Moderna, Inc. (MRNA) Earnings Call Transcript

Thank you, everyone, for joining us here. Great afternoon session here. I am up here with the CEO of Moderna, Stephane Bancel. Thank you for joining us. It's been a busy time, busy year, even a busy day today. You had some announcements, which I'm sure we'll talk a little bit about.

So maybe just -- I would love to start high level. You're sitting at the top, looking at everything that's going on with the pandemic/endemic, and you guys are trying to figure out and predict what's going to happen this year and going forward. So what is your general prediction about where you see COVID going this year and into 2023? And are we going to need boosters? And make some comments about where you see the evolution of this first.

Sure. Well, good afternoon, everybody. Thank you, Michael, for having us. As we've said a few times publicly, we really believe we're going into an endemic setting. I think that's kind of an 80% scenario. We always want to be cautious with biology. We think there's a 20-ish percent scenario to have, down the road, a more virulent variant. We always need to remind ourselves that Delta, who came after Alpha, was more virulent and had higher hospitalization than Alpha. But we think as has happened in the past, between natural immunity, vaccination and so on, the virulence should actually be less moving forward. As we've said, and again, it's virology, I mean, the virus is not leaving the planet. We're stuck with it forever. It's not surprising. A lot of people don't appreciate that the Russian flu of 1890 was actually a coronavirus pandemic. The name of virus is OC43, which used to circulate in the community in the state of New York, in the fall of 2019, 10% of hospitalization due to respiratory viruses were caused by OC43. So we think it's an interesting model to think about, of course, the flu. But as you all know now as 4 strains circulating and continue to mutate. So we think this is where the world is going. So we think annual boosters are going to be necessary. We think that the technology can hold for a fall and winter season. What happened with Omicron was not unpredictable in the sense that there were 32 mutation on the Spike protein at once that surprised everybody. And so while the vaccines still protect very well against hospitalization and deaths, the protection against infection was much less than what we saw with Alpha and Delta, which are still variants from the Wuhan strain, but there was very good also. I anticipate because as we showed this morning a much higher antibody level with an adapted variant booster, that we should have much longer duration of protection.

So let's go into that just because it's obviously news today. The data today, talk a little bit about that. You -- not everyone saw the data and been in meetings, but you had a data on a bivalent new vaccine that includes the Omicron strain. And so what is your confidence in what that product profile looks like, particularly durability, which is what everyone is concerned about? Because everyone talks about why do I need a fourth dose, it doesn't last, but this is a new version. And so -- and do you expect everyone to order that and use that?

Good. So let me talk by pieces. And if I forget a piece, I'm sure you will remind me. So indeed, what we announced this morning is a bivalent product to mRNA in a vial, 1 coding for the Wuhan strain, the same vaccine that is approved, and 1 which is 100% copy of the Omicron Spike sequence. And we think that having those 2 is really important. If we were sure you will get infected next fall or winter with Omicron, we might have only put the Omicron component. But because we don't know what we don't know, we think that's going back to the ancestral strain is really important to get all of your antibodies back up in case during the fall or winter, we have a new variant that is not a Delta or Omicron. But we want, of course, to teach your immune system the antibodies that you require to protect you against Omicron. So if you look at the 211 data which we presented recently, so the 211 was Beta plus Wuhan. We prepared this bivalent last year when Beta, if you remember in the Q1 time frame, was worrying everybody in South Africa. And the good news of having done it last year is we have a lot of longitudinal data. And what we've shown is that day 29, day 90 and day 180, we have a much longer duration of antibody levels because the antibody are more adaptive to the virus. So this morning, we showed superiority of the 214 product, Omicron plus Wuhan, and I anticipate, because molecular biology is molecular biology, that we should see with 214 exactly the same thing. As we share through the summer the data day 90 and then day 180, I anticipate a much higher level of antibodies, a much slower slope of [indiscernible] antibody.

So walk through that because, while I don't need to put up the chart, maybe the chart was in the slides, the bivalent today shows higher levels of neutralizing antibodies against Omicron than 1273 or the original [ launch ]. So first of all, obviously, you have higher levels because you have an mRNA against that specific. And therefore, through natural erosion following the other data you've had previously with Beta, that after 6 months or more, that you should still have sufficient coverage. Do you think that's a reasonable prediction?

Correct.

Okay. And so that, therefore, this idea that people are not getting boosted because the fourth dose of 1273 doesn't matter, that's because you're using something 2 years if you have a new refresh version of [ Omicron ], the durability should be there.

