Moderna, Inc. (NASDAQ:MRNA) TD Cowen 44th Annual Health Care Conference March 6, 2024 1:30 PM ET
Company Participants
Stephen Hoge - President
Conference Call Participants
Tyler Van Buren - TD Cowen
Tyler Van Buren
Good afternoon, everyone. Thanks for being here. Welcome again to TD Cowen's 44th Annual Healthcare Conference. My name is Tyler Van Buren, Senior Biotech Analyst here. For this session, it's a privilege to have a fireside chat with Moderna. And from Moderna, it's my pleasure to introduce Stephen Hoge, President. Stephen, thank you very much for being here.
Stephen Hoge
Thanks for having me, Tyler.
Question-and-Answer Session
Q - Tyler Van Buren
If you guys have any questions during the fireside chat, feel free to raise your hand, and I'll do my best to get them asked. We're going to start with COVID. Even though it's becoming naturally -- but even though it's becoming a smaller part of the story, we feel like we have to start there. So to level-set, you guys have mentioned that you'll have $4 billion of vaccine sales guidance for 2024. So it'd be great if you could start just by briefly breaking up those components for us.
Stephen Hoge
Yes, for sure. It is good to be back here with you again. So thanks again for having us. Naturally, we'll talk about COVID. So the $4 billion, there's really three big buckets to it. The first is US sales. I'm sure we'll talk a little bit about vaccination rates in the US because it is a big driver for us as a business. We -- the second is, we have a number of advanced purchase agreements. These are multi-year agreements or even current-year agreements for governments outside the US will purchase for their whole populations or portions of their populations. And then the third and this is a little bit newer from last year is, we will -- we do see some markets where last year we weren't commercializing. Europe is an example, where there has been an issued advanced purchase agreement -- like agreement -- joint purchase agreement from the European Union, and there are opportunities for us to enter into new agreements and then therefore commercialize that.
Tyler Van Buren
Okay. And I guess following up on US sales, specifically COVID vaccinations I believe this past season were around $40 million and it was $50 million in the prior season yet, the guidance assumes roughly $2 billion of US demand-driven revenues versus $1.7 billion in 2023. So how do you guys expect to kind of maintain or potentially actually increase COVID vaccination rates in 2024?
Stephen Hoge
Yes. So I'll get to the US point. I think is an important one. And -- but overall, one thing I will say, on the first point is that we -- if you look at our $6 billion -- a little over $6.8 billion revenue -- about $6 billion product sales last year, about $4 billion of that came in the second half. And as we know, kind of in the middle of the year, we've really transitioned to what we think the endemic market will look like. So I do think that $4 billion representative. Now on a question of the $1.7 billion of that, that was the US.
There were a number of things about the US launch of our product and our competitors' products were a little suboptimal for respiratory vaccination. And probably the most obvious is that they were approved because it was the first year them being approved, a month later than flu vaccines. Traditionally people get their flu vaccine starting in August. And really September is a big month, October is a big month and then it tapers out.
In the case of the COVID vaccines, because they were really rolled out at the end of September, we lost that whole month. We were still selling as you'll see from publicly reported data, the IMS data in all that we were still selling in December and November. And so in some ways, we lost a month of that season and we do see it as an opportunity. It's almost 20%, 25% of the selling days. And we also lost a lot of people we think they came in to get their flu vaccine early in the season, quite motivated and maybe for whatever reason didn't make it back to the pharmacy or the doctor's office for that booster. So we see upside in the current year because there's going to be approvals we think much more in line because it will be a second year with respiratory vaccines. And if you listened to public health officials or the regulators or CDC or others, everybody is trying to align those things and really treat these more of the same going forward.
The other thing I'd say is that those same public health officials, CDC and ACIP, which make the ultimate recommendations that who should receive the vaccine. That also happened later last year because it was the first year. But if you look at the ACIP meeting just this past week, there is much more now. Normal course standard people should get this booster high-risk people as was recommended last week should get twice a year 65 plus. And so we think that more normal standard messaging will allow people to prepare and ultimately provide better vaccination coverage, which is really what public health and we want to achieve.
