I think, and that's what I keep telling our teams is if you think about it, we are a week away from Pfizer data-wise. If you've seen, we've been tracking filing EUA data and so on. And the company is 100 times smaller in terms of people. And I know a lot of people didn't believe we could execute this plan this year. I think if I told a lot of people, we'll run a Phase III this summer, which we have never run a Phase III, and we'll do it faster and we'll do it very well. And by way, we'll slow down, and we lost 3 weeks of enrollment because I decided to slow down after talking with the U.S. government and with Moncef and with Dr. Fauci because we didn't have enough minorities. And it was really important for us because we always believed our vaccine has a high chance of working because of neutralizing antibody in a Phase I because of a challenge model, all published in New England Journal of Medicine. We always believed that our vaccine could be one of the best vaccine out there, and that it will really be a shame given the high impact of disease on minorities in this country that African-American, that Latino did not feel represented in that study in terms of, is that vaccine safe for me and is that vaccine going to be efficacious for me. And we are very pleased where we are now. I think people will be very pleased when they see the detail of the data at the VRBPAC meeting. And that's a piece that I need to give the team a lot of credit. The team has executed on everything really flawlessly. We have, of course, a couple of hiccups on the way, like you will assume any company will have pulling such a crazy and large complex project. But I have to say, I give an A-plus-plus to the team, and I'm a tough grader, as you know, Ted. It's really remarkable as a company of 1,000 people, that has never done a Phase III, has filed an EUA and is ready to ship before the end of the year 20 million doses and is on its way to 500 million to 1 billion next year.

So I have 2 questions from the audience. One is with the Phase I and Phase II studies, longer follow-up, have there been any severe events or deaths in the subjects that received the vaccine in those studies? That's the first question. And then the second one is, have you considered doing a bridging study for 3 doses at 10 and 25 micrograms as a way to increase the vaccine supply.

So 2 excellent questions. So we have not had any safety -- a serious safety issue on the Phase I or the Phase II. We will have had, of course, to disclose it, as you would expect. So no news is good news on that topic. In terms of schedule and regimen, I think it's a bit too early to talk about it publicly. I want to be careful because of, obviously, Reg FD that I have to respect. But we are trying to be pretty creative on what we could be doing potentially to increase number of final doses without increasing the output because the output is going to be what it's going to be for '21. Most of the decisions are behind us. There's still a few things we can do to improve that number. But where we stand now, given the long lead time in GMP manufacturing, most of it is called for now. So we are not naive to the fact that there could be ways to increase the output by doing a different regimen and/or dosing. So stay tuned on that topic.

So one other question from the audience, and then I do want to ask just a wrap-up question before time runs out. What is the long game here? And are you potentially considering doing combinations vaccines where it might be flu and COVID or something along those lines?

Yes. I think it's an excellent question, Ted. As you know, we have had several respiratory vaccines in the clinic already that we care about deeply, RSV and a combination that has hMPV, the third killer of respiratory virus in the U.S. and PIV3. There is no vaccine for none of those 3 viruses. And we've announced recently at our R&D Day, as you recall, that we're going to go into the flu business. There's going to be more news coming, I think, early in the new year in terms of details. But we made a strategic commitment that given the high-quality data we had on neutralizing antibody in the elderly as good as a 25-year old and now the data we have in the Phase III study, I really believe we can go and disrupt the flu business because the flu vaccines are pretty bad or average in the best years. And combinations, as you know, in our CMV vaccine, we have 6 mRNA in each vial. So watch for this space. We want to use combination to make it very user friendly, especially for the elderly because they need more help because the immune system weakens with age.

It was a great point. And of course, I had like 20 other questions to go into the rest of the pipeline, which we never seem to have time for, but I do want to ask you what is the validation that you've achieved with the SARS-CoV-2 vaccine really due for the pipeline, not just for the vaccines, but for all of your mRNA programs?

Yes. I mean, it's a very important question, Ted. If you recall, because you've known us for a long time, since we started this company, we said it makes no sense this is a 1 drug company, is I have a 0 drug company because we will have failed, we will not have been able to get a drug to market with enough money or is going to be a very large company with dozens and dozens and dozens of drugs. And so what is good is we know now. For 9 years, we didn't know. We are hoping it will be dozens and dozens and dozens. But now we know. With the data we announced as a final analysis of the study on Monday, with, I think, an approval for our first product weeks away now, I believe this type of the end of year, I believe Moderna is going to scale very quickly. And I believe 2021 is going to be the biggest inflection year in the company history because we have a lot of cash, $4 billion of cash on the balance sheet, no debt, obviously, and we're going to generate a lot of cash next year. And so if we think about where Moderna is going to spend 12 months from now, I think we'll have -- we have 20 development candidates now. I think we will have easily 30. A lot of cash. I think people underappreciate how much cash we have because we have no partners. Unlike other companies that are speaking 50-50 of their profit on their vaccine, we have no partners, it is all for Moderna shareholder to come into the company, to invest and to scale the company. We have a platform and now is a time to scale because we don't have to care [ of them, i.e., cash ].

Yes. Excellent. Well, Stéphane, thank you so much for being with us. Thank you for everything you're doing on our behalf, and stay safe and stay healthy, everyone.

Thank you, everyone. Thank you, Ted.