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

Good morning, everyone. Really pleased to have Moderna here with us. We have Lavina Talukdar, Head of IR. With that, Lavina, I'm going to turn it over to you if you have any opening comments, so we can just jump into Q&A.

Thank you, Salveen, for having us here at the conference. And I would actually like to open it up to Q&A.

Perfect. So let's just start here with the data that you just presented, the Phase II/III data of the bivalent booster. Just describe that data to us and what your discussions with regulators have been and what the path forward is to getting it on to market.

Great question. Thank you for that. So we just showed the Phase II/III data just last week. And we are very pleased to show that, when giving 214, which is the bivalent product that includes both 1273 as well as an Omicron -- the Omicron sequence in the vaccine; against 1273, which is the currently available booster at the 50-microgram dose, that there is superiority in the level of neutralizing antibody titers when giving 214 or bivalent product. And that superiority was something that regulators wanted for a statistical significance, which is what we hit. But there were many other hurdles that we needed to get through before even hitting that superiority claim. And one of those was also to show noninferiority against the ancestral strain with 214, which we did also hit; as well as seroconversion rates that were at least 100% or not above -- less than 10% difference. And so all of those hurdles were met, and so we're very pleased with that data. The conversations that we're having with regulators are ongoing. There will be meetings that take place both at the advisory panel level at the VERPAC on June 28 later this month that will be discussing differences in sequence strains for the bivalent product. And so we look forward to that meeting as well for more information.

So maybe 2 follow-up questions here. When will we see the full data and the neutralizing antibody data? And then talk to us about how the vaccine or the bivalent booster looks against the BA strains that are emerging? Just given Omicron's not as -- the dominant one at this point?

Sure. That's a great question. So we will publish the data in a preprint and eventually also submit it for publication. And so we're hopeful that the data against the different variants, not just Omicron BA.1, but BA.2, .3, .4 will also be available in that publication because it's an important data set that I'm sure that we would want to know, as well as regulators around the world.

And talk to us now about what, I guess, timing. So you have this VERPAC meeting. What do you think about timing as to when you could get approved? What's the process by which that happens, and then launch with the new booster dose? And where you stand on inventory.

So we'd really like to be ready for the fall season later this year. In the Northern Hemisphere, that's when we think that susceptibility to infections is going to go higher just because we'll spend more time indoors. So the goal for us is to be ready for a launch in the fall of this year. And so that would mean we'd have to have product ready for shipping towards the end of August, early September, October-ish time frame. And so if we work backward from there, that would hopefully entail that these ongoing conversations we're having with regulators around the world as well as the submissions that we'll make on the data that we just showed later this month, should actually give us the opportunity to get that in ready phase. And so we're looking forward to those interactions with regulators around the world and hope that we'll have EUA or an authorization for that 214 booster in time.

And at this point, our guess -- as you get to that point, how much supply will you have?

So one of the things that we did do is we already started making some of the product at risk. And so what do I mean by that? So 214 is a bivalent product, as we just talked about. That includes both 1273 in the finished vaccine as well as the sequence against Omicron. And so what we did in advance of getting ready for this launch is that we started to make an inventory 1273, one of the components of the vaccine. So that when needed, and we're closer to that now, we're actually making Omicron as we speak. All of our infrastructure would be dedicated to making the 529 part of the bivalent vaccine, which is the Omicron sequence. And then I'm going to make this sound a lot simpler than it is, but we'll mix it together once we have the approval. And that product will then be finished and ready to go for launch. So we are in the midst of actually inventorying some portion of that product right now as we speak.

And on the recent earnings call, you talked about -- so if we move to the demand side of the equation. You talked about upside levers, but also a potential downside lever within COVAX. So where does that stand today? And help us understand how the U.S. market may play out.

