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

Yes. So many of the aspects -- so the core technology in manufacturing and if you think of it as sort of the modules of the BLA, it's common between them, right? So if melanoma is approved, you have worked out a lot of the CMC and manufacturing questions and ultimately, also the safety profile of the product in large respect because it's again, the same combination partners. And so what you're left with is clinical evidence of substantial evidence and effectiveness. I think that will boil down to the data and any good regulator, but also any company should sit here and say that, right, which is if there's a strong benefit hopefully 1 that's even statistically significant, then there's really no reason why the studies can and shouldn't be registrational. They're adequate -- they're well controlled. They're against their standard of care, if they're statistically significant in terms of benefit you've got all this other safety and manufacturing data, it can and should be. Now the question is if there's -- if it's taking more time for those events circus, if there's some reason why the study doesn't quite get to a statistical threshold. And at that point, I think it's probably harder to believe it's registrational, but there are other pathways forward that, obviously, putting the data out there might allow practice to sort of begin to adopt it. But these are all data dependent. And so I think we're all just waiting for these event-driven studies to hit their analyses.

Okay. Great. maybe just moving over to the commercial side. A question we get a lot from investors is just manufacture readiness, turnaround time, scalability, a lot of Cheddar out there like, oh, this is going to be like CAR-T therapy. It's so individualized. It's going to be very complicated. I know you guys have done a ton of work here over the last years to kind of improve that vein-to-vein time. So maybe just talk to us about where you stand from a commercial readiness standpoint and your view on scalability in the event that more indications read out positive and there is greater demand for this product.

So I think we are extremely -- we think we are extremely well positioned for it. We have not broken out a lot of the investment we were doing over the last few years. But -- so it -- and obviously, there was questions about breakeven along the way, you know that we face. But a huge portion of that investment was building capability in INT and then running these 9 global trials. As a reference point, we've treated about 3,000 patients. In the last 18 months alone, it's probably close to 1,500 to 2,000, all delivered from a purpose-built manufacturing system, and that's in 40-odd countries. That is commercial scale. because we're enrolling 3 Phase IIIs in lung cancer and running the melanoma and 5 other studies in Phase IIbs that we were just talking about. So we're already clean of operating at commercial scale across histologies and globally. And that's because we built in Marlboro, and I think we're going to host folks there at some point would love to have you there a completely new manufacturing system. We -- it's highly automated. It is unlike anything else that maybe people have seen in the manufacturing space. And it has actually already been supplying into the clinical trials. So that facility that we have there, we are confident can supply launch. And as we bring people in, you'll see within about 12 months of lead time, we can take that facility's capacity up another sevenfold. In fact, 1 of 7 ballrooms is built out. All the technology is licensed, all of it's built out sitting in that facility is being used in clinical trials now. And within 12 months, we can essentially double that every time we need to. So we're very confident that we don't need more certainly for the first few years of launch. If things really take off on us, then we'll want to talk about a second facility at some point. But this isn't -- we believe we can get there. We are already operating a commercial scale globally in our large global clinical trial program. And I think it's where people are different than CAR-T and you were talking about treating 100 patients in a clinical trial versus 3,000 globally in 42 countries. I mean we're already kind of having to do something very different.

Yes. Is that 1,500 to 2,000, is that kind of the steady-state number for that Suite 1 or or there's more room?

There's much more room. We think that suite 1 of 7, and we'll figure out when we -- we're comfortable disclosing in the future. But we actually don't think we need Suite 2 for launch and still supporting the clinical trials. So we have capacity. And what you'll see when you get there is it's -- there's a beautiful automation that's been built into the system. We took everything -- all of the pain difficulties that we had, all the engineering know-how that we learned from scaling COVID from we never sold a dose to 1 billion doses a year in '21, '22. We then pivoted in '23, '24, '25 into establishing something completely opposite in some ways, but equally technologically a marvel. And that's now paid for. It's been established. And so again, coming from that breakeven question that you asked the beginning, we've already kind of built it all. We were doing that over the last few years.

Okay. I know Stephane has made some comments about potential price points of IMT. So maybe just anything you can elaborate on there? And then that mean for kind of the margins of this kind of product? Because that's another question that we get from investors is just, again, going back to the individualized nature of this therapy. Does that necessarily mean a lower gross margin profile for the product?

