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

Great. Thank you, John. Hi, everybody. Thanks for joining us back. I hope you had a good lunch or a beer or a nice little break. We have today Tal Zaks, the Chief Medical Officer of Moderna, here with us, joining us in our fireside chat with Moderna. I was just reminding Tal, that he and I met in person for the first time 2 years ago at the Oppenheimer Healthcare Conference. And I just had a really, really great chat with him. And in fact, I can remember pretty much every time whenever we interacted because I've learned a lot from him and his team and what Moderna has done. It has been a historic year since -- over the last year and since last year at our virtual health care conference. So Tal, thank you so very much for joining us.

It's a real pleasure to be here again. Good to see you. I wish this were in person, but next time, hopefully, it will be in person.

Next time, I hope, it will be in person. I agree. It is with a little bit of sadness that we're hosting this call because Tal has disclosed that he's going to be doing other things after I believe September of this year, right, Tal, if I'm not mistaken. So we look forward to updates once you're there, and hopefully, you've got a little bit of a break.

But let's talk all things Moderna. Tal, what we'll do is that maybe what we can do is just get a quick update from you. Just recently, Moderna disclosed 2, I thought, interesting pieces of news. You started the trial in children. It's a Phase II/III. You've also started a trial. You've got your new vaccine with the variants, I believe, to the National Institutes of Health. And then -- so those are 2 trials you're going to be doing. If you can just give us an update there and got a couple of follow-up questions.

Yes. Thanks. So indeed, the trial for the older age cohort, 12 to 17, that's pretty much done enrollment, and we expect to have data in the coming months. The younger cohort that was just started, that's a trial where we're going to make sure we got the right dose. Typically, you envision that 12 and above, it's the same old as adults, but you want to make sure when you go into the toddlers that you may -- a lower dose may be enough. So that trial has now started. I expect it will take a bit longer because it's a vulnerable population. You need to work your way through the dose cohorts, but we should have data for that by the end of the year. The adolescence, as I said, late spring/summer, I would expect we have data. Both of these underpin, something that you'll see with the variants as well, which is that the level of the immune response is going to become sort of the thing that everybody bridges to as was always anticipated, and I think that's going to make everybody's life easier to expand the utility of the established vaccines, but also eventually probably license additional vaccines. The variant piece, which we had disclosed is really answering 2 questions that are on slightly different dimensions. The first is, when does immunity wane? And is there utility for a third dose, perhaps in vulnerable people once enough time has passed? And so that was always a question on the table. And once we get to about the 1-year mark for the Phase III population, it was the right time to start to ask that question. But the second question that emerged more recently is the question around these variants of concern where is there going to be preferentially lower immunity towards those variants, and does that mean that immunity will wane quicker as it relates to being protected from them. And if that's the case, would we be better served with a very unmatched vaccine? And so basically, what we've started to do is to answer both questions, more or less simultaneously by exploring the utility of both the ancestral strain vaccine and the variant of concern vaccine, as a booster shot to people who've been previously immunized, but then also as a de novo primary series to people who have not yet been vaccinated. Now this is something that regulators globally are paying attention to as our governments. And so there's been a lot of discussed -- discussion on the regulatory path that would not require repeating the efficacy trials and so again, it will come down to likely levels of neutralizing antibodies.

Yes. And Tal, that's the next question I was going to go to is that it seems with the toddler, for example, trial, you're collecting a lot of -- you have lower doses. You're going to -- you've got a trial of the booster shots at also lower doses. You're collecting a lot of like immunogenicity data, safety data, longer term data, a long-term follow-up in terms of whether protection wanes or not. Do you think that there's a good chance by the end of this year, the regulators could get to a point where newer vaccines against coronavirus could get approved as on immunogenicity data like flu vaccines get approved? Or you think more longer-term follow-up data would be needed?