Sure. So you're right that we did, on the first quarter call, talk to some of the levers around that $21 billion. And so what we talked about as potential downside is a shift in timing of deliveries, particularly to the COVAX facility, which represents the low- and middle-income countries. As many of these countries are having last-mile issues, meaning they're having issues getting product into arms. And as a result, they are pushing out some of those deliveries. And so that's where some of the downside to that $21 billion in APAs could come from. But that could easily be offset, if not more than offset, by demand now coming up for 214, which we've highlighted the U.S. government as one of those customers where they do not have a 214 order in for the fall. And at the time of the first quarter call, we didn't have the data for 214 that we're now very pleased with, given the superiority claim that we can make off of that data set. And so as we move toward an authorization for the 214 product, the chances of the U.S. government order, I think, likely goes up. And so that would be potential upside to that $21 billion, or an offsetting to the downside from COVAX, for instance.

And does that come through -- I mean, I guess, we're watching the government in terms of whether they can get a budget aligned to COVID. But how do you think about the private market emerging? And what are you doing now to build that market as you move, especially with payers, as you move to an endemic period?

Sure. So great question. And you're right, there are lots of moving parts to how this fall booster market is going to shape up. So you correctly pointed out, that there is a bill making it through Congress right now that actually started off at higher levels than where we are now. I think originally in the year, it started off at $21 billion. But given some of the opposition to the bill, I think now it's just that $10 billion. But that $10 billion is going to be earmarked for everything for COVID. So that includes antivirals, vaccines, testing. And so some portion of that $10 billion will be earmarked then for vaccines for the fall season. And so the question then becomes, even if that bill makes it through Congress, so there's still a question around that as well, what portion of it will be earmarked? And will that portion that's going to be earmarked actually cover the whole of the U.S. population? Or/and if not, what portion of the population will it cover? So there are a number of questions there to still be answered, which is will the bill make it through Congress? Is point number one. Point number 2 is, if it does make it through Congress, how much of it is going to be used towards vaccines? And then point number three is, if it does make it through and there is some portion that's used for vaccines, what population will it address? So those are questions that we think we'll get answers to towards the close of the summer, we hope. But in the meantime, our commercial team is getting ready for a private commercial market actually developing as well. And so what does getting ready mean? We're having conversations with the chain, for instance, the CVSs of the world, the Walgreens. We're having conversations with the health insurance plans as well. And those conversations are readying and giving them a heads-up on the data, on what we've seen so far within the pandemic and the different variants and the bivalent product, for instance. So that, should the time come for them to make a decision on purchasing for the private market, they are very well equipped to make that decision.

And CMS also came out on pricing and is discussing a $60 gross price. Is that coming up in your discussions with payers? Is that -- or should we expect that lever to play out as well?

So that's also a really good question. And still, we don't have a ton of clarity on it, but you're right. CMS, for 2 years in a row now, in February, they typically come out with what their actuaries think the value of different medical interventions would be. And for COVID, they put out a gross price of like $60, both last year as well as this year, for the fiscal year to start later in the year. And so that would be, in a truly endemic market where the U.S. government isn't involved in making purchasing decisions, so that's unlike what's happening right now because of that bill that's going on, that would be the starting point of negotiations with CMS, for instance. But until we know what the U.S. government is going to use the earmarked dollars for vaccines, CMS may not come into the picture until later. But those -- we do know that the $60 price is how they value a COVID-19 vaccine.

And then what are your plans here for advertising to, I guess -- and you've talked about the EUA versus a full approval and how you can actually go out there and try to get direct-to-consumer conversation started. But could you talk about your plans there?

Sure. So you're right in pointing out that an EUA precludes you from marketing, brand marketing, a product. And so we do have a BLA on the primary series. But as we know, many people have already gotten their primary series and so that market isn't really a market that you would market into through advertising at this point in time. The EUA, we would look to hopefully change that EUA into a supplemental BLA on the booster. And that will likely take a little bit of time. A few weeks after we get the EUA, we will look to make sure that the data to transform it into an SBLA would be there, and that will allow us to then market into the booster market for the fall.

