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

Good afternoon, everyone. My name is Gena Wang. I'm a SMid-Cap Biotech Analyst at the Barclays. Welcome to our 27th Global Healthcare Conference. On stage with me, we have 2 senior leadership from Moderna. We have Rose Loughlin, the Executive VP of Research. We also have Lavina Talukdar, SVP, Head of Investor Relations with us. And so maybe I know, Rose, you don't talk to investors too much. So I wanted to take this opportunity to take the most advantage of you. I know talk to Lavina a lot. So, Rose, maybe thank you for joining us today. Before we get started, can you give us a brief overview of your background and your role at Moderna?

Yes, absolutely, and thank you for having me. So I have been at Moderna for almost 10 years. So I've seen many stages of our company and our pipeline. And I lead the research organization that includes your therapeutic area research and your platform technology.

Okay. Well, thank you for that. So before we dive into the emerging oncology portfolio at the Moderna, maybe give us a recap of ongoing studies for your INT programs?

Absolutely. So for INT, our individualized neoantigen therapy, we currently have 3 Phase III studies. So we are in adjuvant melanoma as well as adjuvant NSCLC and a perioperative NSCLC setting. And we also have Phase II studies ongoing in adjuvant renal cell carcinoma as well as muscle invasive bladder cancer and non-muscle invasive bladder cancer, where we're actually testing INT as a monotherapy.

Okay. And then maybe the melanoma part, Phase III that's most advanced since you're already fully enrolled. I understand it is event-driven. But what could be like estimate timing or if you can share with us any additional color that what could be the potential data update?

Sure. We completed that enrollment in September of 2024. And so looking at historical data, we are cautiously optimistic in an event-driven way that we will see a data readout in 2026 for that study.

Okay. Good. And I assume you will collaborate with Merck. And then would that be a top line release and a conference call and then a full data at a medical conference?

It's a little bit premature to say how we're going to release that data. We obviously would love to present all that data at a medical conference. But you're right, we'll be working with Merck in terms of the disclosure plan.

Okay. And regarding the 2 Phase III studies in non-small cell lung cancer, maybe give us a quick update regarding the enrollment status there?

Sure. And we haven't shared details on the enrollment status, but we are very encouraged by what we're seeing both from clinicians who are very enthusiastic about the program and their patients enrolling.

Okay. Will you guys also give update once you complete enrollment?

Because it's a major study and once we get to full enrollment, yes, with our partner, Merck, we would likely update when that enrollment status is finalized.

Okay. Good. So I did get tons of questions from investors regarding BioNTech's approach in INT, and there's some question of whether INT only works in melanoma or would that go beyond melanoma? And so maybe your thoughts on BioNTech's approach and then their data read through to your platform?

Yes, definitely very timely news. So in general, we are always hoping that BioNTech will bring positive readouts because we feel like that will move the entire neoantigen space forward. We do look at the 2 programs that we're advancing and see some important differences. So we focus on the technology and the setting. So from a technology perspective, we use our proprietary algorithm to select the neoepitopes that we include. We include 34 of those neoepitopes. I believe their vaccine has 20. We use our own lipid nanoparticle to deliver it, and they have their own delivery vehicle. And then finally, we administer ours intramuscularly, where theirs is administered intravenously. And so you can imagine that has a different antigen presentation profile. And then we think about setting, we have chosen to move forward in the adjuvant setting. So you'll notice most of our studies are there, whereas their study was looking at later line patients. And we believe in adjuvant setting, when you're having a lot of patients who are able to have their tumor resected, so you don't have the same bulk. And also, they're much earlier in their treatment journey, so their immune systems are quite intact. We believe that might be an ideal setting for a neoepitope-based therapy. So when you put all of those pieces together, we obviously watch them closely and look forward to the results, but we don't necessarily anticipate a one-to-one read-through of their program and how we anticipate INT will perform.

I think if they are active in a different tumor type, there will be a strong evidence that INT should work across multiple tumor types. That's great. So I think at ASCO, you also shared beyond what INT we are focusing on, you have actually a much larger oncology franchise. So maybe if you can share with us what has been done in the past years and what should we expect in the coming years?

