Moderna, Inc. (NASDAQ:MRNA) Morgan Stanley 20th Annual Global Healthcare Conference September 13, 2022 10:00 AM ET
Company Participants
Stephen Hoge – President
Conference Call Participants
Matthew Harrison – Biotech Analyst at Morgan Stanley
Matthew Harrison
Good morning everybody. Thanks for joining us for the next session. I’m Matthew Harrison, one of the biotech analysts here at Morgan Stanley, really pleased to have Moderna with us. Quickly before we get started, I need to read a disclosure statement. Please note that our important that our important disclosures including personal holdings disclosures and Morgan Stanley disclosures, if you’re on the Morgan Stanley public website at morganstanley.com/research disclosures.
So, really pleased to have Stephen Hoge, who is the President of Moderna with us. Stephen, I thought a good place to start off is before we go in the details about the many programs that you have ongoing, everybody obviously knows the company because of COVID. And, as I think about the stock, right, there’s a decent amount of debate still on what the COVID tail looks like. But I think when you think about the company, right; the focus is probably on a lot of these other programs. And, and so I just want to ask you, like, where do you see the most value being generated over the course of the next three to five years?
Question-and-Answer Session
A – Stephen Hoge
Great question. Thank you. So first, Matt, thank you for the invitation and the opportunity, and thank you to all of you for being here. It is a real pleasure, I should say, to be back in person as we were just talking about. A little bit of context in maybe how I’ll answer that question. So I am the President and I’ve been here for 10 years, but I lead research and development for the company and have been responsible for the science and clinical development for most of my tenure there.
And more of my passion. And it’s impossible for me to answer a question about where I think the most value will be created…
Matthew Harrison
Which is your favorite child?
Stephen Hoge
Which is your favorite child? Where in R&D are we doing the most? I think, when you talk about value generation, there’s sort of there’s the way it gets measured in terms of dollar incentives, obviously, which is important, but there’s also the potential value we create in our pipeline. And it’s very hard for me to pick one area. But if you were measuring it in terms of impact on the business, clearly, our respiratory vaccines portfolio is the first.
We are — we updated last week that we’re, we’re well on our way in our RSV Phase III, 24,000 people in and we’re starting to count cases. We’re well on our way, actually fully enrolled our flu Phase III. And we’ve already been dosing our combination vaccines and we have for those who don’t remember we have a flu COVID, we have a flu COVID RSV, we’re doing other combos as well. And that portfolio really, in a year, we could be looking at multiple efficacy, readouts, multiple filings, maybe approvals across multiple viruses and moving to the second generation combination vaccines in year two, three. And that’s where I think most people will start to see Moderna branch substantially outside of COVID and demonstrate more.
Now as a scientist, I am equally, if not more passionate about what we updated last week in terms of rare diseases and therapeutics. I know you’ve been following the story for a while. That has been — it feels like a long time coming, but it’s been only a few years since we started that work. And I think that’s where we will demonstrate the long-term potential of this technology.
Matthew Harrison
Okay. Great, great. So I want to ask a couple of platform questions, because I think it’s important. And I also think there remain significant investments across the platform. So you’ve talked a little bit about delivery in the past, I think delivery always comes up. You’ve made progress with delivery to the lungs. How are you thinking about investments in delivery? And how important is that towards advancing a broad portfolio?
Stephen Hoge
So I think as we derisk the potential of messenger RNA, which billions of people have benefited from it already and as we start showing therapeutics, the messenger RNA can reproducibly create a biochemical and even a clinical benefit, we hope.
The real question means, how it becomes — how do you get it to all places. So I’d say it’s existential. It’s the most important thing to get right, is how you invest in delivery technologies in addition to maybe novel nucleic acid technologies.
We’ve been investing in that way for a decade. You will remember that. We have done some of the first work in lipid nanoparticles. And we’re — we’ve been pretty, I think, proud of the progress we’ve made moving into new tissues. So you mentioned the inhaled program, program with Vertex that we’re excited to take into the clinic in the very near term where we have shown in all the preclinical work the ability to safely and reproducibly lead to an inhaled formulation that could actually replace CFTR in the lungs of humans. And we hope to do that shortly.