Well, I think -- so the short answer is yes. I think that there's going to be a pathway for quicker approval. But let's parse it out a little bit. If you want to follow the flu analogy, and I think up to a point we should and the regulators are talking about it, what that says is that once you have an established platform, then switching the strain to match to what is now the current thread is a pathway that doesn't require you to do additional efficacy trials. In fact, it may not even require you to do any clinical trial once you have enough conviction in how the platform performs, right? I think we're still in the early stages, so we will do the immunogenicity bridging. Now that is true for an established platform. And in fact, that's what you need to do for a new flu platform. The question can be interpreted. Does it mean that for a new platform or a new modality, do you not need to do efficacy trials? I think the hurdle there is going to be a tad higher, and that will require a formal correlate of protection, which I think we should anticipate seeing probably mid-year based on the totality of data, and that will -- the only question there is the variant going to confuse the picture a little bit because you're going to be establishing the correlate bets on immunity to the ancestral strain, but you're going to have to make some predictions as to what you think is the relevance as it relates to these variants. Does that make sense?

Yes. No, No. That helps a lot. That helps a lot, Tal. I mean, I guess, I'm just saying is there's a lot of moving parts, but the regulators, and I believe the companies leading this charge like a Moderna are pretty aware of what the end goal is, right? But there's just a lot of moving parts between now and the end of the year.

So I think that's true. And some of the moving parts have to do with is circulating actually. So what's the level of transmission, and what is actually circulating. And a lot's been talked about the fact that we need to be sequencing more to have a better sense of that. I do want to take back, though, you did ask me about long-term data. And there was, I think, a bit of news that we released a while ago as part of our quarterly earnings that didn't get much play, which was an update on the case split of the original COVE trial. So as you recall, that trial continues, and we're crossing to everybody by now. We've crossed practically everybody from the placebo. But everybody was blinded until the point of crossover. And so as long as people are blinded, you can look and understand the relative infection rates in both cohorts. And the update we provided, I forgot the exact number, but it was roughly 640 or 639 on the placebo arm versus around 50 on the vaccine arm. And these are data now that you can see -- if you recall, the original data that were described in November, it's actually much more data. And all of this additional data has actually been collected since November, so you're now talking another 3-month period beyond the initial. And what you see is that the safety -- I'm sorry, the efficacy is holding, right? The case split is still very high efficacy, and now it's holding longer after the original vaccination. And during that period where we're not sure which variants or is it the U.K., et cetera, will have that sequencing data later. But all this is super reassuring to the durability of the effect that you've had, this is no longer, "Oh, my God, it's just the first 3 months." No. Now you're talking about 6 months post vaccination and the efficacy it is holding.

Yes. And I was just going to ask you about that before talking a little bit about any updates or thought on orders and also just pricing. You've got a question coming around that how pricings are working out. But before I go there, I just want to ask you one other question, which is that there has been talk about the ability for the virus to kind of mutate more, right, that there could be more variants as there's sort of pressure put on the buyers to vaccines, just more virus in the population, et cetera. Is that something for you -- is that just an assumption you make that you will expect to see more variants and possibly more complex variants over the summer into the fall? Or do you think that's also still up in the air?

So I think that we will continue to see variants emerge. The question is, are these variants going to be when and to what degree will we see significant variants emerge that are a function of immunological pressure versus a function of fit to infect naive people. It's pretty clear, you can do the experiment in a petri dish and people have in the presence of antibodies to sort of try and mimic sub-efficacious immunity and what that pressure gets you. And you get the same kind of 484 type mutations. And so there's reasonable evidence that some of the selection pressure there is immunological. On the flip side, it's also pretty clear from the British -- the first -- the 117 mutation, the U.K. one, that, that one's probably not evolving because of immunological pressure. That just evolved for a better fit of the virus to hit the receptor. So I think we're going to see the continued interplay between these 2. And it's not clear to what degree we're seeing convergent evolution such that the virus has a limited space into which to evolve, and therefore, we're going to have to chase it to a certain degree, but maybe not endlessly. Or to what degree there's going to be the establishment of a wide enough gamut of states from which the virus can evolve into. Like with the flu, which gives you a more protracted challenge. Now put that prediction aside, we, as a sponsor, only have one thing that we should be doing, which is getting ready for the worst and preparing our vaccines to provide the best possible fit. And in that regard, I believe, personally, that the best possible vaccine is probably going to emerge as something that gives you the broadest possible protection. And right now, it's pretty clear that if you're protected against the ancestral strain, there's a bit of a drop in your protection against the 351. On the flip side, it turns out, if you've been infected with 3 5 1, you're not as well protected against the Wuhan strain, the neutralizing reciprocity there, which is obvious because you're looking at different confirmations. So I envision that having the ability to immunize people with both will ultimately be the best thing. And then the question is, is it both in a combination? Or is it both sequentially over time? You first give one, then you give the other. Those are all things we're going to have to figure out from the clinical research data.