Tyler Van Buren
Okay. Yes, that's a great color on that month. I mean obviously, if you guys are able to increase that and certainly maintain it this year, I think it's reasonable to assume that, that will continue. But last year, I was impressed by the fact that you guys increased the market share from 37% to 48%. I don't think people were necessarily anticipating that, especially given the fact that the share was pretty consistent during the pandemic. So how were you able to take share from Pfizer once it became a commercial market?
Stephen Hoge
Well, 48% is good. It's putting it in the middle. We always hope to do better, but I think a number of features. One, we always thought we had a really strong product, great efficacy, great profile, even the prefilled syringe that was provided where we thought we had answered a lot of questions. The structure of the market before was actually all government-purchased, and many cases under multi-year agreements and so to some extent the distribution and market share was never a natural market share. It was the share that existed as a result of those agreements. And again, remember that in 2021 and 2022, we were supply-constrained. Essentially, our products were being shipped globally to many markets and there were some limitations on what we could offer.
So I really think that the 2023 experience that you just referenced the first natural market that's existed and maybe not surprisingly, it's sort of emerged as a currently -- roughly 50/50 split between the players. And we'll keep working that out against each other, I'm sure.
Tyler Van Buren
Okay. By the way, we had a vaccines panel the other day and KOLs did say that the prefilled syringe is a big deal, which is a good segue into RSV where you guys will have a prefilled syringe and there Pfizer has definitely, got out competed as well by Glaxo. So from this first season, what do you think are some of the key reasons why Glaxo has done so much better than Pfizer in RSV?
Stephen Hoge
So we didn't -- we weren't commercializing in the market. We weren't talking to customers. And so I really can't give you any insight. I do think that some of the things that you just referenced, we think are strategically important and have informed our strategy so I'd underscore them, which is the overwhelming majority of the RSV vaccine market is going through the retail channel, pharmacists, the same people doing flu and COVID and that makes sense. And there are places where labor and prep time matter, right? And if you think about how busy your pharmacists are and any of us have been in CVS or Walgreens or other other -- many of the pharmacies around the world, even in smaller, you see huge numbers of -- you see lines, you see a lot of work. And if you can decrease the labor input that people have to put into delivering the healthcare, you're going to get better outcomes. And prefilled syringes are part of that in our case.
But I would note that Pfizer had a nine-step process with two different prefilled -- actually, lots of things have to come together. GSK had a four-step process, steps really correlate with labor. Obviously, a prefilled syringe is a one-step process, we think we will help with the pain point that exists there. There are other things that happen, contracting, developing the market, obviously, marketing activities. Obviously, we don't have any insight there and how that worked out between the two prior competitors and the customers.
Tyler Van Buren
Okay. You referenced the recent ACIP meeting. I listened to it. In my opinion, it seems like they always want more data and they're fairly non-committal to come to conclusions, but I would love to hear what some of the highlights were for you from the meeting.
Stephen Hoge
Yes. A few things. I think if you pull all the way back, and clearly, there is a view that RSV is a real burden of disease and there is a desire to get more people vaccinated against it. And there is debate about what's the best way to accomplish that and how we position the recommendation. But if you're looking at the percentage of people that ACIP would really like to see a vaccine against RSV, and we're still in the early stages, you know, 10%, 20%, and trying to push that up.
I think the second thing is there is a view that RSV vaccines like flu and COVID vaccines are going to weigh. The timing of that weighing is the open scientific debate and I think we need to all produce data to support it. But for that reason, it makes some sense. This isn't surprising to get your booster -- to get your vaccine closer to the actual respiratory virus season. And I think that was something that I heard start to emerge in conversation. None of that should be terribly surprising. That's how flu works, that's how COVID works, and we think RSV works that way.
There is a question about obviously the frequency of boosting, and I think that will take more data to resolve, but I think there is general acceptance that if it's not one-and-done because you're seeing this 20% decrease between years, between many other products in over time in the vaccine efficacy, and obviously, that's something you can fix with boosting we think. I think the last thing I'd say is, there obviously, there was a healthy discussion on safety because anytime you're making a recommendation of vaccine, benefit-risk is important. And I think there is a binding concern on fortunately very rare, but still signals of GBS that have emerged in the other two companies' trials and is present in some of the follow-up data. That's -- it is -- does not change their recommendation of the benefit-risk. These are fortunately very, very rare events.