We’ve been in the IV infusion space now with the therapeutics for rare diseases for a couple of years and have many patient years’ worth of experience. And we’ll continue to invest in LNPs. I think we’re just at the beginning of really where those — that technology will go over the coming decade. 10 years in, I think we’re kind of in the middle of that journey. And we’re looking to move it into new tissues as we move forward.
Matthew Harrison
Okay. And then last question before we probably go to respiratory vaccines. But I think there, you hear from a lot of different companies, other kinds of mRNA, self-amplifying, Merck just did a recent deal with Moderna [ph] in terms of potentially longer half-life. But what’s what’s next in terms of the technology, what are you guys most focused on in terms of investments for other kinds of mRNA?
Stephen Hoge
So, if you follow the story, as I know, you have of our science days over the last five, seven years, we continually update on our investments in RNA. And that is include looking at circularization, that looked included looking at self-amplifying. And this will include looking at other ways to stabilize messenger RNA, so it makes protein for longer, right. So it leads to longer pharmacology. We have some of those that have actually moved into our clinical pipeline. Actually in therapeutics, we have programs that are stabilized, where we have done it without circularization, and see no incremental benefit to circularization in our work.
And so for that reason, we will can, we’re pretty confident where we are right now with a linear mRNA, but with some chemical stabilization in certain applications. And a lot of that data we presented years ago and why we got there. Now, when it comes to circularization, self-amplifying, we make those investments, and we always will, because we have to be at the forefront of that science as we have been over the last 10 years. When the circularization approaches so far, have not demonstrated that consistent, significant benefit to other forms of stabilization in our hands, doesn’t mean that there won’t be other breakthroughs, and maybe others will make breakthrough. Some will be happy when that happens, because it really speaks to the whole field.
But so far circularization for us, is not leading to substantial improvement pharmacology. When we talk about self-amplifying, again, that’s the idea of an mRNA making a copy of itself in a cell so that you get amplification. That’s not a new idea we talked about that years ago is as what a virus does, right, it makes copies of itself. And long double stranded RNA inside of a cell is a fantastic adjuvant. In fact, it really kicks off the immune system and drives a substantial response. So much so that you get very, very inconsistent amount of protein made when you do that, sometimes people have strong immune responses, and they’ll get not much protein made even before the translation starts.
And so self-amplifying, for us. And I think even some of the clinical data has come out with other tried those approaches. It has always been a far more inconsistent technology, because that problem makes it, it needs to make a copy of itself and your body is looking for that.
Matthew Harrison
Maybe just one other question around us out, which is and I think this plays off of the question about technologies and investments, which is you have a substantial amount of cash. Stephane has talked about looking for ways to augment the platform. I think when investors hear that there’s a wide range of things they can think about. So how would you want investors to think about the kinds of things that you might actually consider doing?
Stephen Hoge
So, we will consider anything that feels like its platformable. Because it’s a platform company, we really actually believe that’s the core thesis, it’s not about any individual medicine. It’s not about an individual late stage program. It’s about the idea that we can make a new way of making medicines. For us, that is about sort of information based medicine. So that’s nucleic acid, really, that is plastic that way. And we look at, we’ll look at anything that looks like you did it. That doesn’t mean that every platform, or every opportunity is, substantial and diverse is what we’ve seen with mRNA.
The kinds of things that you’ve seen us done, seen us do, whether they’re in the case of metagenomic or charisma, or things like that are ways that we think we can move our technology into new platforms and new directions. But we’re going to keep looking at everything from basic platform science, so delivery science, even in the bioinformatics space, things around novel nucleic acid technologies, we’re passionate about those, and we have very active work looking.
And then in the, in the programmatic space in the, in the pipeline space, it will really be around opportunities to, to do many programs, right. So ideally, nucleic acids in our mind, and the idea of building over time platforms that can lead to, 10 programs, 20 programs, as opposed to individual instances that, might be very efficiently understood by you and others. And that doesn’t mean that we’re an actual owner for them.
Matthew Harrison
Okay, great, great. So as you highlighted a lot of updates last week at the R&D day. Maybe we’ll start with respiratory and we’ll go to rare and PCV. But and you’ve been highlighted. So maybe we’ll start with RSV. I think that’s a good place to start. So I think faster than maybe people thought we could get to in terms of interims, it sounds like those are driven by your expectation on case rates this winter season. And maybe just remind people about if you are successful at one of those interims what that looks like and how you think that compares to the data we have so far from the competition?
