Moderna, Inc. (MRNA) Management Presents at Piper Sandler 33rd Annual Virtual Healthcare Brokers Conference (Transcript)

Moderna, Inc. (NASDAQ:MRNA) Piper Sandler 33rd Annual Virtual Healthcare Conference December 1, 2021 2:00 PM ET

Company Representatives

Stephen Hoge - President

Conference Call Participants

Ted Tenthoff - Piper Sandler

Ted Tenthoff

Good afternoon, everyone. My name is Ted Tenthoff, I’m the Senior Biotechnology Analyst at Piper Sandler and thanks for joining us for this year's Virtual Healthcare Conference. Sorry for the slight delay, but as you guys know, Stephen Hoge, President of Moderna literally is on the front lines of fighting Omicron, so we are going to jump right in.

Question-and-Answer Session

Q - Ted Tenthoff

Stephen, what can you tell us about this new variant and routine protection by the current vaccines?

Stephen Hoge

Well, first of all I want to say thank you Ted, and we’ll jump right in of course. I do apologize to everybody for being a few minutes late here. As you can imagine, we're urgently dealing with some things with in Omicron, which makes this a very good starting question.

So well, we don’t know yet, is the short answer. We are looking rapidly to test sera from people who have been vaccinated with our vaccine, as every other manufacturer is, against assays that don't yet exist, which are assays that specifically are for the omicron variant of the virus. We expect to have that data in the coming couple or three weeks, so sometime in the middle of December, and I think that will be a large international effort across all manufacturers and academia and government to try and produce that initial data.

What we know is that our vaccine and others have done a very good job at stopping prior variants, and so there's reasons for some optimism that it will hold up. We were able to with our vaccine 1273 have very high efficacy against Delta this past summer. Actually we saw the highest titers and the best protection. Saw good efficacy against Beta before, which is the variant that was first identified in South Africa earlier this year.

The concern for us is that this looks like a hybrid, a chimera of Beta and Delta and if these are just added-in effects we think we are probably fine. If they are multiplicative or something like that, then we really don’t know where we are.

The good news is we don't start with nothing. We have vaccines; we know vaccines can stop this virus and so our first line of defense is we're just going to use the existing vaccines and boost more frequently – or possibly give a slightly higher dose to high risk people. And we actually are pretty optimistic that will be good enough to get us to the second line of defense, which would be a new updated vaccine if necessary.

Ted Tenthoff

So tell us about your efforts then, because I know that you guys for a long time have firstly been anticipating mutations like this and preparing for them, and are already testing multivalent mRNA vaccine boosters. So tell us about some of those efforts and what it would take to actually develop an omicron specific vaccine?

Stephen Hoge

Great question! So first on the multivalence. What we’ve been doing is as you said, we've known this virus was going to keep evolving and it was entirely predictable, that it was going to try and involve to evade immunity, which is whether it's vaccines or national infection, but its ultimately going to try to keep reinfecting people.

So we have throughout the year, as we've seen variants that have mutations that worried us for evading immunity or other features, we made sure that we added them to our multivalent platform. And so we have two multivalent vaccines, one which includes the Beta variant, when I first described, has had the best immune evasion we've seen so far earlier this year. Unfortunately it didn’t take off globally. And the second includes both Beta and Delta, and we all know the Delta story from this summer with high infectivity and present story.

And that – those two multivalent vaccines, we’ve actually already dosed them in pivotal studies, Phase II/III studies, we’ve got hundreds upwards of almost 600 people in some of the studies that have been received those vaccines’ we’ve got safety data; we've got Serum. And so in parallel the testing against our prototype vaccine over the next three weeks, we are going to be testing those new updated multivalent boosters.

There is a reasonable chance I believe, that if there is a big decrease in protection from the prototype vaccines, that actually will be able to get most or a good part of that back from the multivalent platforms. And again the reason is, if there's a decrease, we think it's because of these mutations and many of these mutations are present in those multivalent vaccines. So those could be tools that will be available really at the very beginning of next year, if in January, if we needed to roll them out in with February.

