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

Great. Thank you. Good afternoon, everyone. My name is Gena Wang. I'm a SMID-cap biotech analyst. It's my great pleasure to introduce our next presenting company, Moderna. With us, we have Paul Burton, Chief Medical Officer.

So Paul, maybe before I ask specific questions, we just saw COVID has some recent change in the past few weeks. What is Moderna's perspective on these?

Yes. Thank you, Gena. Good afternoon, everybody. It's great to be here. Look, we have talked in recent weeks on the last Q call that we felt we would see a period of stability in cases, case counts declining here, certainly in the Northern Hemisphere, as we go into spring and into summer, and then they may rebound. I would say with the events that we've seen in China, throughout Europe, the resurgence now, resurgence of the BA.2 variant of COVID, that I think that has changed. Now I think we can still get back into a period of stability, but these global changes are concerning. We're seeing high death rates now in Hong Kong, in Denmark and other places around the world, certainly a lot of transmissibility of BA.2. So I'm still confident that we can get there, that we can have this period over the summer. But the landscape has changed, and it just speaks to the ability of this virus to make these very radical changes all the time.

So you mentioned Hong Kong, and I know China, now, they have quite a lot of outbreaks and quite a lot of city lockdowns. So any thoughts, updated thoughts, in terms of the market opportunity in China, with the likes of big populations there, and the market opportunity could be very big? What is the Moderna stand there?

Yes. So China obviously has its own internal vaccines, Sinovac, Sinopharm, which are effective. I think the mRNA vaccines certainly continue to show great effectiveness, very safely delivered in very large populations. Those vaccines are used not only within the country, but also with other partners as well around the world. Now we speak to governments all around the world all the time about opportunities to bring Spikevax, mRNA-1273, to them. And we'll certainly continue to do that with China. But I think they have to assess exactly where they want to go with their own internal platforms and just when would they want to get it to everybody.

Okay. Good. Now moving back to your own guidance. I think, for 2022, you guided $19 billion. So any -- based on the current committed orders, how should we expect the delivery in the revenue recognition path throughout 2022?

Yes. So we think that revenue recognition will slant generally more in the second half of the year. This is just because of deliveries. Also now, to your first question, Gena, with the global changes that we're seeing and the pattern of the pandemic, we've talked about this in the past, but certainly, we think there will be rising case numbers in the fall of 2024 -- '22, which will drive incremental need and use. So I think we see that with the deliveries driving second half. And typically, in this kind of market and the environment we're in right now, second quarter would be lower. So we would predict second quarter to be lower. That would be normal and predictable.

Okay. Good. Very helpful. So we did see, like both U.S. and Europe, they sign up large amounts of doses, which is actually much more than what they administer. So should we worry about the cancellation and all like for delivery, or any impacts to the future demand?

No, I think, look, the orders we have are firm orders. The APA is a firm order. So we've guided to $19 billion this year in those. We are on track for the deliveries that we've talked about. Stephane mentioned in our last quarterly call that we're still obviously going to be discussing with the United States government for orders for the second half of the year. So we see the upside of options on top of that, but we feel confident in those numbers still.

Okay. And then any thoughts on the impact to the future demand? Like, say, if they overorder, if the APA is fixed, but can they -- maybe another way to ask is what would be the shelf life of those vaccines, so that in the future they have to reorder, [ can they rely on the previous order ]?

Yes. It changes a little bit around the world, from one regulatory authority to the other. But typically, it's about 9 months from the moment that the vaccine is made. By the time it actually gets through the distribution channels and is in the pharmacy or on the shelf, on average, shelf life is about 6 to 7 months. So that's a pretty decent range, and that should allow most organizations to get their vaccine and administer it. We did see, this year, some pushing out of doses, and we saw some donation of doses as countries around the world got close to their expiry and were then able to donate. But otherwise, deliveries are on track and tracking to that kind of shelf life.

So where do you see the major driver from -- like for 2023 and beyond for COVID?

Well, so I think we see several opportunities. We still believe that this will become an endemic disease. I think that will happen in 2022. We have to cope with this, what could be a fourth wave. We'll need boosting. We've talked about that. Whether there is a need for early boosting and later boosting, we're not sure, but we think definitely boosting in this year. And that, we believe, will also then become a yearly eventuality. Now our aim is to combine the COVID vaccine with a flu vaccine. We would like to try and have that available in late 2023 for that fall and winter season and then beyond that, to now add in RSV as well, so that we would have a triple combo all in a single shot to protect against those respiratory pathogens.