Correct. And the other piece, too, we should not forget, which is as we enter the fall and the winter, people who only got a third dose, let's say, in November, December last year, will be very far away from the dose. And so because of -- as we've shown the [indiscernible] of antibodies happens naturally like it happens with any infection, people that have not gotten the fourth dose, even if they decide to skip the 214 dose in the fall, should expect to be sick. And if you have a high risk because of age, BMI or comorbidity factor, they should expect to be really sick.

All right. Well, look, the issue here, and this gets into the next part of that question, which is are people are going to use this, are people are going to buy it, is the fact that the people who did get the third, I don't need to take a survey here, but I'm sure a lot of people did, but that was a fairly long time ago. So by the time you get to the winter of this year, it's going to be have been 12 months. So part of that though is, a, is it going to be available and are people going to purchase it? Is the U.S. going to purchase it? And b, is there going to be infections that people want to actually [indiscernible]?

Sure. So on the supply front, first, we've started making the 214 products several weeks ago before even we saw data because, again, molecular biology is not small molecule. I mean you can predict what's going to happen, and we have all along believed that 214 was going to work as we've got the data [ it need ]. And so what we've done over the last couple of months, Michael, is we've done a lot of 1273 because it's half of the product. So we just started filing...

Okay. You've got plenty of that you made. Okay.

We've made that so now we switch to making only the Omicron component mRNA, the 529, because we mix them at [ filling ]. In terms of demand, look, I'm talking to Health Minister on a regular basis. They are all very worried about next winter. Nobody wants to go back into lockdown. Nobody. [indiscernible] governments or, of course, citizen of countries. They don't want a hospital again exploding, driving lockdowns or so on. And so they were very eager to wait for the 214 data, which we have been sharing with them in the last 24 hours, and there's more meetings today and tomorrow and Friday that my team is doing around the world. But we showed the 211 data with governments a couple of months ago when we shared the data publicly. And all the scientists, like the Dr. Fauci of the world in all other countries, were very happy to see that the 211 show superiority to 1273. And again, because they understand molecular biology, we all expected that 214 will look even better. And so as we've shared already, we're quite in a number of countries in the last 24 hours. The data, people are very happy. And the question is, when are you submitting the data? So the team is cleaning, [ QC-ing ] the data, we'll submit it. On the CMC front, we've already started to submit a lot of components of the EUAs across the world. And I will not be surprised if countries in the South -- and I can figure Australia as an obvious one. As you know, we have a strategic partnership with Australia. We're building a plant there. We got a 10-year agreement of supply of respiratory vaccines in Australia.

That's right. That's a unique contract. That's a 10-year deal that you did.

It's unique for the industry, but we have also one in Canada, and we're negotiating a few more. And so what I believe will happen very soon is I will see a few countries, especially in the South, where they still have winter down there, to want especially for people at high risk.

So those are the first deliveries going down to the South.

Correct. Because we're going to go really fast from a regulatory standpoint.

Okay. So talk about then that's being made, it's preparing to get shipped. I don't want to get into details of like what's approved there. It's like one of the things is like getting approved. So you're submitting the data to FDA. I'm sure as we speak, you're preparing that. You would expect that -- it's a good question, Mike. Is that just a no-brainer approval by FDA? How long does that take? So when would this be available?

Yes. So all the regulatory agencies we have been speaking to are all aiming to start vaccinating in August or September.

August. Okay.

So what we have lined up operationally talking to them is we're starting to ship in August.

Okay. Shipments in August.

To a bit like we do with flu because everybody, what they want to do is to do flu and COVID at the same visit at the pharmacy or your GP. And so they want to make sure that there's supply in the supply chain as early as August to stop the channel.

Supply the channel. We don't stop the channel.

Yes, yes. Sorry.

Well, it's a big shipment. But importantly then, the ordering. So like you actually just announced recently that you're going to shift the timing of the deliveries. Presumably, that had a large part to do it. Now some people think, no, demand is waning, there's no infections. Just make a comment around, no, we don't see anything. Or what is the color out there? Because then the Gavi and some of these others were deferring options and sends a negative signal.

Yes. But I think we should differentiate high-income country to low-income country, and I will come back into a minute. So let's start with high-income country. What we've announced last week is we have agreed with Europe to delay some of the Q2 shipment into Q3, Q4 and convert those orders not shipped yet in 214.

Like things that would have been shipped today next month.

Correct. People are basically saying, and you will say the same if you are helping [ me solve the new case ], I don't want the 1273 now, getting the 211 data.

Yes. Who's getting 1273 to them? Why are we shipping 1273...