Yes, absolutely. So obviously, we're very excited about INT. We do have a diverse portfolio in oncology coming behind it. And what we really love about the portfolio is it demonstrates the different applications with mRNA technology. And also it's letting us get to different histologies and different stages of cancer. So as we're looking at really strengthening our position in the oncology field, we look at the whole portfolio together. So within what we call our emerging oncology portfolio, we actually have multiple different approaches. So we have cancer antigen therapies which are off-the-shelf therapies, meaning they focus on antigens that are shared across patients. We manufacture them once, pull them off the shelf when the patient is ready for it. We have T cell engagers. So within T cell engagers, we can actually target both cell surface proteins that are on cancer cells as well as intracellular antigens that are actually presented on those cancer cells. And what's really exciting about using an mRNA-based platform for a T cell engager is that it's relatively straightforward for us to multiplex what others might call a combination, but for us, it's a single therapeutic. And so we can go after multiple targets in one therapy, which you can imagine is a more comprehensive approach in thinking about escape and tumor heterogeneity is quite the advantage in that space. And then finally, we're working toward in vivo cell therapies, starting with CAR.

That's really exciting. So maybe I wanted to ask a little bit more about the T cell engagers, especially after we saw a few exciting data out there. I think the [indiscernible] and VIR all showed the T cell engager in a certain target. In their case, there's a PSMA target. So they do have a dual masking, single masking. So maybe like your T cell engager is different because of the antibody conjugate and in your case, direct mRNA. So maybe also elaborating like your asset compared to the traditional T cell engager, what's the unique part there?

Yes, absolutely. So because we're encoding our T cell engagers with mRNA, we're able to access a lot of different types of antibody formats and binding domains. And so we can design those such that you can have the same advantages you put with the recombinant protein like long circulation, but also pursue multiple targets in parallel through those binding domains. And we actually don't have to design all of those to be on the same molecule. We can actually encode such that you actually get multiple molecules that can circulate.

Okay. That's very good. And the -- maybe also any other -- so the programs that are moving to the next step, like a Phase II, any programs you wanted to highlight?

Yes, absolutely. So of our emerging oncology portfolio, the cancer antigen therapies are most advanced. So within cancer antigen therapies, we actually are focused on off-the-shelf, as I mentioned, so they're not individualized, but we're actually harnessing a couple of different biologies to pursue. So we are looking at immune antigens. We are looking at tumor antigens, while also looking at cell therapy enhancers. And so if you look in the immune antigen space, our lead program is our checkpoint [indiscernible] program. It actually encodes for epitopes from PD-L1 and IDO. So the idea behind this vaccine is that you are training the immune system to both target cancer cells that may be over expressing those, but also immunosuppressive cells like T regs. So you're really sort of taking the brakes off of the immune system, but utilizing our unique approach for it. And so that program is currently in Phase II studies in metastatic settings in combination with pembro. So that's in melanoma as well as NSCLC. In the tumor antigen space, we are looking at both tumor-specific antigens as well as tumor-associated antigens. And actually, our first therapy in that space, we're looking forward to moving into Phase I later this year. And then as we move into the cell therapy and cancer concept, what we're looking at there is actually encoding the antigen that is recognized by an ex vivo cell therapy. So our lead program there is in collaboration with Immatics, where they have an ex vivo TCR T cell. And we are actually encoding the epitope from PRAM that those engineered T cells will recognize within the body. So they infuse the cells. We provide our cell therapy enhancer and look to see that it's improving the persistence and health of those engineered T cells, which we hope will translate to improved efficacy.

That's super exciting. So should we expect also maybe at ASCO will be some data update or event at ASCO?

So we're hopeful that we may be able to show some early data from some of these programs, but it's yet to be determined.

Okay. Good. So maybe also switch gear on the rare disease. I know those are the one maybe investors in the past was not a key focus, but I think with the evolving development, those could be also become very important. So the rare disease, the PA pivotal trial timing, maybe any update there?

Sure. So we're on track with our rare disease programs, both PA and MMA will either be in a pivotal study. PA is already generating data there. In MMA, we expect to start that pivotal study later this year.

And the timing of the data that you think that, that's...