Okay. Another question is regarding the label expansion you have. So I think that you are still waiting for FDA feedback on the 12 to 17 years old. And maybe if you can give us updated thoughts there. And also, for the younger patient, would you expect the data, like what do you see, how the value driver will be?

Yes. So for the adolescents, the 12 to 18 year olds, we were approved in Europe and I think 40 other countries around the world in the latter part of last year. The data that we've been able to see from all sorts of different databases is very reassuring, both in terms of efficacy and safety. As we move now into the younger kids, so those between 6 and 12, just in the last few weeks, we were approved again with the European Medicines Agency and with Australia. So that group is now approved there. And imminently, within days, we should now have the data on the 6-month-old to 5-year-old, the littlest kids, particular unmet need. You'll know that the Pfizer-BioNTech vaccine went back to do an additional third dose in their trial. As I say, we should have data very soon. We're using the 25-microgram dose. We feel very confident in the doses that we've selected, 150 and 25. We think there's real unmet medical need there. And there's definite pressure. I've been talking to lots of parents, lots of physicians here in the U.S. and around the world. There's a clear need to protect those littlest kids, get them into daycare, get them into school, help get family life back to normal. So we're hopeful that those data will come in strong, and we'll be able to move forward with an approval there as well.

Can you remind us the timing for the data?

Imminently, days, within days. We've talked about Q1 for the data in those very youngest children, the 6-month-olds to the 5-year-olds, and we have 2 weeks left in Q1. So we really think it will be in the next few days.

Okay. You will have Vaccines Day next week. Should we expect that data at the -- your Vaccines Day?

It's possible. It's possible. There's still cleaning to be done, some of the last sort of lab data to be collected and entered. So we're pulling out all the stops, we hope to, but it's -- it may not be.

Okay. That's great. And regarding 12 to 17 years old, I know you do have, I think, right now, it's 100-microgram primary series.

Yes.

So where do you see this moving forward, 100-microgram, any concern on the myocarditis? And regarding the 50-microgram, like where do you -- like do you think FDA holds on to it because they want to see 50-microgram? Or they wanted to see more safety data?

We're confident in the doses we selected, the 100 for the adolescents, the 50 for the 6 to 12 and then the 25-microgram dose. On adolescents, I mentioned that we have approval, 100 micrograms there, in many countries around the world. When we look at myocarditis, the rates that are observed to expected myocarditis are completely within the range that we would expect to see. There's no excess risk. I think we know a huge amount today about myocarditis that we didn't know 6, 7, 8, 10 months ago. If you look at recent data from the United Kingdom Health Security Agency, where they look at myocarditis after the booster dose of the Moderna vaccine, again, you really don't see any excess risk compared to the Pfizer-BioNTech vaccine or the AstraZeneca vaccine in the U.K. So I think we feel confident that this is a highly efficacious, effective platform that can be safely delivered and that we now know a lot about myocarditis. And even in the adolescents, there does not appear to be an increased risk certainly after boosting.

Okay. And for the FDA approval, U.S. approval for adolescents, like when do you think -- what will be the timing you expect we will see some feedback from the FDA?

Yes. Yes. So we've been having excellent discussions with the FDA, very collaborative. They obviously recognize that, that whole spectrum, from 6 months up to 18 year olds, is very important. We obviously have the Pfizer-BioNTech vaccine for the older kids, but the youngest are still an unmet need. We've been talking to them a lot about adolescents, and I think they do see a pathway forward to reviewing the data. So we'll keep that open. We'll keep reviewing the data with them. I think, for us, the next big port of call is going to be the 6-month to 5-year-old, the youngest kids data. We'll try and get back to them as quickly as possible and then keep the discussions going.

Okay. And then moving forward, where do you see -- and you do have existing 1237 (sic) [ 1273 ] against the original virus and you have Delta and Omicron. So where do you see -- going forward, do you think it will be try to develop a variant-specific vaccine booster? Or do you think you will continue with the existing vaccine supply as a booster?

Yes. So Spikevax, mRNA-1273, is highly effective, certainly against the original strain. It's also extremely effective against Delta. And Delta is certainly still around. It's circulating here in the United States and many other countries. It's pretty good against Omicron and certainly good against Omicron after boosting, but it wanes because the spike protein in Omicron is so mutated. So you would expect it to wane. So we have started testing our Omicron-specific variant vaccine. We started that at the end of January. And just last week, we announced that we have also started and dosed the first person with our bivalent vaccine, which combines mRNA-1273, so you get Delta cover, with Omicron, so you couldn't get Omicron. And I would suspect as well that you will get BA.2 cover from that, which is clearly a problem right now. So our feeling is to go towards the bivalent, to give Delta and Omicron cover that will protect people from hospitalization and death from Delta, and it should reduce infectivity, which Omicron drives and hopefully give people stability and reduce case counts for the fall and winter of this year and into next.