Yes. So we -- it's premature to talk about pricing notwithstanding anything Stephan might have said. Because ultimately, we're going to price to value, and we need to get the data out there and then have conversations with payers about that value. Obviously, the stronger the impact, the more value you create for a health care system and obviously, that impacts pricing. So let's get the data out, and we'll sort of talk through the specifics of it. But suffice it to say, we do believe that there's a clinically meaningful benefit here and we have already -- again, I would come back to -- you've seen our operations on top of everything we've been doing, scaling a respiratory vaccine business has been baked into our P&L over the last few years. So what people probably don't fully conceptualize is the degree to which we are already doing all of this and paying for that in terms of the P&L perspective. And so as we move forward, we're pretty confident about that margin profile. Now everything will be scale dependent. and pacing the -- when we build out capacity and bring it online versus when there's demand there, we'll sort of be a bit of an art in the first few years of launch as it is for any product. But if you want to talk about steady state for INT, yes, it is individualized. But the actual manufacturing technology and the actual chemical matter that goes in the vial at the end of the day, is essentially the same across all of the patients. The sequence, the information is different. But that isn't the biggest driver of cost for us. And so we -- it is not taking cells from a patient and engineering them and all the things that kind of went into CAR-T. It is much more like a traditional complex biologic but not a cell therapy. And so we hope over time that the margins are very competitive with other complex biologics but not cell therapy.

Okay. Great. The other one, it goes to -- it's a good segue to 1 of the other ones we get is just the antigen selection process. I know that's something proprietary. You guys have spent a lot of time perfecting that. Talk to us about if you do make changes to that down the road because of additional learnings, let's say, in other tumor types, what that means from a kind of FDA approval process. Is this something where it's kind of like a flu-like change where you can just kind of like roll that out or do you need a whole clinical programs. So that's kind of the first part. And then somewhat related is retreatment potential. You talked about metastatic. Obviously, the field has focused more on adjuvant given some of the data, but you guys still do have some metastatic trials. So let's say, theoretically, in a future use scenario, you have a patient that received 1 INT for an adjuvant setting, but then unfortunately, the disease relapses metastasizes down the road. Is there some reason to think that they could get retreated with a different INT project or something like that. So again, kind of a somewhat related 2-part question.

Yes. So maybe I'll take the second part first because we -- I think so, we don't have any data on it. So I don't want to create expectations but if you ask me from a hypothesis perspective, or as from a hypothesis perspective, if you have a relapse and it's because the mutations that went into your INT were essentially removed from the tumor. The cells that express those mutations were killed by our immune system. Then there's no reason why you shouldn't then take the new mutations and create a new product against it. And to retreatment with the exact same product, probably not, but retreatment with a product that reflects your tumor as it has changed to relapse. For sure. In fact, you could almost just argue that's a different cancer even if it kind of came clonally in its distance pass. And in that sense, we would -- I look forward to the day when we have that data. I really can't come up with a reason why it wouldn't actually benefit. Again, this is about unmasking your tumor and if it puts on a mask or loses those features that your INT was targeting should -- it should be on. The first part about -- I forgot there.

So the FDA approval process [indiscernible] let's put it in 2 categories, like 1 is like minor ages to the antigen selection process, but the other would be again, I'm assuming if you're making major changes, it's definitely a totally new product.