Stephen Hoge
So the Phase III study for RSV was set up, and was designed to read out this season, this winter season, right, so the fall, winter season 2022, 2023. We powered it to 34,000 people. And that was a conservative assumption on case rates in RSV. And we’re already 24,000 enrolled, and we enrolled 7000, 8000 last month, so you can do the math, we’re going to be right where we want to be going into the RSV season, sort of November, December, January of this year.
We’ve already started to see cases. And as we shared approximately 40 cases and approximately 70 cases, the first couple of interim readouts that we’ll see. The study is powered, such that if our vaccine is as effective as what’s been published recently with other vaccines, and Pfizer is the one that’s actually put some numbers out that we should have a pretty good chance of seeing that in the second interim, if it’s better than that. And again, Pfizer is working on a recombinant protein technology, we’re working with mRNA and LNP, we’ve seen really strong performance of that platform and respiratory, even better, I think, than recombinant protein technologies. If we see something better, we actually might see that, at the first interim, it really boils down to the efficacy of the vaccine. If we see anything like what we saw with COVID in terms of RSV disease, you’d expect it in the first interim.
But that’s not — we don’t know. This is science. You have to run the clinical research to figure it out. And so we’re pretty, we feel like we’re really well positioned with the study that set up and that we’ll have, well, we hope well over 30,000 people going into what we expect to be a big RSV season and the conservative assumption. We hope to beat that in terms of cases. Unfortunately, in this in this coming fall winter, we may even see that third interim, which is a place that we’re well powered to see efficacy even below the current standards.
Now I am cautiously optimistic that we will end up with best-in-class vaccine in terms of efficacy. We have to demonstrate it and we haven’t yet. But if you look at the titers that we’ve seen from our Phase I/II work, we think we’re well on the board, we’re as good as anybody out there. And as we know from COVID, we’ve actually seen really strong efficacy that’s not always described just by titers, but often by cell-mediated immunity. And we actually think that, that’s a platform effect that we offer.
So I’m cautiously optimistic. But if we could — if we do nothing other than achieve the kind of efficacy that others have recently demonstrated, I think it’s a dramatic moment for RSV and a huge unmet need and opportunity. And of course, we’ll look to combine that with COVID and flu as we already are.
Matthew Harrison
What’s the — how do you think about path to market there? Obviously, the other companies are going to sell it as a single RSV vaccine. Do you compete directly in that space or do you only compete as a combination product?
Stephen Hoge
For right now, we’ll let the epidemiology decide. We’re ready to do both. If we’ve shown anything with this platform, it is the ability to move quickly and do combinations. And so we’ve already actually got respiratory combinations, as you know, in pediatrics. And we did a bivalent in record time recently.
So our ability to combine RSV with flu or RSV with COVID is pretty straightforward and pretty fast. Because we don’t have to go create dedicated manufacturing, we’re not creating a recombinant protein factory just for this thing or an adjuvant factor just for this thing.
We’re going to be able to do that and offer that flexibility, and candidly, maybe differently across markets. Different markets, different recommending bodies may make different choices, even different populations about whether they need an RSV stand-alone every year, whether they do RSV plus flu or whether they want a high efficacy flu or RSV flu COVID like we’re developing.
And so our commercial strategy will be our platform says, we can offer it all. And in fact, we use the same manufacturing infrastructure and just fill what’s needed. And so as a result, we would expect to launch the RSV single vaccine and an RSV combo vaccine, and that combo may be RSV flu and RSV flu COVID. We’ll provide all of them and allow the epidemiology of those viruses, which will come back every year to dictate what ultimately governments and payers want to purchase.
Matthew Harrison
I want to come back. But as a side note, right you’ve made certain manufacturing investments in different countries, strategic sort of plans with those countries. I mean is that a unique differentiator for you guys in terms of how your relationship with those governments may be and does that lead to differentiated market share for some of these respiratory vaccines?
Stephen Hoge
I think that could be the output of it. Certainly, that wouldn’t be something we’d be opposed to. The reason we’re doing those is important. At the end of the day, we are an mRNA company. We believe this is a new way of making medicines and vaccines. It’s not the only way we just think it’s going to be the best way in the future.