But it is something that will continue to be a topic of discussion as they firm up their recommendations and get more maybe even prescriptive and suggesting a certain populations really absolutely should. And hopefully, over time, we hope that is a pretty broad recommendation. We're quite pleased that -- so far -- quite fortunate so far in our clinical studies we have not seen a GBS signal, but at the end of day, there is -- it's a place that I think ACIP and public health will continue to monitor costs.
Tyler Van Buren
Okay. Also on a vaccines panel, other KOLs said that all three vaccines have enough durability to cover the season. Do you think it will be annual dosing or every other year dosing for the vaccines?
Stephen Hoge
So the correct answer to that one is it's really for public health to decide because they have to also decide from a health economics perspective, what's the right answer for them. If you just ask it purely from do I believe that boosting annually will increase antibody titers, and do I think that's the right correlate of protection, yes I do. But I don't think that that's the only factor that goes into a determination.
So is there incremental efficacy and therefore prevention of RSV from an annual booster or even a two-year booster, yes. I believe the data is starting to support that. Certainly, when you look at the antibody weighing and correlate of protection data across all three companies, I think there's evidence of that. But the ultimate recommendation is a recommending body, [indiscernible] in the United States at CDC and ACIP, and they have a number of other factors that I want to look at too, which is what's the incremental benefit of that.
Tyler Van Buren
Yes. What's approximate level of protection in the second season versus the first season for most of vaccines? It's a fraction, right?
Stephen Hoge
Incremental --
Tyler Van Buren
Sorry, like vaccine efficacy or protection in the second season versus the first season.
Stephen Hoge
Yes. So if you look at it really all three, and what you see is, as you've progressed six months from a primary analysis or into a second year, you see, maybe a 20 point drop. And generally, you're thinking in the 80s down into the 60s, and in one case, you're thinking in the in the 60s down into the 50s. But it's a meaningful decrease in efficacy. It is completely correlated with the decline in antibody levels, and we think those antibody levels are ultimately doing most of the protection in respiratory viruses.
So again, I want you to look at the glass half-full glass half empty. I think last year, ACIP looked at it glass half full, which as wow, we still have 50% efficacy in this second season. That's really good, maybe we don't need to do anything more. I think over time that will continue to weigh and then there's the question of whether 50% versus 70% or 80% is the right objective.
Tyler Van Buren
Got it. So just to wrap things up. You guys reiterated your belief that the RSV market in the elderly is $6 billion to $8 billion. And I guess this year, Glaxo and Pfizer did what just over $2 billion or around $2 billion-ish. So I guess, it needs to go up 3X to 4X, and that is primarily through just increased penetration of people getting vaccinated. What do you think are the most important factors to increasing rates -- of vaccination rates in RSV
Stephen Hoge
Yes. I think like the COVID situation, it was the first year, the recommendation was a little bit massive. They wanted to go generate more data, but I think we still saw a really good uptake. I mean I think in many ways that $2 billion market that you just referenced really --- is the positive surprise in the opportunity. It certainly supports if you trend that out and say over the next few years we're going to drive towards that better vaccine coverage rate, you can imagine $6 billion to $8 billion starts to become a reasonable estimate.
I think the things that will support that over time as a market opportunity will be vaccine coverage rates, and I think that is about firming up those recommendations, getting clear on which populations will benefit, and maybe moving out of things that sound more like we recommend but talk to your doctor to where we are with flu and COVID, which is really there is a benefit here, you should go do this. And I think that will drive us more towards hopefully flu-like coverage rates. But I think appropriately, public health will take the time to decide when they think that the data is there to support that. It's still early days.
The other thing that will happen is re-boosting. The $2 billion of sales that happened last year, how many of those people are motivated consumers? And in talking to their doctors say, you know what, I've got a bunch of other medical conditions. I don't even want that difference in efficacy. I want to be protected and they'll come in for our selections because the more this becomes annual, the more that really will just grow.
