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

Good morning, everyone. My name is Gena Wang. I'm SMID cap biotech analyst at Barclays. Welcome to our second virtual global health care conference. First, I wish everyone stay healthy, and I would like to thank all the participants, investors, companies and also especially our event team and the corporate access team, who made this virtual health care conference possible. With that, it's my great pleasure to introduce Steve Hoge, the President of Moderna. Steve? So maybe I will hand over to you to give a brief overview of the company, and then we will go to a Q&A session.

Terrific. Thank you, Gena, and thank you for having us and for this opportunity. What I'd like to do maybe just to open up is provide a bit of an overview of Moderna more broadly, not just COVID and all of our efforts. Although I expect we'll have a robust conversation about our efforts against COVID-19 as a part of the Q&A. So as many know, but maybe may not, Moderna is an mRNA technology company that's been around for over 10 years now. And we've been focused on advancing a broad portfolio of vaccines and therapeutics in a range of therapeutic areas. As of today, we do have one authorized product, which is the COVID-19 vaccine. But we have a large portfolio of over 24 medicines in development. And that's roughly equally divided between efforts in infectious disease vaccines, of which we have several that are in the -- entering the later stages of development. One that we'll probably talk about today or I hope we talk about is our vaccine against CMV or cytomegalovirus. It's one of the leading causes, it's the leading infectious cause of birth defects in this country and one of the leading causes globally. And we have a vaccine that is in Phase II trials and imminently going to be starting Phase III, we hope, as we've said previously this year. And so that's a very exciting next-generation program that we're working on. And then a large portfolio of vaccines against respiratory diseases, which not just COVID-19 but also influenza, paramyxoviruses like RSV and hMPV, as well as parainfluenza viruses like PIV3. So a quite large effort in infectious disease vaccines, not just limited to COVID. That only defines our infectious disease portfolio. We also have a portfolio of programs in therapeutics divided between a few therapeutic areas. One is oncology, where we have programs in Phase II, randomized Phase II programs. The one that's most advanced is a Phase II program against -- for first-line cancer vaccine. It's being evaluated in melanoma patients right now. We've been enrolling that for a while. It's partnered with Merck, and it's in a truly a randomized Phase II against KEYTRUDA alone. So it's PCV plus KEYTRUDA versus a KEYTRUDA alone, trying to demonstrate a benefit in relapse-free survival. That study continues to enroll. We're looking forward to that data. And we have a number of other therapeutic programs in the oncology space, including an OX40 ligand program that is in a Phase II cohort for ovarian cancer and a couple of intratumoral programs, one partnered with AstraZeneca, IL-12, and one of our own called the Triplet. I'm happy to talk about any of those. Outside of oncology, it's still in therapeutics. We have a quite large portfolio of efforts in rare and metabolic diseases, where we are looking -- we have 4 programs that we've publicly announced that are in development against a range of rare metabolic diseases. And so these include MMA and PA or methylmalonic acidemia and propionic acidemia as well as a program against PKUs, so phenylketonuria, and others. And we continue to advance those in the clinic. We have a couple of open INDs, as we've previously disclosed, and we're looking to start those in the near term, particularly now that some of the COVID disruption has settled down in our ability to conduct those trials. And then lastly, we have programs in cardiovascular medicine. And those include -- actually, I should say, not lastly. We have programs in cardiovascular medicine and autoimmune disease. Let me talk to the autoimmune disease first. The -- we have a program for -- against IL-2 -- so I'm sorry, a mutein IL-2 for broadly autoimmune diseases, and these are -- we are excited about this. It's our first subcutaneous program, and we're in the process of trying to start that study up in 2021. And we also have a program against PD-L1. Now this is to drive tolerance in autoimmune diseases. And specifically, we're advancing that in type 1 autoimmune hepatitis, which is a disease of high unmet need, which has over 100,000 people who suffer from it globally. Now lastly, as I promised, we have programs in cardiovascular medicine as well in therapeutics. This includes our most advanced therapeutics program, which is VEGF. This is for cardiac regeneration, and it is in Phase II. That program is being led by our partner, AstraZeneca. It's one of our first therapeutic programs, and we're excited by all the efforts there. And again, I'll remind you, that is a program to regrow or regenerate heart muscle following myocardial infarction, or in the case of the program they're currently running, during CABG for myocardial ischemia, so open heart surgery. We are very excited by that progress and look forward to updates from AstraZeneca, our partner, and having data. And then lastly, we have a program in relaxin against heart failure, which I'm happy to talk about as well. So as -- I hope I have provided an incredibly broad range of existing development programs, many in the middle or later stages of development, either moving into Phase III or in Phase II right now or Phase II cohorts and many more in Phase I. And we think this is just the beginning. We really do believe that the world is becoming aware, as a result of COVID, of the potential of messenger RNA. And at the core, we have always believed that it is an idea of how do we convey information? Do we change what medicine is from making molecules against specific disease to creating a capability to instruct the body to heal itself or prevent a disease in the form of vaccines? We think the future is incredibly bright for this technology. We've worked hard over the last 10 years to get to the point that we are in. But I actually am more excited about the coming decade in this technological space than I am about the decade of progress we've made to get to the point where we could have an impact on COVID. So with that, Gena, I'm happy to answer any questions. And thank you for giving me a chance to provide a little bit of a broader overview. But I'm very comfortable starting on COVID because, obviously, it's a program for which we have a tremendous amount of ongoing sales activity, regulatory activity and a huge, unmet public health need that we're still addressing.