And because of that, we’re following that strategy where it leads, which does say you don’t have to think in this very traditionalist way about what your manufacturing infrastructure looks like. You don’t have to be the holding to that legacy CapEx and infrastructure. You can be much more flexible.
And so the reason we’ve started to partner and you mentioned Australia and Canada and United Kingdom and obviously speaking to other government and how in partnering with them differently, is we want to create the capability to build the vaccines you need, the portfolio you need and it can change over time. It can evolve with the epidemiology, it includes sequence update, that can include combinations. Because you, as a payer, of your nationalized health care system, you just care about the fact that every winter, you face this overwhelming number of hospitalizations and doctors’ visits, it requires you to build extra hospitals, like twice as many hospitals as you might otherwise need.
Now that infrastructure, all that cost and then you get to the morbidity and sometimes more [indiscernible] of these viruses. All of it is preventable with a single intervention, which is a well paired booster vaccine for those high-risk populations against the viruses that are likely to circulate.
And the truth of the matter is that different geographies face different viruses at different times. So there’s no reason why there should be a single global manufacturing solution, everybody has to just take it. The right answer should be partnering with health systems to solve their cost and epidemiology and morbidity mortality problems. And that’s where you see us at almost at a national level now trying to do that.
We do think the reason that leads to more market share in the future, not just that it’s domestic in those countries, is that actually it’s a better solution. It’s more flexible. It addresses their concerns and their problems and partners with them on it. And so we hope to have the best individual vaccines in terms of efficacy. We feel like we are in a good spot with COVID and we are looking forward to pool in RSV. We hope to have the most flexible combinations and portfolio, something more diverse than anybody else offers. I mean, these are the big 3 in respiratory, right, like flu, COVID and RSV. And we’ll offer all that. And then we hope to partner in a different way in how we provide that vaccine to market. It’s not something somebody manufactured 10 years ago in a factory somewhere and figure out how to manufacture 10 years ago, hopefully didn’t manufacture 10 years ago, and forces you to take the same way every year. That doesn’t feel like it’s interesting. It matches the need around respiratory viruses.
Matthew Harrison
Okay. Great. Good, good. Let’s touch on flu, and then I want to make sure we have enough time for rare disease and PCV. So I think at R&D day, you announced that you think you can file through the accelerated pathway. So maybe just remind people about how you think about path to market there and specifically how you think about path to market for the combination product.
Stephen Hoge
Yes. So we believe we can — we’ve actually had regulatory feedback in the U.S. and Europe that we can file through the accelerated pathway. That’s subject to review, always is. And so that’s the only qualification. But we’re quite confident that if we can hit the endpoints in the currently designed study that we should be able to move forward with an accelerated approval filing.
The path to market there, that flu vaccine, even if it’s under accelerated approval, and again, we’re fully enrolled as of August, fast forward 6 months of follow-up and assume we hit the immunogenicity endpoint, you’re in Q1 of next year and in a position to file. And we’ll be moving heaven and earth as we usually do to accelerate those time lines and file as quickly as we can.
And then there’s a normal review cycle. We will work to make that as fast as possible. But we would hope that the flu vaccine that we’re filing under accelerated approval. By the time it would be approved, let’s say, 9 months later, that we would actually have efficacy data because we’re in parallel running this 23,000 person efficacy study in the United States. And so it’s the third large Phase III that we’re running in respiratory vaccines in parallel.
That efficacy study is intended to demonstrate, obviously, first non-inferiority, but the secondary endpoint, the key point that we’re pursuing is superiority in terms of efficacy. Because if we can demonstrate that mRNA leads to a more effective flu vaccine for high-risk populations in terms of prevention of outcomes, then we think we’re going to be in a pretty strong position to launch that product even if it’s under an accelerated approval pathway. And then, of course, we will file that study, the efficacy study, very quickly for full approval and be able to market on those claims.
And so our strategy has been get on to market as fast as possible with what we believe is at least as good as the best in terms of a flu vaccine, demonstrate an efficacy study, hopefully, that it’s even better than that, but we have to run that study and improve it and then begin to launch that product and begin the process of combining it with COVID and RSV. We’ve already run the Phase I/II study for flu-COVID. We’re looking forward to that data in the fourth quarter as soon as we have it and pick the dose, we’ll go into the Phase III portion. We’d end up talking about not even a year in many cases between these events as we think about product launches in just six months. So we’ll go as fast as we can. We think the right answer over time is a flu-COVID-RSV combination vaccine, because the syndrome of respiratory viruses that impacts people 50 every year is preventable and combined to the top five killer. It just doesn’t need to be.