Tyler Van Buren
Yes. Okay. Let's move to flu. So for flu, what are the nature of the ongoing FDA discussions, and what do you have to sort out prior to the filing by year-end?
Stephen Hoge
Yes. So not -- a couple of things. We're talking to many regulators, not just FDA. And because those are all different stages of conversations and obviously, we want to get to a common view across, I don't want to get into the details. We haven't discussed about what the details of those things are. But conceptually, the kinds of things that we talk about in pre-submission meetings is understanding what data is necessary to support the file, what durability, or what duration of follow-up, whether it's safety or efficacy, or otherwise are necessary to support that filing. And if there are any other questions on comparator or other work that we need to do, then we make sure we get that done.
We moved very quickly last year. If I point to the Phase 3 studies that we were in, and we pivoted, as you know, to a second-generation flu vaccine that included improvements in the BA antigens. In the middle of the year, ran the study, and then actually, we announced the result I think by September. But it's important that was a day 29 endpoint. It's not six months or 12 months of follow-up and importantly, as well, we wanted to -- we want to support that with more data, looking at other comparators. And so we actually [indiscernible], but we had follow-up groups that we enrolled in that study.
So it's an ongoing clinical program, and in some ways, we are building the best data set we can to address the questions with regulators. But our reserve -- the privacy of those conversations here now.
Tyler Van Buren
Understood. So flu, I mean, clearly, you guys were there at the beginning of the formation of the COVID market. They're very close to the beginning of the RSV market. One could argue taking a share of a growing market that's being established, like that is a little different from something like flu. That's more mature segmented kind of entrenched players. So how do you guys plan on taking share and flu over the long term?
Stephen Hoge
Yes. So there's a mid-term, long-term component. I think I'll start with the long-term, was your question, but I think we can get to the mid to short-term. On the long-term, and we hope we have the best product, you know, full stop. We need to generate data that shows that, and over time we need to demonstrate that there are advantages to messenger RNA platforms that have already shown up in COVID vaccines that actually could be present in flu vaccines.
One of those advantages will be and we've talked publicly about our ongoing research and we've actually shared some data on multivalent flu vaccines. So changing the strains selection so that you have a more diverse set of strengths and you get we think better protection against the circulating strains, a mRNA-1011 program as to H3 for instance. Also making later strain selections.
It was interesting, the whole WHO group and folks are debating where we're going to make COVID strain selections. In the sense, I think in the communities is going to be in May and that May or June, like it was last year. And flu is happening in February. And everybody knows that's not -- there's no reason why that's better than doing later. And so over time, we hope the ability to make later strains selection is better matched, and particularly in mismatch here potential for better performance. So we do believe we have the right platform for respiratory vaccines, and we do believe that over time, those things will -- long-term will help build that story with data that we have generated.
I think in the short to midterm, and at the end of the day, your contracting on a portfolio. And the three big high-volume vaccines that are moving into many channels and a lot of this, as we said is the retail channel in the United States and other places is other channels. But in the United States, it's retail. It's COVID. It's flu and it's RSV. And we expect to be maybe the only, maybe the first player to have all three and therefore can solve a portfolio problem. We will have all three prefilled syringes with very similar sorts of labor and other benefits. And so over time, we think we -- or in the short-to-mid term, we hope to compete by actually being a pretty good service provider and then maybe a partner of choice for the retail channel.
Tyler Van Buren
Why is it apparently relatively easy for you guys to have prefilled syringes for your vaccines and difficult for the others?
Stephen Hoge
Well, again, I can't speak to what other challenges were, right, because. I don't know, but I can talk to our advantage is that all of this works on the same platform technology. It's essentially the same four ingredients at the same manufacturing facility as you know. And therefore, for us to do a prefilled syringe is something that we can do across all of our platforms. Once we've solved the technology problem once, we actually then just roll it through.
There are different platform technologies out there, things like recombinant protein, things like the RSV vaccines that are recombinant protein, sometimes other viruses. They sometimes are freeze-dried and it's called lyophilized, and that requires reconstitution. When you freeze-dry something, you have to put the solution back in. So obviously, that becomes a limitation because that's a feature of the product.
