Moderna, Inc. (MRNA) Management Presents at NASDAQ 45th Investor Conference (Transcript)

Moderna, Inc. (NASDAQ:MRNA) NASDAQ 45th Investor Conference December 1, 2021 9:30 AM ET

Company Participants

David Meline - Chief Financial Officer

Paul Burton - Chief Medical Officer.

Conference Call Participants

Matthew Harrison - Morgan Stanley

Matthew Harrison

Great. Hello everybody. Thanks for joining us for the next session. I’m Matthew Harrison, one of the biotech analyst here at Morgan Stanley. Very pleased to have Moderna with us for the session. Just some comments before we get started, I need to read the disclosure statement. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures.

Secondly, you can ask questions throughout the webcast if you would like, they'll get sent to me over email, but you can ask them in the textbox. So please feel free to do that. And then thirdly, so pleased to have both David Meline, CFO from Moderna and Paul Burton, the CMO. So we'll jump into it and looking forward to it.

So I guess, Paul, maybe just to start out, we should probably address omicron. And just what's Moderna's outlook on omicron just from a virus standpoint itself? And what sort of level of evidence do you think we have around things like, transmissibility, disease severity, vaccine evasion at this point and what are you looking to learn sort of over the next couple weeks?

Paul Burton

Yes. Thanks, Matt. Good morning, everybody. Look, I think we -- honestly, I think we're in an awkward position, a difficult position at the minute because omicron has 15 mutations, 30 in the spike protein, mutations that span in alpha, beta, gamma and delta, some of them are really quite concerning as a virus. It's a concerning virus. But we don't know that much more about it.

We know from some data that came out with Fred Hutch, in Seattle, that probably it occurred around mid October. It then sort of lays low and suddenly comes to the fore in early November, in South Africa, Botswana and suddenly takes over and displaces Delta. I would note that, again, just from public information, there were maybe 250 cases a day in South Africa being recorded yesterday, I believe they recorded 4,500, 4,300 new cases. So -- and we've seen from the cases reported around the world, that it's spreading and it's transmissible.

But what those mutations really translate into, Matt, in terms of severity of disease and immune evasion, while they have features that would suggest it can cause severe disease and it can result in immune evasion. We don't really know yet. And that's the problem. So I think people are concerned about it, I'm concerned about it, we'll take it very seriously. But we don't have good clinical evidence and we're just going to hold tight for a few more weeks until that comes, I think.

Matthew Harrison

And, Paul, maybe could you just lay out for people, what you're looking to see and from data coming in around the world, and what the time period you think is -- what we might have in a week, what we might have in 2 weeks or 3 weeks in terms of what you're watching?

Paul Burton

Yes, I think, Matt, the -- all the sponsors, us included, we'll be doing and we've talked about this, Stephen announced it in a release, in vitro assays in the labs to try and get a handle on neutralizability of this virus with antibodies that have been generated in response to vaccines. And I think that -- those types of data will likely that's quicker to generate will come out in the next couple of weeks.

I would imagine that, given the number of cases that we're seeing that within the next 2 to 3 weeks as well, we should really get a good handle on what is vaccine effectiveness in the clinic, in real life clinical practice from South Africa, maybe from other centers around the world, as cases emerge.

And I think also on the severity of disease. There's a lot of anecdotal reports at the minute, but I just don't know that you can put, until we get some really rigorous data out of centers that -- generating data and carefully analyzing it, I think it would be -- it's premature to reach any conclusions right now. So I think we should take it seriously. But we don't need to -- we shouldn't panic, and we just need to be sensible about what we do.

Matthew Harrison

And I think, obviously, because there are health care specialists, but there's a lot of other people that are very interested in what's happening here. Maybe you could just describe for everybody when you do that in vitro analysis, what actually happens and what's the result that people are going to get out and how that should be interpreted?

Paul Burton

So, my colleague Dr. Hoge runs R&D and his team leading that and he'll be making the decisions about it, but it's been published in many other settings and people have done this for all the other variants that have emerged. Essentially, you take some blood, and you take the serum and you from people who have been vaccinated, you grew up the virus and you put that in [indiscernible] and test tubes, and then you see if there's neutralizability, and how strong is that neutralizability. And that's essentially in a nutshell, again, it's well published, and these are techniques that are done in labs all around the world.

So we'll get some handle on it. I think the data -- this is just my opinion that will come out will basically say, compared to other variants, how neutralizable is this one. And then that, I think, in -- taken in conjunction with the other clinical data, because one piece of data in isolation is useful, but it's -- we need the full picture. What are we seeing in terms of severity? What are we seeing in terms of spread? How many cases really are now developing around the rest of the world? Those pieces together, I think are what's going to really inform everybody's strategy.