Yes. Yes. And then I do think your product, the COVID vaccine and together with Pfizer vaccine certainly establish that mRNA is a drug class and very successful for the vaccine part. And then certainly, we will see more for the other field. And I think we're standing on the same line. We are very excited about the RNA potential. And that actually goes back in my PhD training also. Post our training, all focusing on RNA. So for me also, very excited to see how this trip evolving over the past several decades. So with that, I wanted to ask you the COVID-19. This is the -- everyone's focus. Even my grandma knows your company because of the COVID. So I wanted to ask them all, like, because I'm a scientist, I wanted to ask initially, we do have -- you did show very impressive efficacy. But we did to see the 6% individual who fail vaccine. So have you done any additional analysis on these? And then what could be -- their neutralizing titer look like? Anything you can learn from these patients?

Right. Great question. And so just a bit on the framing of that. I'll remind you that the interim analysis that we published and shared is on the first 196 cases that were part of the Emergency Use Authorization. We have updated even just a couple of weeks ago as a part of our quarterlies, that we continue to see cases accrue, well over 600 cases. And so we'll talk about the 200, but there's well over 600 cases. And if you look at the approximate case split that we reported, it continues to be broadly consistent in terms of -- overwhelmingly, I think the case numbers were 639 cases on placebo and only 50 on vaccine. And that is very consistent with the ratios that we were seeing earlier. And so the overall efficacy looks consistent, which is great. Now on the breakthrough cases, which is what you were pointing out with that 6%, I would also remind you that when we look at those 196 cases, we did not have any severe disease. It did not have any hospitalizations. We literally had 30 severe cases on the placebo and 0 on the vaccine. And so a lot has been made, for instance, recently about the Johnson & Johnson vaccine that it's 100% effective against death, and it's 85% effective against severe disease. We were, arguably, that announced, we were at 100% effective against severe disease. So when we're talking about breakthrough cases, we're talking about people who develop symptomatic COVID, they got infected, but they did not require hospitalization. They certainly, obviously, didn't end up with severe cases, at least in that analysis. We are looking closely at those to see whether there's evidence of an immunologic correlate that predicts that breakthrough. And so as you would know, that's essential for vaccines development, just trying to figure out is there an antibody level? And really, when we say immunologic correlate, we mean neutralizing antibodies. Is there an antibody level in the blood that was lower in those 11 people that broke through that would suggest if you're above a certain level, you're going to be fine? And the challenge we have is that you -- for statistical reasons, you don't want to keep looking at every individual. And so you wait until you have a critical mass, and 11 is not a critical mass. It could be very noisy just to look at 11 people in those breakthrough cases. And so we've been waiting more into the couple of dozen, 3 dozen cases, and we're trying to see those breakthrough cases. And we hope we're there now. And so we've just begun the work of trying to look more deeply at that because you now have a critical mass of breakthrough cases, and again, 11 wasn't very much. But that correlate, if we go do it, will be against severe -- it will be against symptomatic disease but not severe disease. Because again, we didn't have in that initial analysis, and we'll see in the final analysis, any severe cases. And so it will only be against prevention of symptomatic disease, which may limit its use for others. Because again, as you said, the vaccine was so effective that it may be very hard to establish a correlate against end points other than just symptomatic disease.