Tyler Van Buren
Okay. To round out the respiratory vaccine discussion, the mRNA-1083 next-gen flu COVID combo reading out later this year, what do you need to show in that to have confidence in filing for approval?
Stephen Hoge
We have to demonstrate statistical non-inferiority against both of the comparator vaccines, and that's our COVID vaccine and flu vaccine. We're also looking at enhanced flu vaccines in different populations. And so it's pretty straightforward from an immunogenicity perspective. There criteria out there. There's the same sort of non-inferiority criteria that have been established elsewhere. The lower bound can be 0.67. Point estimate has to be favorable.
We saw that in the Phase 1/2 data that we shared earlier so we're pretty optimistic that we'll see that in the Phase 3. The second thing is we have to show good safety and a favorable reactogenicity profile. At the end of the day, our goal, and this was the data that we -- caused us to move forward into Phase 3 is to present this as a convenience option. And so what we'll be looking for in the Phase 3 is safety data, reactogenicity data and immunogenicity data. And if it looks like where we are in the Phase 1/2 or any sort of non-inferiority, the two shots, we think we will have a product that we've always wanted and we'll move forward to file it.
Tyler Van Buren
Do you think it's possible you could have it ready by the 2025-2026 season, or by the end of next year with the -- so you could have both the combo and the flu monotherapy?
Stephen Hoge
For sure, it's possible. I think we have to be realistic that there is a number of conditions and there, and so let me just make sure I'm clear. Obviously, the data has to be positive. There has to be not any concerning signal that requires further follow-up like letting the study run another three, six months, whatever that would be.
Regulators will have to agree on the submission timelines and we'll have the same sort of meetings we're having with flu. And then, of course, we have to get the submissions done and the review process probably needs to be expedited. It doesn't necessarily have to be record-breaking but there has to be a public health view that this is worthy of some acceleration in order for it all happen in time for the launches to be a good part of 2025. And we think that's possible. We think also it's possible. And again, if you look at different markets, could have different answers to that, I think our -- we have a good confidence. But there are a bunch of conditions out there. Step one for us is to get the data and then we'll clarify steps two, three and four.
Tyler Van Buren
But you said it's possible.
Stephen Hoge
It is possible.
Tyler Van Buren
All right. Okay. So --
Stephen Hoge
Mathematically. It's not like you have to [Multiple Speakers] you have to believe in something that's unprecedented. It's just a bunch of things have to happen very efficiently.
Tyler Van Buren
Understood. Oncology individualized neoantigen therapy. On the earnings call, you noted that you guys need to have follow-up discussions with the FDA. Phase 3 needs to be sufficiently enrolled. You need to finalize or have the Marlborough manufacturing facility set up. So where are you at -- on those fronts?
Stephen Hoge
All right. All right. We've been talking about -- you and I have been talking about IND for a bit. Yeah. So -- again, I'll be a little bit coy, because we haven't guided on some of those specific time horizons. But I think we all see the durability data as oh, that's exactly what we would have hoped. And with that confirmation of durability now passed three years really is statistics getting pretty unequivocal in that durability data. And we see a real benefit in a real need to lean in. And the enrollment of the Phase 3 is the next big step, all right. And so we're making great progress. It is enrolling quickly. We and our partner Merck do have not communicated publicly about the timeline on that, but if I were to give you -- if you would ask what is great look like, what is our ambition look like without a guarantee of where we're going to be?
When in this population folks have involved similarly sized Phase 3 studies really aggressively, think about what BMS did or we -- Merck has done so much. 12, 18 months is something that's been seen, but no more normal could take a little bit longer. So you can assure yourself that we're aiming at as aggressively as possible because we think we need to do this. But that's not a guarantee that we'll get there and we're still in the early part of that of that window. So we're working hard and we want to be successful in enrolling the study quickly. But lots more updates throughout this year, frankly, as we do that.
On the manufacturing site, and I think we've been similarly working hard to establish that site. You know this, but more broadly, this isn't a product you can make anywhere. So, individualized medicine you make it for one person one-time it is scaling down not scaling up or scaling out in the way the traditional pharmaceutical manufacturing works. And it has to operate -- for the economics to be really attractive, it has to operate incredibly efficiently. And so what we prioritized starting well over a year ago was that we need to -- we don't have a product to even intend to launch until we build a purpose-built facility that can operate incredibly efficiently with favorable economics and can deliver high-quality products. And that is the licensed facility, initially for the world for launch.