I think the challenges, if that’s not good enough or if we want to take a long term view and say let's bring forward a omicron specific booster, that really you start talking about three to four months and the reason is it takes a couple of months to get into a clinical trial, takes you about a month to run that clinical trial and then you have to file and process that data and move forward.

So that would be more in the early spring, maybe late winter, but sometime in March, April timeframe would be the timeline which we normally have those things rolled out in large numbers. You’d have the small amount; you’d have the data sooner, but ultimately large production volumes would take a little more time.

Ted Tenthoff

And as you said, this isn’t a still start. I mean we’ve – what you guys have accomplished over the last years in terms of preparing the vaccine, certainly in terms of manufacturing, so this really is you know a rapid response to new a threat and something that we can kind of consider as something to look forward.

I’m go transition a little bit, because there's so much ground to cover. We could probably talk for an hour, and not that you have the time to do that, but 1273 is presently approved as primary in 18 and older and as the booster. I believe it's available to teens in Europe, but we're still waiting for FDA emergency use authorization in teens here and that ultimately will move down to younger children. Tell us about sort of what that hold up is with the FDA and what the process is to get the initial vaccine approved in younger kids?

Stephen Hoge

Yeah so first it's actually not just in Europe, it's in Canada, it's a number of other countries. Actually our vaccine is fully approved in many geographies for 12-plus. In the United States as you said its 18-plus and the difference has been as we announced a few weeks ago, is that the FDA has been more cautious in trying to follow-up the data on the rates of some side effects that are seen with the vaccine and particularity this incredibly rare rate of – you know very rate of myocarditis, you know 10 per million roughly.

And the truth of the matter is, it's the same day that everybody is processing everywhere, but different regulators have their prerogative. It's a thing we want them to do, to independently review them and decide when they get to a position to decide and move forward with the booster – sorry, with approval in any population.

In the case of the United States, they’ve let us know that they just feel like they need more time to evaluate that signal, which is totally appropriate. We encourage – obviously we always wanted the regulators to do that.

I think there is also the reality, which is that in the United States purely as a function of some of the timing of the emergence of that signal which happened between when Pfizer filed them and we filed, many people who wanted to get – in the adolescent age group who wanted to get a vaccine actually received Pfizer’s vaccine over the course of the summer and there is no much of a need, a strong sense of need in the emergency use context for the Moderna vaccine in that population.

So I'm sure that factors in a little bit as well. I think it would be a different situation if we didn’t feel like largely that population area have been vaccinated in this country. But again, we will work constructively and we're grateful to the FDA for their continued diligence on this and we’ll continue to work with them as they evaluate that signal and make the decisions about the best path forward.

We are also pursuing under 12 approvals and authorizations globally. Expect to hear about those in the coming weeks and months, I mean depending on the different geographies. In the case of the U.S. as we said, it's obviously appropriate to wait on those filings, although we’ve shared the top line data which we think is terrific and we are very encouraged by. We’ve decided to hold off on filing in the U.S. at younger ages until we make sure the FDA is comfortable with the adolescent population there that we've already produced for. So the U.S. may continue to lag, but we think globally we’ll move forward very quickly in younger populations.

Ted Tenthoff

That’s really helpful. Now you guys have guided to deliver 700 million, 800 million vaccine doses this year, the spiked [ph] revenues of $15 billion to $18 billion; next year somewhere in the $17 billion to $22 billion range with a booster market in the fall of around $2 billion of next year. What do you see as sort of the long term outlook here SARS CoV2? What does this curve look like?

A - Stephen Hoge

Yeah, you know it changes on us day-to-day. So whatever I say has to be qualified by its only today well, and who knows what tomorrow brings, because none of us would have predicted delta, none of us predicted Omicron, and I think you know it's really hard to predict what 2023 looks like; let alone 2022. It just changed dramatically on us.