Okay. I think that's helpful. And that kind of related question regarding the booster shot, the third booster shot against the variants. So the question is what level of immunogenicity that will ensure that you have a protection against the new variants?

That's a great question. I think the important things to note right now are all of the data we have in our vaccine and that others have published, and I think Pfizer's data is similar, shows that we see neutralizing activity against all 3 of the big 3 strains that people are worried about: the 351 strain, the P1 strain from -- originally seen in Brazil and obviously, the 117 U.K. strain. Like the really good news is we don't -- I don't think there's anybody that's really concerned about the U.K. strain for good reason. I mean it's a terrible situation, but the vaccines seem to be very good in there. In terms of what level are protective, I think the short answer is nobody knows. Nobody has the clinical data to definitively say what levels are going to be protective yet against those strains. And so what we're all doing is a version of in vitro comparison to our prior experience with other strains, right, where you say, okay, you're losing threefold or fivefold of the neutralizing protection in an assay that you think is correlating with the protection that you're seeing against the ancestral strains. And is that significant or not, nobody is really sure. But we said about -- now, gosh, it's almost 2 months ago, 6 weeks ago, we were the first to announce that the 351 strain specifically was one that created some concern from us because it creates a six- to eightfold reduction in some of the neutralization assays in the neutralizing titers. Now they're still really high. Several hundred is the neutralizing titers, which is great. But I think the concern that we have is -- and this gets to your question on the booster. Is how long will those titers last? Maybe you're fine for the first -- right after you get the vaccine. Maybe you're fine for 3 months, maybe you're fine for 6 months. But the higher your titers are, the longer your immunity is likely to last. And we do expect immunity to wane to coronaviruses because that is every coronavirus that infects humans. There's not -- I mean, there's sort of a bit of a debate about whether it would happen or not. But all 4 of the endemic strains in the -- circulating in humans every year, there is waning immunity. You get reinfected at some point in the future, sometimes it's a year, sometimes it's 2 years, sometimes it's 3 years. So we know that because the common cold makes its way around every year. And so we expect that SARS-CoV-2 will eventually -- we'll see waning immunity and reinfections. What we don't know is it 1, 2 or 3 years out, maybe 4 years out. But I think it's very appropriate to assume that the level of neutralizing titers you have immediately after vaccine will predict the duration of that protection. And that's where the 351 strain concerns us because if you're sixfold lower, five-, sixfold lower, you should expect that you're going to see breakthrough infection sooner. And none of us want to be in a situation where we see breakthrough infections while the pandemic is still going on, which would mean this winter or next winter in the Southern hemisphere, or the next summer 2022 or around. So our view is prophylactically, it's probably going to make sense to boost while the pandemic is happening, maybe 12 months after your primary series, to just get to levels of neutralizing titers that look like the protection you had immediately after vaccine. That may be more than is needed over the long run. But we -- while we're in a pandemic, and we're still wrestling with the virus evolving, it seems better to be safe than sorry. But the decision on whether that's appropriate or not is not ours alone. And any amendment to add a third dose booster or a new variant strain to our EUA is contingent upon the FDA agreeing and regulators agreeing. So we have to build data. We have to get that data to them. And then ultimately, they have to make a decision to say it's okay, and then it will be up to public health officials to determine whether they want to recommend that third dose.