Matthew Harrison
In terms of the regulatory front, flu traditionally, right, has been reapproved on every year on titers, right? And COVID, it looks like we’re sort of heading that way…
Stephen Hoge
The first moment we said COVID is a product, I guess.
Matthew Harrison
It’s heading that way. But I guess, what I’m sort of asking about is, now you’re going to put them together, right, is there a regulatory complication with that? Or do they just say, okay, what do you need to demonstrate from a combination product? And then to get on the cycle in terms of updating how do you think that’s going to play out?
Stephen Hoge
So it will depend upon regulators for sure. And to some extent, in the combination work, we have to have those dialogues and move forward. I’ll tell you, the precedent in pediatric respiratory — or pediatric vaccines is pretty actually established. You have to demonstrate non inferior safety and immunogenicity.
And so the safety data set is usually 3,000 people followed for six months. And the immunogenicity takes substantially less than that, non-inferiority immunogenicity. We expect to be able to demonstrate that our first study, as I said, the Phase I/II was enrolled. We’ve previously done combination respiratory vaccines. If you remember, our 1653 program is RSV and another virus called human metanumavirus. We demonstrated the ability to generate neutralizing titer against both.
The question you’re asking, though, about how do you deal with the seasonal updates is a really intriguing one, because if it hasn’t been lost on anybody, I can assure you, including our regulators, that we have demonstrated with our platform in the last 60 days, that you can go from picking a viral strain, in the case of COVID, and updating and rolling out tens of millions of doses of vaccine.
That is — it’d be very strange to go to a different model for COVID in, let’s say, 2023 or 2024. It would seem to make a lot of sense to pick the strain later in the year because if you had picked in January last year, it would have been BA1, but FDA picked BA4, 5 on July 1 or June 28, whatever it was. The days flyby. And so — and it’s a better match to what we’re currently facing right now.
So clearly, that’s a demonstration of the benefit, and it was able to be launched and rolled out, and the approval as we all know happened just a couple of weeks ago, the authorization is to say in the U.S. And now it’s rolling out globally. So that becomes the model.
Then the question really becomes, why are you picking your flu strains in January and February? It’s the same fundamental challenge, which is mismatch years or drift and you make a different decision, everybody admits at least one year in five in the June time horizon. There’s no reason why you have to be taking in February anymore. It’s not any more difficult to update the flu vaccine than it was the COVID vaccine, and I would argue it’s going to be a little bit easier actually.
And so from our perspective, there’s the very near term of how do we do the update seasonally. But actually, the flu one is the one that we think should be accelerated. It really should happen later in the season for a better match. And the COVID one, there’s really no reason to go back to a world where we’re doing this so early in the season that it’s not well matched.
Over time, we’d love to see a world where actually this is happening also regionally, perhaps differently. We’ve talked about this before. But in flu, there are two big strains that cause hospitalization in adults, H1 and H3. And each of the G7 many years has a different H3 as they’re number one, because there’s four or five circulating H3 streams. But everybody gets the same vaccine, which means we talk about it’s a mismatch here. But the truth is for like six out of seven of the G7, it’s always going to be a mismatch year or it’s going to be — year on H3. That doesn’t have to happen.
Really, we can follow the epidemiology, make different choices regionally, actually have multiple of these vaccines in back up, and make sure that we’re addressing the hospitalization and need that you have that fall. We think that’s the platform enables. We’ve had an opportunity in the last two years and even just the last two months to demonstrate that at a scale that nobody thought possible.
I think if you look to 2023 and flu launch in 2023 or 2024, wherever flu launches, you really have to question how disruptive that will be the realization that we do not have to make a single suboptimal global choice, the realization that we do not have to do it so far in advance that we know what’s wrong at least 20% of the time.
I think that that’s something we’re excited to see play out because the need is there. It is — flu is a top 10 killer in the United States every year in the face of vaccines, right? 50,000 people are going to die, hundreds of thousands of hospitalizations in this country. How is it that it’s a well-served market? It’s not.