But I think if I take a very long view and say I'm out five years from now, you know and we're through these waves of variants, where do I think this virus lives in the long term for us? Look, we know that coronavirus infect young and old, every year and lead to hospitalization and some death in both those populations, and the burden of that disease is quite significant. You know we don't tend to think about it; used to call it the common cold, but it can be very significant in the 65 plus population.

In that sense we now also know that if corona, SARS CoV2, COVID-19 drifts into that category, it may or may not continue to be as severe a disease as it is now, but it is certainly a disease that's preventable with vaccines boosters. And so given that, we believe that for those older populations, as well as in those over the age of – you will decide, over 40, over 50, over 65, those who are at high risk of infection either because they have medical conditions or they have jobs that put them at risk of that infection may benefit from a seasonal booster. And the more we see the SARS CoV2 virus evolve, the more I think we have to accept that that actually might be something that needs to happen almost every year going into the winter season, and that has been our operating model as a company.

So this heads towards we believe something that looks sort of like the traditional flu market globally right now. It could be larger, and a lot of that depends upon how severe the disease is and how much the virus continues to surprise us with Omicron like opportunities.

Now, what is the pricing of that? I wouldn’t say that's like flu, we don't know yet, we have no idea what the future brings and it also depends a lot on how much this has continued to be a largely government procured market or does it start to become more traditional and private, and we just don't know if and when that happens.

Q - Ted Tenthoff

Yeah, awesome! So switching gears, you set it up perfectly, just to talk about flu. You know tell us about your efforts in flu, because again if you guys deliver comparable efficacy as you have in COVID to what you can do to flu, it would fundamentally transform the seasonal flu market. So what are your plans there, and what are your plans ultimately to develop pan respiratory vaccines?

A - Stephen Hoge

Yeah, that is our passion as you know and that's the place we're going for sure, so I’ll try and talk most about the pan respiratory stuff, but just quickly on the flu space. We do think that mRNA technology will add substantially to the efficacy that’s potential in flu and we have a long term vision of getting there by adding additional antigens, so more variants of the hemagglutinin antigens, more flu strains if you will, as well as additional antigens in the form of [Inaudible], other parts of the flu virus that we think will provide higher protection.

And then of course we've all seen how mRNA can allow us to move quickly and respond to changes in the variance, we’re just having that conversation. So different strains of flu, which sometimes the vaccine mismatches, we would hopefully be able to resolve with our platform quite quickly, which would give us more assisted durable performance on the average.

And so all of those approaches are in flight in different studies, but it's important to note that our first program in flu is actually one whose objective is to go fast to market and so that is our 1010 program; that's the one that we’ll have data very soon.

Our goal there is we want to quickly get that approved and combine it with COVID to do pan respiratory vaccines at the beginning of that, in order that we have to work within a familiar regulatory framework, and so in the case of flu that is they pick four antigens every year, HA antigens, WHO does and vaccine manufacturers roll those out, and so the fast path for 1010 is to try and go do that.

And I think it's important to characterize that we would expect that – we hope that that will look really strong performance, but I think because we're doing something that's more in line with what other enhanced vaccines, high dose vaccines would hopefully do in terms of efficacy, I don't think it's going to be the game changer that we were just talking about. I think the game changer is what happens right behind that, which is the faster market 1010 will go through, but they were following behind with more antigens, more hemagglutinin strains, more variants, and we think that that actually will lead to the next step change in hopefully efficacy in the flu market.

Now the second thing which we talked about, we just mentioned is combinations into respiratory. So we hope to have at least as good as the best flu vaccines, maybe a little better, but we’ll it as our first generation program, but that's our target and then we’ll add over time. But the first thing we want to do when we get that 1010 program – if we can get that 1010 program through to authorization approval, will be to then combine it with a COVID booster and then the next step is actually to combine it with our Respiratory Syncytial Virus program, RSV program.