So then I understand you also send NIH to do the variant-specific booster candidate. So what are the timing you are testing? Are you testing -- you mentioned 12 months. So are you also testing 6 months post the second dose the current the...

Great question. So I'll divide this into 3 different buckets because -- or maybe -- we've already -- we've said we have 3 different approaches to make sure we maintain immunity and beat the virus. And the first is just giving another dose of 1273, our vaccine. We have actually -- we made an amendment even before January, so well before people were concerned, we made a decision to evaluate 1273 in our Phase II trial as a booster. And that's about, give or take, 9 months on average, probably in the 6- to 12-month range after their primary series. And we've almost completed, if not already completed all of that dosing. It's imminent. And we would expect to have data from that third dose boost, which is in several hundred subjects, probably about 400 if you look at the Phase II study. And those are different age cohorts. We expect to have data in that group imminently. I mean that's a study that's been ongoing for a while. And so imminently -- I shouldn't say imminently, imminently. But as we've completed dosing and obviously, you wait a month to collect bloods and then you collect those bloods and you run them through the assays, yes, we would expect to have the dose -- the data from that certainly by the early summer, if not before. And so we're in that process. That will be the evidence, we hope, and knock on wood, that we -- a third dose is well tolerated. First, you need to establish safety. We have no reason to believe it won't be, but we need to show that. And second, that we can boost again, and mRNA and lipid nanoparticles are particularly able to redose as opposed to the other viral vector media and things where you get some immunity of the vector that might impact your ability to continue to boost. So we hope to show that in 1273. In parallel, we are developing an update to the vaccine, a multivalent booster that includes 351. And we're testing 2 forms of that: the variant-specific form, which is against 351; and a multivalent form, which we call 211. That includes the Wuhan strain, the ancestral strain we've been working with, and the new strain that was first identified in South Africa, the 351 strain. That combination vaccine, we expect to test -- we've shipped to the NIH. We've actually started the studies. We will go fast. If you look at -- if you want to get a sense of timing, my best advice is, we're almost exactly to the day on top of the timing that we had last year. And so if you were to -- if past performance is the best predictor of future results, and by last year, at least by early May, mid-May, we had that data from that Phase I. It may happen sooner here because it's just a -- it's a boost, not a primary series in all cases. But that's dependent again upon enrollments and execution and the assays. And so we can't always control all of the factors involved in that. But that's probably a reasonable prediction. We would certainly want to have by the summer that early data showing whether or not a variant specific to -- an update to the vaccine, a vaccine 2.0, if you will, COVID vaccine 2.0 provides a better advantage to boosting than other approaches.

Okay. So then for the Phase I patient enrollment, will you try to go certain area, like South Africa or certain areas in which the population with that mutation?

So we haven't been doing that. Because right now, what we're looking to do is boost people who've been in our clinical studies for a year in the case of the NIH study, almost exactly a year and characterize their immune response. It's clear from the FDA guidance that was put out recently that there will not be a requirement for efficacy studies, that we will -- that they will accept immune bridging or a correlate if it exists. And we think that's the most appropriate way to continue to evolve at the pace of the virus. If we had to run a 30,000- or even a 5,000-person efficacy study, you would likely miss the wave of that variant. And so we expect this to be -- again, quoting the FDA guidance, is subject to the regulators and ultimately, the data we generate, but a few hundred people and then immunogenicity bridging before you update the vaccine. And then honestly, it would just be, again, this being mRNA, it's like a software update. We will update that vaccine and make it available quickly.

Okay. And then we have a few minutes left. I do want to talk about the competitive landscape and a commercial -- sorry, continue focusing on COVID-19.