Matthew Harrison

Okay, perfect. And then I guess, just one last topic that I think has been coming up a lot, sort of in recent days is, as you think about potential reduction in neutralizability, what does that mean because when we talk about vaccine efficacy, obviously, everybody thinks about the primary endpoint in the studies, which is symptomatic disease, but I think what we all sort of really care about is very severe outcomes, hospitalization or death. So how would you interpret or how should we think about or just how is Moderna thinking about reductions in neutralizability leading to maybe more symptomatic cases, but maybe maintaining that profile against hospitalization and death?

Paul Burton

Yes. Yes, absolutely. I mean, look, we have seen with other variants, think about data that's coming out from different centers around the world over the summer, that vaccine, that effectiveness against infection can drop, but you retain protection against as you say, Matt, severe disease, hospitalization and even death. So that is why I go back to this point, which an isolated data point or from an in vitro study, which is very, very valuable, because it will tell us a lot about how the antibodies are interacting with this virus. Is it able to bind because clearly, the vaccines are against the spike protein, 30 of those 50 mutations are in the spike protein, so they can just alter their morphology, you may get less binding, right?

But what I think we'll then see is what does that translate into and it could well be that even if binding force neutralizability force, that there's still sufficient binding and protection to protect people from hospitalization and death. And I think that's what we have to just wait for, again, 4,300 cases yesterday, I believe in South Africa, the systems are very, very rigorous, very mature, they can collect data quickly and easily. So I think we really will get a sense soon from those types of centers just how severe it seems.

Matthew Harrison

Okay. Okay, perfect. So -- and then, I don't know if the next one is for David or for Paul, but I'll let you guys decide. I mean, obviously, what follows on is if we play this out, and we say, well, we do need a variant specific boost, or you need to change sort of course in terms of what you're making right now. And let's just assume that decisions been made. What can you talk to everybody about broadly what that timeline may look like? And then, secondly, what you have from a manufacturing capacity, how long it takes to ramp to sort of the run rate you're making right now and sort of practical considerations like that.

Paul Burton

Maybe I can take the first part, and David, perhaps you could touch on the second part, if that’s okay. I mean, look, again, just what we've said publicly in the release, Stephane's talked about this, Stephen's talked about it as well. It may be that simply the 1273 current vaccine is sufficient boosting people at 50 micrograms and maybe what we need to do is to get people boosted with more antibodies and they have a higher dose of the booster 100 micrograms. We've tested that, that's actually the dose of it's used in immune compromised people and indicated for use in immune compromised people. So that may be effective.

If one were to then actually have to make a new, truly specific vaccine, again, Stephane has talked about this and Steven, it's going to take us a couple of 2, 3 months to really generated, get it tested and then begin to produce. I think that is an early 2022 part of the armamentarium if we have to go down that route …

Matthew Harrison

Okay.

Paul Burton

… in terms of the -- the other parts, maybe David, you want to comment?

David Meline

That's right. I mean, if you look overall for the company, we have indicated that our plans for 2022 contemplate increasing the overall throughput and capacity that we have for this vaccine, obviously, and it becomes a question of which one, which version, but we've already been looking at multivalent changes that we've anticipated. So there would be a transition period. Certainly, if we think about 2022, we're in a good position to be able to respond to whatever changes are required, although there will potentially be as Paul mentioned, a lead time that’s in fact we're moving from the original 1273 to a multivalent or another vaccine that will put in the vial, so.

Matthew Harrison

Okay, okay, good. Thank you. So, David, maybe it seems like old news now. But I think as we move into the fourth quarter, right, we'll come back around and people will focus on right, you made some adjustments to guidance last quarter. And essentially pushed some revenue into 2022. So maybe you could just explain to people that I think there's still a little confusion on what happened, and what's really the underlying cause of that, and how that changes the outlook for next year?

David Meline

Yes, very good. Thank you. So, yes -- so first of all, what we -- when we looked at the outlook for '21. we updated them that and shared it with the market. What we've been saying through the year is as we've been ramping our production capability and signing contracts, we try to keep that information fresh. We've indicated that for several months, we were foreseeing the possibility of getting as high as 800 to a billion doses in 2021. And we'd signed contracts, which if delivered upon would result in revenue upwards to $20 billion.