Yes. No, that's great, Tal. So we'll just ask a couple of questions that came over the Internet, just while we stay on COVID-19 before we go to the pipeline. Any updated data on serious infections, hospitalizations, COVID death in the treatment arm for the COVE trial from the original -- or what the company had disclosed?

No. We only gave the overall count, not the breakdown by [ Sirius ], et cetera. Frankly, I haven't seen those data yet. We'll be wrapping them up as we prepare to file.

Understood. Okay. And the filing is still applying still over the summer, roughly around there?

Correct. Correct.

Yes. And then another question was months ago, Moderna announced that U.S. is paying $25 per dose in smaller countries, about $32, $37. Are these costs still roughly what the company is seeing or has increased competition from J&J, as an example, led to a reduction in the pricing amounts?

To the best of my knowledge, and this is where I'll defer to my commercial colleagues, there has not been a significant change in our pricing strategy or our ability to command price.

Yes. Got it. Now just in terms of -- just finishing up on the coronavirus, I know that Stephane has talked about this many times about how he sees it evolving from a pandemic to an endemic market. We've noted to people that flu vaccines can come on a price as high as $75, for example, telling as low as $15, right? So unlike the classic drug market, there's a lot of dispersion based on the product profile. And I guess maybe if you could talk a little bit towards the strength of the Moderna mRNA platform and the clinical data you've had, because I still think sometimes investors don't really understand that long tail based on product profile of 1273 and future mRNA vaccines from Moderna, how that could...

I'll -- so let me start with a personal anecdote. It bugs me to no end when I see CVS put a price of $139 for getting a COVID test, and knowing the price at which we sell the actual vaccine because you have to get tested every time you're worried. The vaccine, you get twice, maybe 3. And then we'll talk about the endemic. So clearly, there's a question of pricing in a pandemic, which we're doing the right thing versus the endemic market. The -- if you step back, this vaccine for me, there's 2 -- 3 key things that are worth repeating. The first is the level of efficacy. We've just lived through -- when scientists look at the result, the first question is, can you replicate this? Or is this a fluke? We've just seen the greatest scientific replication in my career, which is both we and Pfizer have completely independently developed a platform. By law, we can't collude. I have no idea what goes into the product. You know from the collusion that, that's different. But we're using the same scientific concept. It's the same disease, the same construct antigen, the same protocol. And within a week, we came in with a result that's within 1%, 94.1% and 95%. That level of scientific replication just speaks to the veracity of the effectiveness of what we're seeing. And by the way, we differentiated from the other platforms in terms of level of efficacy. So let's start with there. Clearly, if you look at these 2 vaccines in the emerging real-world evidence, it's holding up beautifully, whether it's in a country level in Israel or the Mayo Clinic reporting results for both. The Israel data, I should say, where Pfizer is. But again, I see this as just speaking to the strength of the platform here and the science. Now the other -- so that's element #1. Element #2 is the safety. So people were worried, but look, there's been more than 100 million doses given in the U.S. alone of both of these vaccines, more than 50 million doses of our vaccine. CDC published about 10 days ago, a look at the first month early data. And the results are: number one, the reactive genicity profile is exactly what you saw in Phase III; number two, the anaphylaxis is there, but it's rare, and it's in the similar magnitude as any other vaccine, and so that initial noise probably isn't real; and number three, we have no other signal of concern for any other safety event. Now the safety then and the efficacy, the Phase III results hold up in real-world utilization in a deployment we've never like seen before. And that brings me to the third point, which is our next vaccine and the rest of our pipelines. Their life in the eyes of development, the public, the regulators' common sense has just changed dramatically overnight. Because it's different, launching a new technology for a CMV vaccine when nobody else has ever gotten a CMV vaccine and you're going to women of childbearing age versus launching this into a market where about every other person you know has themselves gotten an mRNA vaccine that currently hasn't fallen, right?

Right. Right. It's actually interesting you say that. I was just -- happen to be looking over my notes a couple of weeks ago from the JPMorgan conference of your presentation or Stephane's presentation in 2020. And how Stephane said at that time, I think there were over 3,000 people that had gotten mRNA vaccines. And now they're, as you mentioned, over 50 million. And yes, we've seen some anaphylactic reactions. But other than that, of course, there's always longer term data, right. It would always, right? But it's -- to me, I think it's just fascinating how quickly this has scaled and it's held up. And as you said, Pfizer and BioNTech also. Last question on this is just, are there any technical limitations to making multivalent mRNA vaccines, Tal?