PA has a clinical endpoint in reduction of MDE, so it will be event-driven to some degree. We do expect data sometime in 2026 for that program. In MMA, there will be both a biomarker endpoint as well as the reduction of MDE as the clinical endpoint, which could allow us to see some of the data from the biomarker data set earlier than we do for PA, which is slowly clinical on that endpoint. But again, we think that because that study will start later this year, data most likely in 2026.

Okay. Good. Now we switch back to the key topics we used to talk a lot. So maybe I will start with CMV because we haven't seen the events happen yet. So maybe give us any updated thoughts there regarding the timing? Do you see actually blinded events on your end?

It's a good question. We're still expecting the results for our CMB final analysis, event-driven in 2025. And we are blinded and have been blinded since that early analysis has been -- has taken place earlier this year. So we do not see any of the data.

But you do see blinded events, right?

Right. We are aware of some of the blinded events as they're coming in, correct.

Right. Okay. And then do you see it coming closer to 112 cases?

We do expect the data to come out sometime in 2025.

Okay. Okay. And then the longer we wait, should we be worried about the efficacy, the harder to hit 49.1% efficacy threshold that from the statistic perspective?

So I don't think the time to the 112 events really affects whether or not we will hit that 49% or roughly 50% on the vaccine efficacy. It could portend that the cases that we're accruing is just a little bit slower, but we do expect that data in 2025.

Okay. Okay. Good. And then going back to the 2025 guidance, you do give a range of $1.5 billion to $2.5 billion. So maybe any walk us through what could be additional headwind? I think earlier this year, you did say, hopefully, this is -- you do not need to revise the guidance again, right? So what's going to be the headwind or tailwind that will make you have to change again?

So you're right. We gave a very wide guidance range for 2025 at the beginning of this year of $1.5 billion to $2.5 billion. And what we were attempting to do with that guidance range is to really take into consideration the uncertainty that potentially could come through this year. And some of those uncertainties include vaccination rates, what the uptake of vaccines will be this year, including additional competitive pressure. For us specifically, we also are waiting for the licensure of 3 facilities in the ex U.S. arena in Canada, Australia as well as U.K. And so the timing of the licensure for those 3 facilities could impact the revenue we see coming in from international markets. All of that is contemplated in the low end of the guidance range. At the higher end of $2.5 billion, it really assumes flat vaccination rates to last year, a market share similar to what we had in COVID last year in the U.S. at 40% as well as timely approvals for the licensure of the 3 facilities in those countries I just mentioned.

Okay. So given current all the political uncertainties, any thoughts there that Moderna could do something?

So you're right, there's a lot of uncertainty that we all have experienced ever since the new administration has taken place. However, we are still waiting for additional confirmations for some of the key leaders in the health care space. The FDA commissioner was just confirmed. We are waiting for CMS as well as the head of CDC to also be confirmed. And we think that as these confirmations take place, you'll start to see potentially a little bit more of a business as usual in terms of ACIP meetings and VRBPAC meetings, just given FDA commissioner and some of the other confirmed individuals will likely also weigh in on those important meetings that are advisory meetings to the regulators.

So in your low end of guidance, do you think you're already taking enough consideration or the risk assessment regarding the political uncertainty there?

So vaccination rates being impacted could be for any reason, including additional political risk, correct.

Okay. So what could be the upside possibility from here to your revenue guidance?

On the guidance range? Well, some levers are that vaccination rates are actually higher than we anticipated even on the high end, which would be flat to last year, better competitive positioning. This year, we'll have 2 products that we will be positioning during contracting season, our COVID vaccine as well as our RSV vaccine, whereas we were really locked out of that RSV market last year due to timing of approval and ACIP recommendation. And also if the timely licensure of our facilities happen, that could also lead to some nice upside.

Okay. Good. And then regarding the financial goal, like a breakeven in 2028 with potential to further reduce OpEx. So maybe, if needed. So maybe what change in cost structure that could help reaching that goal?