Sure. That's okay.

So just J&J single dose will launch very -- it's already through, I mean, authorized use, right? So any thoughts there in terms of competitive landscape? And also based on what you're understanding now, do you think -- I think a several layer question. First, the dosing, you guided if I remember correct, the $18.4 billion, right? So the -- with continued additional, say, government agreements sign up, is it fair to say that number, it should be continue go higher for 2021? And how should we look at beyond 2021 about the market opportunity there?

These are great questions. Now I'll try and get through them in quick order. So first, on the competitive landscape with J&J, we're all competing against the virus. I'm super grateful that J&J got approved, and they've been launched. I think it's important to note that for now, we think we're in the first wave of making sure everybody is getting their primary vaccination series. We do think that 2 doses for us and for Pfizer are why we're seeing 94%, 95% efficacy and 100% against severe disease. And I think it -- I think that those are features that are desirable, particularly for high-risk populations. But I think it's really important to note that when we talk about boosters and we talk about 2022 or maybe the winter of 2021 in the Northern hemisphere, that is not going to be seronegative populations. And so every vaccine is single dose, including mRNA. Nobody is doing a 2-dose booster. And so at some level, the question of what did you get for your primary series becomes a question of last year very quickly, and we start to focus in the future on when to do a boost. And that's where we do think mRNA has an advantage for the pace of being able to redose it because you don't have antivector immunity, and because of the software-like nature of our technology. But we obviously -- we hope everybody, again, Moderna, Pfizer, J&J, even with the 3 of us being hopefully very successful, there's still a need for more vaccine than we can produce. And so we need more people to be successful here, and we're rooting for everybody. On the guidance in terms of 2021, we did -- we have signed advanced purchase agreements for delivery in 2021 totaling $18.4 billion of revenue, and that was announced as part of our Q4 update. We haven't updated that. And David Meline, our CFO, would tear my head off if I said anything on that. But we will obviously look to continue to provide updates as we see more agreements. I would note that increasingly, as people get vaccinated in 2021, particularly in the developed economies that are ahead on this, including the United States, the question starts to become, how do we anticipate the next waves and booster? And that is not about delivery and storage right now. It's about what does the vaccine need to look like, which strains, which dose level in the winter? And so as you can imagine, in winter of this year and in 2022, the conversations have moved now appropriately at a public health level and a government level to what are those needs going to be. And how do we make sure that we're able to serve them? And so we -- $18.4 billion of deliveries this year is something we're intensely focused on doing. But I think a lot of the conversation starts to turn to what happens next year and beyond. And I think there was a third-party question. I'm sorry if I didn't get to it.

Yes. No. I think that, that's the main part. Like how should we think about revenue going forward? And then maybe related, is there any pricing change once we pass the pandemic phase to the endemic phase in terms of which dose?

Yes. I mean we've been pretty clear that during the pandemic, we are going to make sure that pricing enables access. In the United States, that means everybody gets it for free as a result of the United States buying it at the negotiated prices we did, which is great, and that's what we want. And in the pricing we're doing globally, we're also being sensitive to that public health concern. This obviously has to be something that's broadly available. Post pandemic, as we get into those what I will call seasonal epidemics that you would expect to happen with a SARS-CoV-2 virus, we would expect more normal pricing based on value. And we do think there's a huge health economic value here in the vaccine. But it depends on things that we just haven't -- we haven't announced and discussed more broadly yet, but that we're starting to look at. And obviously, it would -- we would expect that a price that more appropriately reflects the value of the vaccine would be higher. But again, let's get through the current phase before we have discussions with payers on that.

Well, thank you very much, Steve. And we also thank you for Moderna deliver the COVID-19. I think millions and millions of people are benefiting from that. And we are looking forward to another great 2021.

We are too. We're looking forward to doing this in person with you next year. So...

Yes. Okay. Thank you.

Very good. Thank you. Bye-bye.