And the goal for that is we really think that these are syndrome, a syndrome of viruses that impact – syndrome as a disease, a group of viruses that impact older adults every season, and it makes a ton of sense to just boost everybody with a single shot every year. One way to think about it is, you know flu maybe creates half of this disease today if you compare it with coronaviruses and RSV. Wouldn’t it be nice to have a single flu shot that covers you against all of it? And that is our principal objective in the near term; is to get to a pan respiratory, flu COVID common – flu COVID and then flu COVUD RSV combination subsequent to those approvals that you would get seasonally for older adult populations.

We would eventually want to look at that as a second generation or third generation product, add more features to it, add the better and better flu performance of 1020 and 1030, our two other flu programs that we hope to demonstrate, and then lastly move it into other populations. So higher risk populations that are younger and including eventually pediatrics.

Now, the reason we're not doing that right out of the gate, is that all of that will take more time. We have to reshape the regulatory landscape in the case of changing the flu instance. You have to reshape the WHO approach to selecting these things and that just can't happen in a couple of years here, and so we’ll work to build that data over time.

So we’re very excited about the flu program. We are actually quite optimistic about the performance of it relative to current vaccines, but it won't be our last best shot. It’s actually just going to be our first shot at trying to get to that combination product quickly.

Q - Ted Tenthoff

Yeah, really exciting, especially considering how much 19 – 2023 [ph] has de-risked the whole mRNA vaccine franchise. I've got a bunch of questions coming in, so I'm going to kind of try to ask some of these as they came in.

Firstly, what is the impact of Omicron on children or toddlers based on early data, given that children almost never or caught COVID at lower rates?

A - Stephen Hoge

Yes, so I will say first of all, I have only the information that comes to us through our medical community internally and externally, and so you know I would defer to others and their reporting. What we have seen reported is particularly out of South Africa, which is a country that deserves a tremendous amount of credit for their transparency and the quality of the data they are producing right now. But we have obviously seen these reports of higher infection rates in the under fours, in children.

I think what's not totally clear to any of us yet is that Omicron has evolved in a new way that allows us to create more symptomatic disease in young children, which would obviously be a huge concern. Is it a reporting bias? Just right now we're early in this phase and you know we're capturing all those cases and conservatively children are being hospitalized, but we'll get a little bit less conservative over time; or is this actually a feature that was always there? It was always in the background with this virus, but what has happened is we've really relaxed so much of our social distancing and another work that actually you're starting to capture those infections, whereas a couple of years ago or a year ago I should say, we were in lockdown, many schools were closed, we were being much more conservative about exposing young children to this disease.

I just don't – we don't know yet. All of these are credible hypothesis and there are probably many others. It is certainly concerning that we are seeing higher infection rates right now with Omicron and I think it's reasonable to assume that there’s something maybe in the transmissibility of that virus that’s leading to more symptomatic disease in young, but we just don't know enough yet.

Q - Ted Tenthoff

Yeah, that’s helpful and I appreciate your answer here. I'm also getting actually several questions on the arbutus court ruling today, showing what that could potentially mean to monitor and maybe you can just give a two second background and shout any thoughts if you do have any?

A - Stephen Hoge

Sure. So Moderna and a company called Arbutus had entered into a series of dispute around some claims that Arbutus had made around their patent mistake and whether it related to what we were doing. That is the suite that existed years ago, as Ted as you know and one that really substantially in our mind is in our rear view mirror.

The way these disputes run, there were a number of patents that had been advanced. Some we had challenged and were just allowed and the federal court held up those disallowances which were great. Some were ultimately – the court said we’re ultimately allowed, and you know subsequently if we felt the need to, we would still go back and challenge those in subsequent filings.