Well, I'm sure there are, we just haven't found them yet. You look at our CMV vaccine. We've got 6 mRNAs and 1 vial. 5 of which have to come together to form 1 antigen. The 6 is the sixth antigen. We get immunogenicity against both antigens independently measured at levels that exceed what science thought was possible and exceeds what people who are walking around infected latently every day have in their body. And so clearly, you can -- I mean, that's the best bonafide clinical data we have for multivalency. And that's going to go forward with a dose that I believe is 100 microgram in total or roughly thereabout, and the Phase III is about to start this year. So if you take into account what that means for your ability to do combinations of respiratory viruses, clearly, we see a huge opportunity to leverage the utility of this technology to prevent respiratory diseases. And now that we can identify them by name. And this year, it's flu and this COVID and next year, it's that flu and the other COVID and look forward ahead enough and you can throw an RSV for a good measure. We see a huge opportunity here in vaccines in a way that we'll profoundly change what we're able to protect people against. And because of that multivalency that you point out, the ability to combine it and make it actually easy will give a benefit to consumers, but also will give a huge benefit to this technology and us and being able to provide it.

Yes. No, no, absolutely. I mean it's really exciting times. Each one of the R&D days or science days, it's just fascinating how much has already been done, but yet, how much more can be done. I mean it's really -- so when I think about it, it really drives me up. This last year with Moderna, Tal, is truly one of the special years in my life. I will remember it for a long time, and what all Moderna was able to achieve and how much I learn. So in terms of -- just going to the pipeline, Tal, what is -- what excites you about your pipeline outside of the coronavirus vaccines? I know CMV is starting. But in the near term, in the 6 to 18 months, what really excites you in terms of readouts, things that are well known, things maybe that are not well known, if you can divide them into 2 buckets from as investors think about them.

So I think the 2 buckets I would divide is I am super excited by the vaccines. Maybe not so much for readouts in the near terms, but for really critical starts. And I think starts are important because now, the probability of technical success should be very high given what we've just seen. And so I think the value of the start has just grown tremendously, right, just as far as our news flow. So CMV Phase III start, I think starting flu and having regulatory discussions on how you get flu in a combination flu product to the finish line, is potentially something that should be shortened. It's another respiratory virus. We've just done one, and you'll see us come forward with that and with RSV as well. There's a few other viruses behind that. We'll be looking at EBV. I think that's an interesting one for infectious mono, for sure, in the near term, but it's becoming more and more clear that EBV in the long run is the cause of multiple sclerosis in the population. Just think of what that could mean for people. So now the other bucket or the other therapeutic areas, I think the 2 things to watch for our first oncology, right? Because oncology, we're in the midst of I/II trial -- Phase I/II trials for both, the OX40 ligand and the triplet. The personalized cancer vaccine is going. It will take some time to read out because it's event-driven and it's a randomized Phase II. So -- but within the 18 months time frame, that could hit. And then, of course, rare disease. It took us a while to get into rare disease on my watch in the end of '19, beginning of '20, and then we were stymied a little bit by the pandemic. We're back at it with some of the programs redone. PA will now dose likely first and a lot more to come on the back of that. Those clearly should have a relatively quick time from Phase I start to actually POC because POC is dependent on a relatively small number of patients and a very clear movement of biomarkers. So as opposed to oncology, where you're waiting to see tumors reliably shrink, here you're looking at mini -- like biomarkers that you're measuring days and weeks after you dose people. So I think that's the place to look at. And then there's the wildcard. AstraZeneca has been after VEGF for a while. I'm super curious to see their data. I think that should get out in the time frame that you alluded to. That could be big. Yes.

Yes. That's fantastic, Tal. And then we got another question from the audience, actually two. One is, how does intellectual property from mRNA technology differ from other drugs? Or doesn't?

Well, we probably have better IP than for other drugs in the sense that like for other drugs, we have composition of matter IP. But I think here, there are platform-related IP elements, and there are formulation. These are very complex drugs. So I think the -- and I'm not an IP attorney, but my sense over the years has been that the layers of protection that you can build up here are more significant than for new chemical entities.