Yes. Good question, Gena. So our breakeven guidance is really predicated on both the top line growing from the base that we have in just COVID really and a small amount of RSV sales from last year as well as the intersection of that top line with our cash cost structure. And what you've seen us do is that we're bringing that cash cost structure down from 2023, it was roughly $9 billion in operating expenses that came down to $6.4 billion last year. This year, we're going to take that down even further on a cash cost basis of $5.5 billion. We've guided to an additional $500 million of cash costs out in 2026, which brings that cash cost structure in 2026 down to $5 billion. So that's the guidance we've given thus far. We are and always looking at ways to run more efficiently as we kind of come off of some of the larger clinical studies in infectious diseases and anniversary through those, we should see a natural evolution of clinical trial spend coming down as well. And so stay tuned for additional updates that we may have, but we are committed to bringing our cash cost structure down.

Okay. Good. Quickly on a few other pipeline assets, maybe one is the norovirus. I think the earnings call was announced the clinical hold for one single case of GBS. Maybe any update so far?

Sure. Just so everyone knows, we did voluntarily pause that study when we saw that case of GBS out of an abundance of caution and also to update regulatory documents. So this is consent forms, investigator brochures for that trial. But in doing that, we also alerted the FDA that we were taking this action on ourselves, and that's when we were officially put on hold for the norovirus study. However, the trial had already enrolled -- fully enrolled the Northern Hemisphere, and we have started enrolling the Southern Hemisphere, and that continues to happen. So it should not affect time lines for the readout for this study. However, the clinical trial hold as we're going back and forth with the FDA, will run its course. And when that comes off, we'll have an announcement there.

What did the FDA ask for the data? I mean we're talking about one case. Like what could make them feel comfortable that the trial enrollment can resume?

Yes. So we typically don't talk about discussions we're having with the FDA or Q&A back. But should they have any questions, it gives them the ability to ask us questions. I think that this was just one case in a 20,000-plus study, and we also have had our technology in billions of people, and we haven't really seen GBS, which -- and the one case in this study doesn't really breach the background rates of what we see in older adult populations, which is 2 in the 100,000 people who can get GBS. So I think that it's kind of in what you would expect is background rates?

Okay. And like in the worst-case scenario, if you can like some significant delay in the Southern Hemisphere, you only have 5,000 patients additional, right? So will 20,000 patients will be enough for the study, the powering assumption? How much impact that will be?

So we haven't really said what the powering assumptions are for the study, but we do have in excess of 20,000 people enrolled in the Northern Hemisphere. And as I mentioned earlier, we're continuing to enroll the Southern Hemisphere currently. So we don't see any issues to the time line and to the statistics of the study at this point in time.

Okay. So maybe kind of going back to the RSV vaccine, the ACIP meeting delay. So how much impact do you think it will be for the -- I think that's in the high-risk patient population in terms of launching?

So I'll remind you that for any of the products or indications that we look to get approved in 2025 are not factored into the revenue guidance. So we're hopeful that we're going to get the approval later this year for the RSV 18- to 59-year-olds. That PDUFA date is June 12. And so once that approval comes through, we'll be in position really to compete next year on that label.

So without ACIP meeting, if June 12, you got approval, will you be able to launch or you have to wait until ACIP meeting to make a recommendation?

Once you get FDA approval, you can start having those discussions with customers. The ACIP recommendation will actually help that. And so we would -- and probably our customers who would want to see that ACIP recommendation, which is another reason why we didn't put it into the guidance this year.

Okay. Good. We have one more minute, maybe give you opportunity to see like what -- which part do you think investor maybe the most disconnected in terms of understanding or misunderstand Moderna, which one topic do you think that you wanted to highlight?

Sure. Actually, having Rose here is one of those reasons why we wanted to talk about what's beyond INT in therapeutics and that emerging oncology portfolio that has made a lot of headway in just a year in moving into the clinic and Phase II data potentially coming for our checkpoint [indiscernible] that is in Phase II is really exciting. Those are in metastatic settings, so very distinct from what we're doing in INT. And so I think that as that portfolio moves forward, we're already seeing a ton of interest in the oncology space for Moderna, but really through INT, and we've got so much more right behind INT.

Okay. Are you planning to carry this forward internally? Or you will be seeking some partnerships in terms of oncology franchise?

So we are going to move these forward in the Phase I and Phase IIs on our own. Partnerships, we're always open to partnerships, particularly if a partner can bring commercialization progress, for instance, in that space. And so stay tuned for that as well.

Okay. Great. Well, thank you very much. We look forward to the data update later this year.

Thank you for having us.

Thank you.