But the most important thing for us to say and we’ve said this consistently in our regulatory filings over the last couple of years, is that we do not believe any of these patents read on our vaccines portfolio, our COVID-19 vaccines specifically. In fact we've moved on substantially from the compositions and the technology described in those Arbutus patents and that's been actually a story Ted I know you've followed for years; that's hard work that we've done. And so at the end of the day while it was a dispute that started you know three plus years ago and has now come to a possible conclusion, it's not one that we think has a direct impact on what we're doing.

Ted Tenthoff

This one really has to do with your lipid nanoparticle technology and the encapsulation…

A - Stephen Hoge

Correct, correct. And an older lipid nanoparticle technology that we had in-licensed from a prior partner of Arbutus’s, not a subsequent version of that technology that was invented at Moderna, impacted the same.

Q - Ted Tenthoff

Yeah, exactly, great. So we're actually just about out of time and I literally I think we’re on question five and I have like 20, so we barely even really got to scratch the surface on the pipeline, but I think that's a lot of the conversation on Moderna today. It really focuses in on COVID, because it’s such an impact and before I forget to say, just thank you to you and everyone at Moderna for what you guys have done over the last years to keep us safe.

My last question for you is, you know beyond the impact and the validation and the expansion in the company, obviously money has flowed to the bottom line. I think you guys at the end of the third quarter, it was something like $15 billion which was just incredible. How do you envision deploying that capital and investing in all these other areas? I know you're doing a lot of work in vaccines. You know my favorite area is orphan diseases, where I think the technology makes so much sense. How do you really envision investing back into the technology over the next five years or so?

A - Stephen Hoge

Yeah, great question, and the short answer is, absolutely! We think we have a huge number of opportunities to reinvest over that timeframe and even more aggressively. Let me just describe a little bit, that you know this Ted, but we built this company not to make a COVID vaccine, not even just to make vaccines. It’s a technology company; it’s a platform technology company.

The principal was that we were going to change the way medicines are made, so that if we could do one, we could actually do 10 and 100 very quickly. And in fact if you look at the company even as it stands today, well we're really well known for the first product. Its wasn’t the product we thought we’re getting first, that is COVID, the COVID-19 vaccine, there’s 34 other programs in development and we're entering multiple respiratory vaccines into pivotal studies right now and other studies as you mentioned, rare disease and oncology that are also in proof of concept studies as we speak.

So you know we've got this huge number of, I guess you'd say candidates shots on goal that are already up and running, and we're still a relatively small company. Most of our dollars get reinvested into those programs, because our platform allows us just to add them at incredibly low marginal technical cost and risk and we can just do more and more.

So what you should expect us to do is just what we've been doing for the last number of years. Realistically though we have 10x the resources that we’ve ever had to do this, but it's the same idea, which is we always believed once the platform got proven, we would be able then to more rapidly expand the number of programs we have and move much more forward in parallel. And so even in the last year I believe we added almost 10 pipe program to our pipeline; we started many more Phase III studies. We will continue to do that and we think that the technology demands it. That's ultimately what being a platform company means.

So the single best place for us to reinvest that $15 billion is in the core platform technology that created it in the form of new medicines. Something we will do in every one of these diseases; we talk a lot about respiratory disease, but Ted I agree with you. I am very excited to see what happens in the rare disease space in the near term. And then the corollary to that is how we move into genetic medicine, so gene editing and all the associated technologies which we’ve also announced we’re moving into in a substantial way, right on the back of that rare disease group of efficacy, proof of concept.

So I'm really excited about it. I think it's early. I think you will see us do much more of what we've done that has made us successful so far.

[End of Q&A]

Ted Tenthoff

Yeah, excellent! Well Stephen, thank you for your hard work. Thank you for being with us today. It's really an honor to have you. And again, I appreciate your time. We could have talked for an hour at least and discussed more of these programs, but looking forward to additional updates in the New Year. So thanks so much.

Stephen Hoge

Thank you for the great questions.

Ted Tenthoff

Cheers!