Just pivoting here to the seasonal flu. Can you help us understand your profile and why you view it as differentiated? And then the path to market. Because it's just a little confusing between the different Phase IIIs and the timings of what the FDA would require here. But help us understand the path forward.

Sure. So we've already shared now Phase I as well as Phase II data that looked pretty consistent in terms of showing neutralizing antibody titers that were at least on par with the best flu vaccine out there currently on the market, Fluzone HD. And in the segment where H3 antigens that actually caused the most severe disease in the most vulnerable populations, we saw neutralizing antibody titers that were actually higher than what Fluzone HD has shown. So we're very pleased with the data thus far from the Phase I and Phase II experiences. We are currently in a Phase III. It's an immunogenicity study where we'll be looking obviously at safety and tolerability, but immunogenicity as well. And the n in that Phase III is going to be a lot larger than the Phase II study was. So that study, we hope, will form the basis of an accelerated approval with the FDA and other regulators around the world. And however, we will start a vaccines efficacy study as well, another Phase III vaccine efficacy study later in the year. So let me walk you through the different paths if it's accelerated versus if it's not accelerated. So in the accelerated path, all the FDA would use to approve the product is that immunogenicity and safety and tolerability profile from that first Phase III. However, every company that is afforded an accelerated path will also have to show vaccine effectiveness or vaccine efficacy with their product some time down the road. So it's a question of does it happen pre-approval or post-approval? Which is why we're starting that vaccine efficacy study shortly later this year, we hope, so that we do have that information ready and available should we not be given that accelerated path. So in any case, there is a very short amount of time that would pass in terms of us getting an accelerated path or not. And so that we hope to be on the market with a product relatively soon.

And then how does the COVID-flu combo come into the picture, as well as the idea of better matching versus flu? And instead of using the WHO strains, you wait a little later until you can start to pick your own?

Sure. So the program that I just talked about, which is mRNA-1010, we think of that program as our speed-to-market program. And so what do we mean by speed to market? It is an approach that's following an established pathway that's been used by many other companies year in and year out. And so we're not rocking the boat, if you will, on the regulatory-established pathway. As a result, we are following the WHO recommendations for both the Northern Hemisphere as well as the Southern Hemisphere in an effort to use that accelerated pathway, for instance, as a way to get on to market very quickly. But once we do that and we've established ourselves as a flu player, we expect to then iterate on the different flu strains. As an example, we can add additional antigens into our vaccine, for instance, mRNA-1020, which has just started a Phase I study, includes the neuraminidase antigens that no other currently approved flu vaccine has in quantity -- in a substantial quantity in their vaccines. And so that's one approach where we can actually iterate and get vaccine efficacy to be even better than what mRNA-1010 may show. And so just to be clear on that, we're still waiting to see what vaccine efficacy from mRNA-1010 will be once we have that vaccine efficacy study out. But the point that you're making in terms of being closer to flu season and being able to pick strains that may be one closer to actual circulating flu, but also regionally based, is something that our technology enables us to do. So that will be other ways that we, in the future, will look to advance our flu vaccines, both as a potential stand-alone. But really key to what we want to do is have a combination respiratory vaccine, and the first one is going to be the combination of flu as well as COVID booster. Ultimately, we also want to add in RSV there as well.

And the tolerability profile, does it get impacted as you start to merge these different vaccines together?