When do you expect that data to be read out?

Yes. So look, I would say that we would be in a position to file or to begin filing, whether that's on a rolling basis with initial data or larger data sets, by early summer. The first study of Omicron alone enrolled very quickly. We've started enrolling now the bivalent data. We want some longevity of data, not only day 28 data, but we might want 2-month, 3-month, 6-month data. But these studies enroll quickly. So I think we'll begin to see data over the next month or 2 and certainly by early summer.

Great. Very helpful. Maybe now switch gear to your flu vaccine, which is also a very, very important component for Moderna. So for the upcoming Phase II trial, first, when should we expect the data? Should we also expect to see the data next week at the Vaccines Day?

Yes. So again, we have -- it's quite a large study of Phase II immunogenicity. Our whole strategy around flu, with what we call mRNA-1010, has been to enter the competitive market quickly, bring the mRNA platform to bear on what is a very bad disease and begin to move into this area. So the study is controlled up against an available flu vaccine, and it has about 500-or-so people in it. To get the immunogenicity data, to complete those assays, again to clean them, to get the data in, takes some time. It may be possible that we'll see something next week. But it's, certainly, it's going to again be within a short number of weeks, if it isn't next week. So we should see data soon. We'll then use that study to really select the definitive pivotal dose that we'll take into our Phase III study, which should then start later this year.

I don't know if you can disclose the comparator. What is the comparator you are using?

An approved, just an approved flu vaccine [ at the minute ]. We'll certainly then think about what is the comparator vaccine that we'll use in Phase III, which is the most generally used one, which [ one would regulators ] like us to see most, will also give us a handle, I think then, on where we go with the flu-COVID combination, which is particularly exciting.

Okay. Before I move to flu-COVID combo, I have a few more questions on flu. So where do you -- so for the data, what kind of profile you consider that's successful?

Yes. Look, I think, again, the study will be an immunogenicity study. So we'll be looking at titers and we'll be looking at safety. The data that we showed, I guess it was earlier this year or even late last year from Phase I, as we've talked with investigators and systems physicians around the world, many people believe that it actually has the features of what could be a really best-in-class or highly effective flu vaccine. And I think that's right. So we would like to see good immunogenicity and protection, certainly against the HA antigens, and then an acceptable safety profile. Now I think one thing that the pandemic has taught us as a world, educated us about vaccination, it's educated us about reactogenicity. And what we've learned is that if you just explain to people that they will get some mild fever, that it's short-lived, that it can be dealt with through over-the-counter medicines, easily dealt with and managed, so I think the profile that we're seeing, even from Phase 1, is really very attractive. If we can recapitulate that and show noninferiority to an approved flu vaccine, then I think that will be a very attractive platform.

Okay. So when you say noninferiority, is that referred to the efficacy alone or...

Immunogenicity. So if we can show noninferiority to immunogenicity, that's an improved pathway to get approval through health authorities, certainly here in the U.S. and around the world, for the product. We would then hope to move into the current standard world, which is where you see the new flu strain that is coming from the year ahead. You put that into the [ lipid ] nanoparticle, that's the new mRNA, and we go out with that. And we would then hope as well to try and apply that to the flu-COVID setting as well.

So for the flu, what about the safety compared to the current standard of care? When we did a comparison, we do see COVID side effect is much higher [ than grade 3 ] or the fever or the rate is much higher than the flu vaccine. So where do you see your profile will be? There is some investor concern because we saw much higher with the COVID vaccine. And does that translate to potentially higher safety events, also AE events, in the flu?

Yes. So look, the Phase I data was not actively controlled as compared to placebo. I think that's important just to remember. And it is as well 1010 is our fast-to-market entry into flu as proof of concept. Can we get antibodies to the flu antigens, can we do that safely, and I think the answer is yes. There is reactogenicity. We saw that in the platform. But it's manageable, it's typically short-lived than people would say, particularly if they're told about it, they can deal with it. The efficacy, the immunogenicity was strong and was robust. So I think -- again, I think what we have seen from -- as we've talked with leaders around the world, the feedback has been positive. And I think it sets the scene to get into the flu market, to start understanding that moving forward with either flu-alone vaccine or the flu-COVID combination vaccine, and then to bring online what we call mRNA 1020 and 1030, where we now bring in these neuraminidase antigens on top of these hemagglutinin antigens. And there, I think, we'll see real differentiation, profound effectiveness, again with a good safety profile. That's our aim, and that's what we hope for. But that's also the adaptability of the platform, that we can bring together a very complex vaccine, complex antigens into a single shot.