When we then updated in, as we prepared for the call, what we saw were a couple things that came into view that caused us to revise the outlook. The first thing that was going on was, we're seeing a shift, of course, as the initial primary demand from the developed markets, in particular, the U.S., Europe and in Asia were initially satisfied, we then have been moving into the phase where we've been allowed by these governments to start to export. And so the customer base is spreading out to many countries around the world, as we move through towards the end of 2021.

And that had two effects on our ability to meet the demand. The first was that we revised our outlook for volume to 700 million to 800 million units for the year related to, again, shifting mix and a much broader set of customers, these international markets being served from both now the U.S and from our Swiss production base. Smaller lots, in some cases, donation cases, which continues as we speak.

And at the end of the day, that was a contributing factor to us revising our overall volume, and it's a contributing factor to the revenue outlook because of course, what we're seeing is a shift towards COVAX and African Union contracting, which is our lowest price product. So hence, we revised the outlook for the business for the year, there were other contributing factors. One was we've been -- as we've been ramping our production, we're adding additional capacity and in the case we mentioned fill finish capacity bringing additional capacity on stream which involves then some transition which again impacted the total volume we thought we could produce this year.

And then finally, as we got the production capacity in place, we ran into some bottlenecks temporarily, which we've now fixed around our ability to get to the end of the line and to quality release. So, as you said, people still trying to interpret -- to me, if I step back and looked at the fact we started this year, with no production capacity commercially and we've been ramping through the year, I think it's a [technical difficulty] effort on the part of the company. And we continue to press ourselves and now with this new developments it creates a whole new set of challenges, but we feel very good about our ability to respond and meet the needs of the public around the world.

Matthew Harrison

And just, I guess, as you look into '22, then, your outlook on capacity and sort of solving some of those issues, right, I think you suggested you have confidence that you can work through those issues through the end of the year, and start to see that, I guess play out more smoothly next year, maybe just any updates there, anything people should be watching or thinking about in terms of [multiple speakers]?

David Meline

Yes, no, it's a good -- I'd say watch this space for -- we feel good about our ability to deliver on what we suggest we're going after for 2021. It's a bit up in the air again. We gave guidance on what we thought '22 would look like. We said we felt that the range of [technical difficulty] next year was $17 billion to $22 billion. That was based on a scenario which as you just observe, feels a little bit -- is getting everyday more outdated by these new developments.

And as Paul, I think, correctly described, for me to predict what it looks like and how it's different right now, I think what you should listen carefully to. So, best information that we have right now is what we guided to in the call for '22, $17 million to $22 billion this space will, as we always do update as transparently and clearly as we can.

But I mean, suffice to say that it does appear and as you can imagine the discussions with our customers around the world who are scrambling to respond, it does appear there's going to be a need for more vaccine and the mRNA vaccine is a good one. So we think we'll be in a good position to support the needs of the world next year. And that will result in continued growth for the company.

Matthew Harrison

Okay, perfect. Thank you.

Paul Burton

Sure.

Matthew Harrison

Maybe we could talk about sort of another catalyst, which I guess has been overshadowed a little bit by the recent news. But obviously, people are looking at flu and really sort of combination, long-term revenue potential of a combination respiratory vaccine. So maybe we could just take a few minutes and put flu in context.

Paul Burton

Sure.

Matthew Harrison

What kind of data we could expect to see and what sort of result you're focused on in terms of a positive result there?

David Meline

Paul, did you want to comment at all, or otherwise I could.

Paul Burton

David, a few -- I can add some comments at the end. We're still [multiple speakers].

David Meline

Yes, Paul. What we've announced is that we fully enrolled in September for a Phase 1 trial for what we call mRNA 1010, which is a pure vaccine for flu using our technology. Obviously, Phase 1, we're looking at the safety and tolerability and immunogenicity of that product at different dose levels. We -- as we've said previously and continues to be true, we expect to get some data on that trial here in the very near-term.

And, of course, to the extent the data is positive, it would be a step in the right direction on the path to our announced intention to develop a COVID flu vaccine combination, which we think will be very powerful and important product for the market and we think we can have an impact in a positive way. But Paul, other comments?

Paul Burton

No, I think you're right, David. As you say, Dr. Hoge's organization in R&D is feverishly working away. The study fully enrolled. And we are eager to see the data and to understand obviously, again, a high unmet medical need, flu certainly for the elderly and it would be an important part of strategy there to protect older people, 500,000 hospitalizations a year probably at least with flu [indiscernible] the winter season sound important program for us.

Matthew Harrison

And, Paul, I was wondering, maybe if you could just comment, obviously, there are multiple ways you can look at efficacy from a vaccine CRO conversion, titer level, even just your protection. So, how do you think about those different measures when you're looking at a flu result?