Yes, exactly. And so they're saying, we want the 214 product and want it to be shipped in the summer, so we can use it for the fall boosting season. And because we want to, of course, be accommodative to those customer, they are very big customer of ours. They're really important to us, so that's what we are doing. The COVAX comment is quite different. What happened in the South is basically you have, as you've read in the media, total oversupply of vaccines, where you've had Europe giving away vaccine, U.S. giving away vaccine, the Chinese giving away a lot of vaccine in Africa. And so the issue we have in the South is a last mile issue.

Those are issues for the low-income countries.

Correct.

If you talk about the higher-income countries, that's not a concern.

No. The high-income countries, they are in their fourth dose campaign, but they are now really focusing on the fall campaign.

Right. Which is the winter and 214 that's coming.

Correct.

Okay. So for Europe, which is a senior in portion, you're preparing to ship those orders. You've guided to that. You call to that. U.S., they have nothing yet.

Yes. So U.S., we have nothing yet because there is no money in Congress, as you know. So what is interesting is the country where the vaccine comes from is the only country [indiscernible] country that has currently no agreement.

What's going on with that?

And the same with Pfizer. So what we are doing, as we've said publicly, we are preparing to go private if we have to. So the team at Moderna is working toward the August 1 launch of the 214 product. You've got to go private.

This is interesting. So even if there was no budget signed or no government purchase, you would just ship 214 to distributors.

Yes, we will do like a normal product.

And then if Cigna or Wellpoint at least want it, I go in, I get it. I just use my health care coverage. And by the way, it's been reimbursed through CMS.

With CMS. Yes, CMS has already announced...

But there's no problem in terms of thinking about U.S. budget. Is that fair?

Correct. I mean the piece that we cannot do both from a public health standpoint and from a business standpoint is I cannot plan to wait and hoping that things are sorted in Congress. So I hope they will be because I think it will be easier for Americans if people especially that are not insured have access to a vaccine like it has been the case in the last 2 years. But I just cannot wait hoping or scrambling other -- so I told the team already a couple of months ago because it was clear already that we -- it was the only OECD country with no contract with Pfizer or Moderna. So I told the team, let's get ready for August 1 commercial private launch if we have to.

I mean [indiscernible] time, but literally, we're months away and we don't have a budget.

Correct. But as you know, it could happen in -- also in a week or so if I wanted to get it done.

Okay. Okay. But you're in active dialogue in the...

We're in active dialogue with the U.S. government, as you can imagine. But we're also getting ready in case there is no contract from the U.S. government.

Let me ask 2 questions in there, but they're related to [indiscernible] which is competition. On one hand, I don't know that there's been much said about anything from BioNTech-Pfizer about an improved version that includes Omicron. And so what does your industry intelligence tell you? And do you feel like, look, you have an obvious competitive advantage as we go into the winter because you're going to prepare and ship an Omicron one? So that's question 1 is on that competitive standpoint.

Yes. So I mean as you know, Pfizer has announced that they are working on the Omicron variant as you would expect. So we expect the data to come anytime soon. I was -- I'm surprised that the data is not out yet because they started their clinic before we started bivalent. So we'll see for that. What we're focusing on is to get the best product out there that we can. And so from a commercial standpoint, we're spending a lot of time making sure that doctors and consumers understand the 2 products are different. If you look at the real-world evidence data, as you know, Michael, because I know you read everything, the higher dose of Moderna, even the booster is almost twice the Pfizer dose, it leads to higher antibody levels. And if you look at the data, it leads to longer duration of protection. The U.K. has actually some of the best real-world evidence data every week that they publish comparing Moderna and Pfizer together. And if you just look at the curves, you don't have to be a PhD or an MD to understand that the curve of efficacy looks much better on Moderna than Pfizer.

Okay. Look, we're going to -- you got to convince people of that. It's often not so easy, and it's also often politicized. But that's one. And obviously, the idea that it's a totally different vaccine, which is an Omicron one, obviously, would be a message to MDs today. But quite frankly, I think the market, Wall Street and the financial community and others just feel like there's not going to be lot of infections or that the urgency or pressure to go out and get one is not there.

I think if it's co-administrative with flu, it makes it very easy. A lot of people get flu. As you know, the flu market is $400 million a year pre-COVID. So just that is already an interesting market. As you know, there's a lot of employers trying to get people back into the office. We also, I think, are interested in discussing with us about how do we get the staff sometime and their family vaccinated on site. So there's a lot of things going on because I think a lot of people want to make sure that we go back to pre-COVID.