So going back to the safety part. So anything, differences in terms of the disease, even though it's all on a vaccine, one is the COVID, one is the flu, any underlying disease or sequence that will make you think the safety profile could be different than what we've seen from the COVID vaccine, that the high rate of fever and the other -- the side effect will be -- would not be the same in the flu vaccine?

Yes. Yes. So I think with COVID, I think the reasons we see some fever, arthralgia, the well-described safety profile, is the pyrogenic, the fever-inducing nature of the antigen. I think it's the spike protein, People who have had COVID will attest to it. Spike protein is very reactogenic. I think what we have seen in flu is some reactogenicity. Whether there is some of that due to the lipid nanoparticle, some due to the protein itself, difficult to tease out. Remember as well, we actually had quite high doses. We went from 50 to 200, I think, without a profound dose response. So I actually think, for flu, we also have a large amount of room to even go lower on dose that will manage that reactogenicity profile. And that's what we've been able to do in Phase II. But I think as we get the Phase II data, we'll assess the safety profile and again, obviously, look at immunogenicity. But I think we have room there on the lower end to pick and really maximize their selection for Phase III. And again, just going back to flu-COVID again, as we want to try and keep that total microgram amount of mRNA down perhaps to 100 micrograms or even 50 micrograms, it then gives us the ability to do that.

So for flu vaccines, do you think that you will have to run the outcome trial, or do you still have the chance to use immunogenicity data to seek for accelerated approval?

Yes. So that's a great question. I think, look, we can use the pathway of noninferiority on immunogenicity as our primary pathway to approval. At some point, we are going to then need to do a clinical outcome study, a flu case count study. The question really is whether we can get approved and then do it as a commitment, subsequent to approval, so essentially an accelerated pathway. Or we have to present the immunogenicity data then do the study and then get approval. And I think it will depend, to some extent, on the strength of the immunogenicity profile as we talk to regulators, whichever pathway they recommend that we go down.

Okay. Very helpful. And you did mention a few times the flu and the COVID combo. Where do you see the path? Like now you have 2 individual vaccines. So when you wanted to do the combo, do you also needed to run a new study to have the boost together? And should we worry about the safety, some synergistical safety? Yes.

Yes. Yes. I don't think we know yet exactly the regulatory pathway to get that approved. We know it broadly. I think we're still discussing and debating and having discussions with regulators around the specifics. So by this point, we should know the immunogenicity and safety profile of flu. We clearly know the immunogenicity profile and safety effectiveness of the COVID portion. Our feeling would be that we can just bring them together. We have demonstrated data as well that we can make bivalent. We can put them together in a single lipid nanoparticle, and they carry the effects of the 2 individual components. So I think our argument would be, look, we know the characteristics of flu, we know the characteristics of COVID, put them together and apply for approval. Whether we would then be asked for some kind of post-approval commitment or an in-line study to show some effectiveness, I think that's the bit we need to debate. It's very clear with publications that we see today and hundreds of millions of people, as they're the sample size, that real-world evidence can be generated very quickly now within this framework. So I think we can generate it fast. That's the piece that I think we still need to talk to regulators about. Do they want us to show effectiveness of that, the whole, or would they accept the sum of the parts?

So going back, I know we don't have much time left, but just going back to the flu vaccine data, you said depends on the immunogenicity data, you may get accelerated approval passed. Like would that be -- can we interpret that it will be superior to the active comparator? And what about the safety, do you need to show at least comparable safety to the comparator? What if you show a little bit worse safety in how the profile will look like, how this profile, how would that lead to the next step?

Yes. I would say, as a general theme, when we have talked to, again, investigators around the world and individual people or consumers, people want to be protected from flu. They will accept a degree of reactogenicity so that they don't get flu. I think that's clear. I don't think there is a clear-cut answer to what regulators will want to see to then either go down the standard approval pathway or an accelerated approval pathway. I think it really comes down to totality of data. How strong immunogenicity, how did the comparator perform, what's the overall safety profile, I think there's confidence growing for sure. We've dosed 400 million, 500 million people around the world with Spikevax. So there's clear confidence in mRNA as a platform, but I think they want to see a totality of data to then make that decision. And it may be that they propose to go the standard pathway, which is fine, we'll do that and we'll do the study.

Okay. I know we are running out of time. Well, thank you very much.

Thank you, Gena. Thank you.

Thank you.