Paul Burton

Yes, so I think we'll look at the hemagglutinin titers from this study, that's one of the major endpoints and look at it in comparison to other agents. Now, that would also be -- have potential for approvability [ph] as well. And then as we run larger studies to get to efficacy against hospitalization, if needed in the future, would be something that we'll be talking to regulators about. But again, it's an important study. It's early, get the data and then plan, really what we want to do with larger studies in the near-term. Obviously, the -- it cycles as well through the different hemispheres. So that's something for us just to think through as we would stand up those studies. But again, that would be coming out of my colleagues and the R&D organization.

Matthew Harrison

Sure. Of course. Just one last question on this topic, because it's one I get a lot, which is, I think people look at the reactogenicity of COVID. And they compare that, COVID vaccine, and they compare that to what you might see with a traditional egg based flu vaccine and say, reactogenicity looks more significant. And try to put that in context, where and I guess what I'm getting at is some people say, well, is it antigen related? Is it the fact that mRNA tends to be more immunogenic? Are there other factors? So I guess the broad question is, how would you think about reactogenicity? And how do you think that could impact the profile of a flu vaccine?

Paul Burton

So at least in the setting of COVID, we have -- we cover safety, obviously, and think about that very carefully. The spike protein is it's an interesting protein, and it is quite reactogenicity. So I think some of the reactogenicity that we see is because of the spike protein. So I think it is related to that, specifically to that vaccine. It will be interesting to see how that pans out with other programs of flu. We've obviously also initiated the CMV study recently. And so we'll get more and more data, but I think it's -- I think it is a spike protein specific thing, but we'll be able to see.

And then, on flu look, we are going to look obviously at hemagglutinin titers, sort of conversion, and the endpoints as well in that study. So I think we'll have a good handle on that, not only on outcomes there in terms of efficacy, but certainly some early looks at reactors as well.

Matthew Harrison

Okay, perfect. Perfect. David, one of the other I think areas that investors are thinking through a lot is capital deployment. And in particular, right, I mean, you've gone from a position as a company, where I wouldn't say you were capital constrained, but your flexibility on the amount of cash you have, and what you can undertake is very different now than it was before. So just what's the high level discussion like inside the company or around that? And how do you think about priorities? And I know you've addressed this on calls previously, but maybe you could just sort of be -- I think what we're really trying to figure out is how you're waiting some of the factors?

Paul Burton

Yes, no, it's a great question, Matt, and I guess what I would say or observe is that if you look back whatever period the year or two as a pre-revenue of biotech company working on the technology that didn't have a proof-of-concept in the market versus today, where you've had a very spectacular validation of this technology in a way that is -- to me unimaginable in a positive sense, what I believe to be the case is that we will see mRNA as a technology platform built out very quickly. We see lots of players coming into the space to try to participate in that. We're in a leadership position. And my view is it's ours to lose.

It's up to us to ramp and grab as much of that space as we can. And so we need to scale the business. We've got a very ambitious pipeline that we're continuing to move forward at quite a nice pace. And frankly, this -- the struggle is things like happened this week where there's a very strong pulling sound towards focusing on the next wave of this current corona situation. But fortunately, we've been able to keep the pipeline moving ahead this year and building it out. We've been expanding the footprint of the company capabilities to be able to do that. And we continue to work on that mission.

And correctly, I think, you implied by your comment, we don't have a financial constraint. It's really about the management bandwidth that we have, and that we can build. And fortunately we're leaders in this space. And we have the best know-how and capability and it's again up to us to really press that advantage, which I feel very excited and encouraged we're going to do. That's our core. That's where we're allocating capital.

We've said, we're also looking at external investment opportunities to, again into adjacent spaces, probably in the form of collaborations and partnerships and licenses. And again, it's about the bandwidth to take those things on, while developing a core platform.

And then finally, unusual in the context of a company at this stage of its development, but we indicated that we'll also got authorization to start to repurchase some shares, which will offset dilution. And you can expect more news on that as we have the quarterly results. So, yes, so we're in a good place. It's very exciting. It's now I guess, it's December. And I would say knock on wood, the company's evolved in a very positive way, made a real contribution to addressing this pandemic. And we've got a lot more to do when we're geared up to that.

Matthew Harrison

Well, great, good. Looks like we've come to the end of the time, but thanks to both of you this morning, this afternoon for being with us and appreciate them all. We'll look forward to see how things play out over the next couple of weeks.

Paul Burton

All right. Thanks, Matt. Bye.

David Meline

Bye.

Question-and-Answer Session

Q -

[No formal Q&A for this event]