So we actually don't think so. We don't -- we actually think there will be a ceiling effect, if you will, in terms of the tolerability profile. And so what gives us the confidence to say that? There's a number of examples in our vaccines pipeline that actually illustrates this. So the first one that I'm going to point out is a combination respiratory vaccine that we are now in Phase I studies for in toddlers, in children. And the reason why I mentioned that it's an important one that we're in children is because we've actually gone through an age de-escalation to get to that age group. And so we've already demonstrated good tolerability as well as neutralizing antibody titers against 2 different viruses, hMPV as well as PIV3 in this vaccine program. And there, we do not see, with the combination approach, tolerability that exceeds what we've seen with like our COVID vaccine, for instance. So that's one example. Another example of tolerability profile kind of being of that ceiling effect to where we saw the COVID vaccine is our CMV vaccine, which includes, now in this case, 6 different mRNAs that encode for 2 different proteins, but on the same virus. And there, we also didn't see tolerability profiles that exceeded what we saw with COVID, for instance. But the best proof in the pudding will be when we actually show you data on our Phase I study that we expect to start -- or has started already with our COVID plus mRNA-1010 flu combination. That's mRNA-1073. There, because we'll be looking for immunogenicity as well as tolerability and safety, that data could likely be available well before we have a Phase III readout for flu by itself, for instance.

So BD, you have about $60 billion to $90 billion in balance sheet capacity and have talked about wanting to look at informational medicines, not small molecules. Can you explain to us 2 things? One is when you talk about it has to have increased value, what that means to Moderna? And then two, the urgency to go out and do a deal?

Sure. So yes, we have a very strong balance sheet thanks to the success of the COVID vaccine. And we have a capital allocation plan. First and foremost, is to reinvest in the business because that's where we think we're going to have the highest rate of return, given the derisking of vaccines, for instance, from -- and the fact that we have a platform. But M&A is priority #2 for us. And our BD teams are, as our CEO put it, very, very busy. We are looking for technologies that are complementary to what we do. And what does Moderna do very well? mRNA is a nucleic acid, and we manipulate and deliver nucleic acids very, very well. And we've demonstrated that now with our vaccines franchise, for instance. And so we want to now look at complementary technologies that will expand our expertise and let us go after other areas where nucleic acids or information molecules are going to have an impact on medicine. And so gene editing is one of those areas that we're looking at. But we'll also look at adjacencies to nucleic acids as well. And so the way I think we think about it is creating value is when the expertise of 2 different technologies and companies can come together to actually move a field forward or bring products forward. So there is urgency, as there is with every company, to create value. And we are looking through the landscape to see where we can actually complement other technologies and other companies that are innovating in spaces like gene editing. And one of the things I can say is that we're size-agnostic, so it really does have to be something that's complementary to what we'll do and hopefully create value hopefully in the shorter term versus in the longer term.

On your pipeline outside of the infectious disease vertical. You have a personalized cancer vaccine drug with Merck, and we're going to see data in the second half. Maybe frame for us how we should be thinking about this data? Because to date, with cancer vaccines, it's just been viewed as early proof of concept. So is this meaningful? What are you looking for? And then what does it mean for that vertical as a whole?

Yes. Great question. So you're right. We will be looking for data coming out of our Phase II PCV study. So let me just explain what we're looking for in that data set. So this is a landmark-type study that is head-to-head against KEYTRUDA as a stand-alone medicine for patients with adjuvant melanoma. And we're looking to show that the combination of our PCV plus KEYTRUDA shows higher percentage of people who are living recurrence-free from their adjuvant melanoma at the 12-month mark, which is why we can say that it's -- since it's a timed endpoint, that we will have that data available in the fourth quarter of this year. And so we know that KEYTRUDA, which is already approved in that setting, shows somewhere between 60% and 70% recurrence-free survival rate at the 12-month mark. So what we'll look to do there is increase the percentage of people who are living recurrence-free at 12 mark -- at the 12-month mark when they're getting PCV plus KEYTRUDA. So it's proof of concept because this will be the first instance where we can show the additive value of PCV to KEYTRUDA because it is a head-to-head study. And then once we show that data set, because we know KEYTRUDA works in many other cancers and because, by this data set, we will know if the mechanism of action is complementary, it will beg the question, where else can this mechanism of action, that's synergistic between PCV as well as KEYTRUDA, work? And as I just mentioned, KEYTRUDA works in many other cancers, so it has the potential of really unlocking PCV working in other cancers. But first, let's see what the data shows. I won't get ahead of our skis here.