Matthew Harrison
Since we only got four minutes. So right — no, it was good because I think it’s something that we don’t think about all the time, rare diseases. I guess, the thing I think about rare disease, I don’t know, four years ago, we were talking about can you give the drug more than once? And can you give it without steroids, right? I mean, that was like that was the conversation. And so obviously, a lot of progress since then. I think my top question on rare diseases, have you seen enough derisking data now that your investment in multiple programs is going to accelerate? And should we expect to start to see Moderna having 10 rare disease programs in two years from now or something like that?
Stephen Hoge
Well, without committing to the number, Stephane is here, you’d be like that tends not enough. But I would say, without committing to the number, yes, I have personally. And I think you hit on the key thing, which is the unknown four years ago, it was speculative that you could give an mRNA and LNP even once to a healthy person.
Three years ago, we were just starting to do it in healthy people, one dose and it was like, okay. Where we are today is we’ve been in one year olds. We’ve been — we have six patient years on drug. We have three — we have many individuals, very sick individuals, metabolically unstable, who’ve been on drug for a while and no premedication. And in the last couple of cohorts, no infusion related reactions.
And that is incredibly encouraging, right? So if there was a question mark about whether our technology had proven it could safely be administered for a life, I think we’re one year into, well, six patient years into experience and saying, gosh, that looks pretty fingers crossed, it just keep falling over time, but that feels pretty good right now. And so I’m I am really excited about that.
And the fact that it happened and we also did it in a couple of other programs, including the GSD1a program, and again, it’s performing as you predict preclinically, that’s really reassuring. You combine that with the pharmacologist, okay. But then can you repeat those over time and do you continually see the same thing? Is it drug-like in its behavior?
And we’ve seen that with the recreative proteins. But now we’re starting to see that in the intracellular hepatic space. And it’s early days. But yes, we’re seeing 19% in 0.3 mg per kg and 34% at 0.45 mg per kg reductions in biomarkers. And we’re seeing what looks like a really intriguing trend in reductions in clinical events, hospitalization and decomplications.
And again, you then look at the other program, GSD1a, and you kind of see the same thing. It’s like, wow, that something is happening, it’s working. As a platform company, that’s all we need to say, okay, you’ve got longitudinal safety, large range of patients, very sick patients, very young, and you’re seeing predictable pharmacology now, which means that the information you’re putting in there is safe and doing what you’d expect. Of course, we have to go do more of these.
Now we announced OTC, but as you know, that’s just going to be the beginning. And we’ll think broadly about what rare disease means. We will look obviously the metabolic diseases of the liver, but there is a large number of unmet diseases that involve secreted proteins or other organs. And we’ll think significantly about those as well. The ERT, like opportunities, where there are unmet needs and where we think our technology can provide a benefit because clearly, we can now repeat dose chronically in patients and lead to what we believe is early signs of clinical benefit. So yes on rare for sure.
Matthew Harrison
Okay. And I’m going to squeeze one in on PCV, because we’re getting the data late sometime in the fourth quarter. But basically, what does success look like with PCV?
Stephen Hoge
We’re eager for this data. It is a high-risk play. Let’s just upfront say, cancer vaccines are — there’s never been a success, and we have some hypotheses that we’re testing that we’re passionate about. That’s why we went into a randomized Phase II study against KEYTRUDA. We’re doing KEYTRUDA combination versus KEYTRUDA alone with the goal of demonstrating that benefit. And I am cautiously — I guess I’m just hopeful is the way I would describe it.
But the key thing that you need to see in a randomized study against KEYTRUDA [ph] got to separate. We’ve got to see better relapse-free survival at one year, and importantly, beyond that one year. You don’t want to see a landmark and it’s — actually, we look at those Kaplan-Meier curves. We should be able to look at it and say, those are different.
Now whether they’re statistically different or was powered for it, we’ll have to see. If the curves are on top of each other, obviously, that would be disappointing. And nobody wants to see the kind of situation that we’re reporting recently with the IL-2s where were they look like as a disadvantage. And I think it’s just that simple.
KEYTRUDA beat standard of care, we need to be the current standard of care, which is KEYTRUDA. And you’ll see the Kaplan-Meier curves, and that will ultimately determine it.
Matthew Harrison
Okay. Great. Stephen, we’re out of time. Thanks for being here. Appreciate it.
Stephen Hoge
My pleasure. Thank you.
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