Moderna on that, we made great progress. We bought the Marlborough facility. It's up and running. The shelves there, anybody who drives by can see it. There's lots of activity and people in it. We're completing out that manufacturing. Our intention is to qualify that site and bringing in line to our clinical research. We are very aware of wanting to align the timing on both the Phase 3 and the site, but we're still on both of those in the beginning of that exercise, and we don't want to make any firm commitments yet. And so we'll keep updating as we go through the year, but we're making really good progress on both fronts. And we're actually optimistic that it will make substantial progress this year.
Tyler Van Buren
Understood. Yeah. If I'm not mistaken, you guys started that trial last summer, right, July, maybe in -- so 12 months to 18 months would be by the end of the year -- if you can get the facility done by the end of the year, that would be a great outcome.
Stephen Hoge
I think getting these things done by the end of the year will be a great outcome.
Tyler Van Buren
Yes, awesome. So adjuvant melanoma opportunity, what's your latest thinking on the magnitude of that? I mean, obviously, KEYTRUDA what on average $150,000 a year. You guys aren't obviously, going to guide the pricing, but how do you think about the opportunity for you guys in adjuvant melanoma?
Stephen Hoge
I think when we start to see the benefit that you're seeing where you're seeing the hazard ratio reduction as good or better than what you see with KEYTRUDA alone, and this -- it's important to say, these products are going to be different, right? And so they're different products, they're additional and we hope that, that incremental hazard ratio will provide an argument for a similar health economic benefit. We'll have to show that. But if you look at what, for instance, KEYTRUDA, our partner's product or other PD1s are doing in the adjuvant melanoma context, it's a couple of billion dollars. And that gives you a sense of the kind of benefit that we're providing and the kind of opportunity that we hope we have -- or the economic opportunity that we hope we have with our partner Merck for providing that health economic benefit.
Tyler Van Buren
And without going into all the RFS rates for the audience, I believe the combo versus KEYTRUDA and a better hazard ratio and KEYTRUDA versus placebo, right?
Stephen Hoge
Correct. Yes, yes. So we -- our distant metastasis-free survival hazard ratio was 0.35. It's a 65% reduction in the related dystrophin tests or death hazard ratio on the -- on any relapse that concluded a small local relapse sSo that's happened one more frequently is 50%. So we just -- we're seeing pretty dramatic reductions in the residual burden of disease. And you're right, those numbers are trending better than the prior placebo competitor.
Tyler Van Buren
30 minutes is not enough time, unfortunately.
Stephen Hoge
No.
Tyler Van Buren
And we weren't able to get to the Phase 3 CMV trial read-out by the end of the year, which is an exciting opportunity, as well as the orphan programs and several others. But just maybe you can wrap up by discussing what you think is the most under-appreciated aspect of the story by investors right now, and if that is the Phase 3 CMV program.
Stephen Hoge
Yes. Well, it could be the CMV. I think if I were to point to one thing is what you said upfront, which is Moderna is still -- there's a lot of talk about COVID, COVID vaccination rates, where we're going to be this year, how are we going to make that revenue. But if you look at just the Phase 3 pipeline and the near-term filings for approval, even just across where we're talking about and we didn't get a CMV and we didn't get to other programs that are in pivotal studies now including [indiscernible] rare disease stuff are moving into very quickly.
I think the unappreciated thing is to the extent to which that we have used the last three to four years to dramatically diversify and expand this pipeline to a scale that we think in the next years, very shortly in months to years starts to demonstrate the power of this platform, and will turn us into a very, very different looking company. The news flow alone is going to be all non-COVID from a pipeline side. And so we're pretty excited by that. We know it's a show-me year for us, both on the commercial side, we got to do it again, and hopefully, a little bit better with our -- and then add RSV to it and pipeline side. But we actually think we are in a strong position in a strategic side.
Tyler Van Buren
That's great. Thank you for the awesome discussion.
Stephen Hoge
Thank you.