Perfect. And you also have a data set for your rare disease vertical. Help us understand the optimism towards those programs. Because in a way, isn't it somewhat derisked at this point?

Yes. So for our rare diseases, we are using a lipid nanoparticle that's different and distinct from our vaccines' lipid nanoparticle. But we did derisk that lipid nanoparticle. So lipid nanoparticles are the delivery vehicle for our mRNA payload. And that lipid nanoparticle, on a repeat basis, was derisked in our chikungunya antibody program. We've dosed people in that program just twice. However, the data set that we'll see for PA will have multiple dosing data. Because we started this trial in PA in the early summer of last year. And so the cohorts there that are now fully enrolled, Cohort 1 and Cohort 2, they have been dosing patients now on either every 2-week basis or an every 3-week basis for close to a year. So we know that, on the repeat dosing, that we're not seeing any issues coming up because otherwise, we'd have to disclose. We're very eager to see what impact it may have on the disease itself. So what are we looking for in that in terms of end points is both biomarkers. Are we having an impact on biomarkers for the disease? But also clinical benefits as well. And if we're having an impact on clinical benefit from baseline when people enter the trial, or through natural history, observances on what the natural history of this disease shows versus when you're getting the medicine in the clinical trial. The other good news is that, in the open-label extension program, every single patient that has the opportunity to roll over from being dosed 10 times has now moved into the open-label extension program. So that's also very encouraging in terms of how the profile of the product is behaving.

That's great. Any questions from the audience? A couple more for me. You've noted that the Phase III pipeline could lead to 3 respiratory disease launches over the next 2 to 3 years. Just walk us through how derisked these programs are and comprehensive, and which programs they are.

Sure. So we actually now have 4 different vaccine programs that are in Phase III. One of them, we just showed you data on, which is the COVID bivalent booster, which we're hopeful will be on the market in the fall time frame of this year. The other 3, 2 of them are respiratory vaccines, so flu -- seasonal flu, as that we just talked about; as well as RSV, our respiratory vaccines. And then the fourth one is a latent -- a vaccine against a latent virus known as CMV. So we do think that, given the speed at how quickly we moved from Phase I to Phase III, it took us less than 12 months for all of those to move into a Phase III program, that now with the data readouts, we have the opportunity to actually bring flu as well as RSV and then ultimately the combination to market within the next 2 to 3 years. So in flu, because you did ask. Obviously, we have what we just talked about earlier, the ability to bring the product to market sooner if we use that accelerated pathway, obviously, if the FDA grants us the ability to use that accelerated pathway. And so that's one of the contenders to get to market relatively soon. And then RSV, which is in a Phase III as well, is going to look more like what the COVID vaccine program looked like, which is its case accruals. So it's a placebo-controlled study, where we will see the vaccine effectiveness or vaccine efficacy of RSV in 1 arm when you're getting active vaccine and placebo in the other. So vaccine efficacy is going to be what we'll get from that study. It's a global study. And as we know, RSV is a seasonal virus. So we will have the opportunity to be enrolling patients or subjects in that trial as we follow RSV seasonally around the globe.

And lastly, outside of the 3 verticals we discussed, what else are you most excited about? Maybe pick one vertical.

So I am actually very excited about our inhaled lipid nanoparticle. We just shared data at our Science and Technology Day where, after quite some time with our partners at Vertex working on this delivery mechanism, we feel as if we've now actually have a very strong product profile that's going to move forward in cystic fibrosis with Vertex. But because we have the rights to this inhaled lipid nanoparticle, we are free to use it in other pulmonary diseases. So super excited about that program, especially since we've all seen how much of an expert Vertex is in that CF space. So they'll be running the clinical program there. And typically, what we've seen in their other programs, readouts for FEV, can actually happen relatively quickly. And so it's one that I think we'll be able to turn over the card on pretty soon once we get that program up and running through the collaboration with Vertex. So I'm super excited about that one.

Great. Well, with that, thank you so much, Lavina.

Thank you.