Got it. And then there's a question here. I might not understand it correctly. It says, any data on vaccines protecting against the long -- I guess, these are the long haulers COVID, the 10% to 30% post-acute infection?

Well, I'll break it in 2 parts. If the question is, once somebody gets sick, do you want to vaccinate them to prevent long COVID because I've heard that hypothesis. I don't know. I haven't seen any data. If the question is, does this protect specifically against that form of disease, that's going to be very hard to tease out because we've got so few people who are actually sick, and none of them severe so far, at least that I've seen. So we don't really have any long-term data yet to be able to inform that.

Yes. And then specifically on flu vaccines, Tal, when you've looked at this market, right, so we've done a little bit of work on it. It seems it's about $4 billion right now. The flu vaccines themselves are very suboptimal, the way that they are manufactured and the strains come from the south to the [indiscernible], et cetera, et cetera, right? So when Moderna has done the analysis, look at the flu market, what are the sort of top 2 or 3 or maybe 4 ways that you think you can change, transform the flu vaccine business or can you?

So I think there are 2 important ways. I think the first one, I would characterize as predictable efficacy, if you will, right? So if we can get to a point that the reaction time is faster, then the probability of hitting the right strain is higher. And there are some years where the flu vaccines do well, but there are some years where the flu vaccines don't do as well. So now that is that's going to take some effort because right now, we all manufacture it based on the WHO releases. So we're going to get the WHO to change that. So I'm not making light of the challenge here. But I think now that we all see that there's a new platform here that is very effective against a respiratory virus, I think there's going to be an intense scrutiny on how we can do better. The second one is the ability to do combinations that I alluded to before, that I think this platform lends itself very easily to and maybe even develop them from the get-go as combinations in an endemic COVID era, if you will. So I think that's going to be a benefit of this platform. And I think the other enablers. So these are the 2 things that are proactive factors that are there. And then there are 2 very important enablers for me. The first is having demonstrated safety and efficacy against a respiratory virus to this level. I think it takes a lot of the questions off the table. And the second one that we should -- side of it is a manufacturing footprint. I think our ability to leverage this pandemic to scale up and establish a manufacturing footprint that we can then put to work is a huge enabler for us to go tackle flu.

Yes. Yes. That actually makes a lot of sense to me, especially since I think, Stephane, when he said going from $600 million to $1 billion and then at JPMorgan this year, saying $1 billion-plus next year. I could kind of see his wheels turning, now I've got to know him well enough where he's like, "Yes, once we get past pandemic, we can use that for flu and a bunch of other things." Another question is, will people need a COVID vaccine every year? Do you see it as a recurring model like the flu vaccine, essentially?

I don't know if it's going to be every year. It may be periodic, maybe not on an annual basis, but there's going to be some periodicity to this because, look, the other corona vaccines -- the other coronaviruses that are circulating in a population can reinfect, within 1 to 3 years, generally speaking. And we don't know whether the reinfection is because they cause mild disease or because that's just the way these have evolved. They do cause significant morbidity and mortality, but it's -- they account for a very small percentage of overall respiratory diseases. So there is some precedents with other corona vaccines -- I'm sorry, coronaviruses, so we're just going to have to watch it carefully and be ready for it.

Yes. Got it. And we're on the hour, Tal. I'd like to ask you one last question because of our time together, and your journey up to September. We just -- what is your favorite memory at Moderna? I know you probably have many. It's like asking what is your favorite child. But is there one favorite memory that you have at Moderna you'd like to share with us?

Well, I'll tell you, the 2 are the day I put on my tie for the first time in the company, which was circa November of 2015. We had just dosed our first-ever healthy volunteer with an mRNA vaccine against influenza. And Stephane stops me in the corner and said, "Why are you wearing a tie?" I said, "Look, I mean, the physician in the clinic wears a tie." That's just -- and then, of course, I think the other one is the FDA advisory committee. This is my third FDA advisory committee, but certainly the one that will forever stand out as the most important and impactful and the one that I'm proud of.

Yes. Great. Well, thank you, Tal, so very much for all the efforts, all of the -- being a great colleague and helping us learn a lot, too.

Thank you, Hartaj. It's been a real pleasure. I look forward to keeping in touch.

Same here, Tal. Same here. Stay safe.

All the best.