This is the most exciting part of the field. And so we -- if I -- again, scientifically, we have put out at ASCO some of the data on T cell clonality and actually showing in individual patients, what are the T cell clones that are really associated with they're not having a relapse or not? And then across the population I think there was like 7 patients, we went very deep on that, but more broadly across the population. Can we start to show what's -- what's the mechanism of action? What's the cost? Now what you start to be able to do is say, now how do I predict that clonality and how do I -- that was on a Phase II where we had 100 patients treated, we've got several thousand now. And in the melanoma study, about 800 patients. You're going to massively expand your ability to, say, at a population level. What are the -- what are the features of these T cell clones that predict survival. And we're in the early stages of looking at that. But if you got to the ability to say, well, no, actually, among these 100 options, there are a few here that are going to have a higher propensity to predict survival. which is something we'll look very closely at with our partner, Merck. Then you might want to do maybe a more substantive update, right? At that point, the real question, and we've been working with the FDA closely with EMA and other regulators because software is a part of the drug to define what kind of software updates constitute a major change and require an SBLA versus more just kind of a process change a prior approval supplement type approach. And the basic answer won't surprise you. The more you expect a meaningful improvement in clinical outcomes, the more it starts to look like a new product, a new version of a product. That doesn't necessarily mean that you need a new clinical trial. right? And you can imagine how you use the flu example. Now there's lots of instances where you change your product to make it more relevant for today, but where you don't have to go back because your product is still -- you're able to look at translational biomarkers and data like what I was just describing, and say, "Look, I'm going to get you all that benefit and then some and so we're pretty excited about that because it's a space where we think with continued improvement and ultimately, the flywheel we have with more data coming in from our translational data more opportunities to drive those improvements that we're going to have an opportunity again, with that proprietary data set to really advance the field pretty dramatically and maybe even ultimately advance the label.

Okay. Great. Maybe just in the last few minutes and pretty amazing we've gone half an hour without talking about your vaccines portfolio. But again, obviously, a key part of the commercial business, the breakeven plans, you guys now have 3 vaccines in the portfolio. So just talk through what that scale means as we think about the forward outlook for this, like how much of advantage does that give you versus when you were kind of a single product vaccine company.

It's transformational. We've come a long way. So we -- you go back sort of 3 years ago, we were pursuing a first approval at a COVID vaccine and dreaming of a day where we would have a more diverse portfolio because flu and RSV are the other sort of big respiratory threats, and then opportunities for combination that can be differentiating. So you said 3 products. It's actually 5 now product approvals that we've achieved. Obviously, COVID, flu and RSV, the first combination product and then a second-generation COVID that has really shown in the real world as well as in its clinical trial, Phase III trial and Nextbike we think, superior performance. And so we're excited by that. And so that just gives us -- it's a completely different conversation. Most respiratory vaccines contracting is at a portfolio level. Portfolio of 1 is substantially inferior to a portfolio 5. That internationally, we've established through strategic partnerships with U.K., Canada, Australia, other governments coming online. the ability to offer them flexibility across that portfolio. It's a big flu year, you can buy more flu, a big COVID, you want some combo. And that allows a completely different conversation with those governments. And then within the United States with health care systems with pharmacies, portfolio-based contracting is obviously an advantage for us. So we're having our first taste of that in some ways in this year. And in the years ahead, we look forward to taking full advantage of it.

Any early insights you can give us as we think through the next year in terms of how -- you said you've had some early learnings from that scalability. So just any insight in terms of how that's going or how to think about it? It seems like we should be more optimistic for kind of a growth -- more meaningful growth inflection.

I don't want to raise expectations anymore. So our guidance for now is up to 10% growth on the top line for this year. And as we look forward towards breakeven, we kind of have retained that. We think that's the right sort of mental model for us. I think we're -- across the board, what we're seeing is enthusiasm for that portfolio. What's great for us is we don't need more commercial infrastructure. We don't need different manufacturing infrastructure. It's all basically diversification of our sources of revenue and gives us new products to sell into customers that are already familiar with us from COVID. I do think there are a couple of features that we're really excited to bring to the market. So flu is 1 and Placebo, our approved product in the United States. It is the first really enhanced efficacy profile for seniors that comes without egg-based manufacturing. And that -- 95% of flu vaccines are currently made in eggs. That matters because eggs lead to antigen drift and mismatch in more than half of years. So about half the time, you have 1 of the 3 strains with an egg adaptation mismatch. And that was talked about at the FDA at Virpak. It's been talked about for decades in CDC and WHO. And we finally have a solution to that because mRNA allows us to make a perfect match to what they're targeting. So we're excited to bring that innovation into flu because we think you'll add a lot of value. In Europe, this year, we're launching combo, a Flucovacambo. So 1 shot more protection. And so we're pretty excited to bring that as a way for health care systems to improve their public health outcomes without adding the cost of having to store 2 shots of paying for 2 administration fees. So there are lots of places where we think we are positively disrupting the system and hopefully will add a lot of value.

Great. Well, I think we're up against time. But thank you so much, Stephen, and always a pleasure.

Thanks, Tracey.