Moderna, Inc. (NASDAQ:MRNA) Jefferies 2024 Global Healthcare Conference June 6, 2024 10:00 AM ET
Company Participants
Jamey Mock – CFO
Conference Call Participants
Michael Yee – Jefferies
Michael Yee
[Starts Abruptly] of Moderna, Jamey Mock, up here with us. Jamey, it’s great to be here. Last I checked, you have a second product that is going to be generating revenue. So, that’s very exciting. We’ll talk about that, in RSV. You just got back from ASCO, a long week at ASCO talking about the pipeline and with a particular focus on the INT adjuvant melanoma data, three-year data. So, that’s pretty exciting. And obviously, a lot going on with financial guidance and trying to get Moderna back to a profitability standpoint and setting the stage for the next few years of growth.
So, maybe I would take the opportunity to ask you first from a high-level perspective, the guidance this year, starting from a high-level 2024, you have guidance, talk about the inputs in that guidance, the confidence in hitting that guidance with a particular focus on what I think is the wildcard, which is RSV. So, financial guidance and your approval of RSV and how much is RSV going to contribute this year.
Jamey Mock
Terrific. Well, good to see you, Mike, and thanks for having us.
Michael Yee
Yes.
Jamey Mock
And thanks for your coverage and videos, including your new song.
Michael Yee
Very good. Very good. The next one, I’ll get Moderna into the [indiscernible]
Jamey Mock
Appreciate that. And thanks, everybody, for joining and your interest. Yes. So, in terms of the guidance, maybe I’ll just go through the categories that we’ve talked through in the past, which is our APAs, which we came into the year with $1 billion that we said, and we’ve learned our lessons on the APAs in the past in terms of not always being follow-through. So, we’re hoping that perhaps there’s a little upside there, but we’re fairly balanced on that.
Question-and-Answer Session
Q – Michael Yee
Clarify that. So, in your APA guidance that you have taken some to handicap to that.
Jamey Mock
Correct.
Michael Yee
Such that in prior years, if they didn’t all come through, that would have been a miss. But this year 2024, because people have said, well, no one is going to give all of it, you’ve already actually included some of that discount into that.
Jamey Mock
Exactly. So, if I go back to 2022, when I stepped into the role in September, we had estimated $21 billion of sales from APAs in 2022.
Michael Yee
Right.
Jamey Mock
We came in at $18 billion and deferred $3 billion into 2023. So, there is this notion that deferrals can happen and I think we’ve accounted for that in our guidance.
Michael Yee
Okay.
Jamey Mock
The second category is the US sales. Everybody is watching vaccination rates. I’m sure we’ll talk about COVID. We’ve assumed a pretty flat market year-over-year because it has declined and we’re hoping we’ve hit a base and perhaps there’s reason for optimism of increasing vaccination rates.
Michael Yee
Can I comment on that one?
Jamey Mock
Sure. Yes.
Michael Yee
So, US COVID, so APAs is outside the US, you’ve commented that you’ve been more conservative on some of that if people don’t follow through. On US, you expect equivalent or flattish year-over-year jabs.
Jamey Mock
That’s right.
Michael Yee
On there, people feel like, well, each year gets a little bit lower. So, is that a risk? Do you think it might actually be better? Talk about why would it be better or why would it be lower.
Jamey Mock
Yes. So, maybe I’ll talk about the long term for COVID. Who knows exactly what will happen in 2024 and 2025, but I think if you just look at the health burden of COVID and we just actually about five minutes ago published a report, an annual report on COVID and our belief in what we think is driving the rates — the vaccination rates and the disease and — but if you look at the long term, if you look at the health burden versus flu, hospitalization rates, particularly in older adults, are 5x what it is of flu. And the vaccination rates are about a quarter or half of what we actually see versus flu. So, if you have 5x hospitalization rates and half to a quarter from a vaccination rates, it just doesn’t make sense in the long term from a health burden perspective. So, again, I don’t know exactly what will happen in 2024. That it’s obviously a politicized topic, but long term, I think science prevails here. So, that’s what I mean.
Michael Yee
I hear you on that. So, despite the fact that hospitalizations are five times higher, the vaccination rate is much lower. That doesn’t make any sense. There needs to be probably better promotion or an understanding by the public to do that. So, just to be clear though, while you’re guiding flattish, people feel like jabs may go lower, but you feel that it should be at least flat.
Jamey Mock
That’s what we’re like assuming in our $4 billion guidance.
Michael Yee
How about RSV? So, RSV —
Jamey Mock
So, that’s the third category. Yes.
Michael Yee
Congrats on the RSV approval, lot of nervousness that happened around that, but it did happen on a Friday. And so, talk a little bit about your approval, the label, how competitive you feel and how much will that contribute to your guidance this year.
Jamey Mock
Yes. So, it is nice to have a second product. It’s wonderful to actually be able to sell a second product and not be a one-product-only company. So, in terms of — maybe I’ll round out the guidance, then answer some of those questions. So, round out the guidance, the last $1 billion in the $4 billion was both RSV and other countries that didn’t have an APA already signed for COVID. And we said that, that combined was about $1 billion. We never guided an RSV-specific revenue target.
But in terms of the product, we — I mean, we think it competes extremely well. We think from an efficacy standpoint, it is equivalent to the competitors. We think the presentation is terrific. In fact, yesterday, I was on with a retailer, the CFO and the Head of The Pharmacy Group, and they are very encouraged by PFS and what that can mean for how they deliver RSV. And so, we’re encouraged by that and hope to be very successful.
Michael Yee
So, since not everyone knows the acronym, so you were — you guys naturally are on the phones, hitting the phones with major pharmacy people who are going to be purchasing this and that you’re having a good conversation and that the pre-filled syringe one-step process, I think the one-step is thawed.
Jamey Mock
Right.
Michael Yee
And then open the cap.
Jamey Mock
Should already be thawed.
Michael Yee
Should already be thawed. And then one step is open the cap. And can you compare and contrast how that would be with the two other players, GSK and Pfizer?
Jamey Mock
Correct.
Michael Yee
I’ve actually literally pulled down the instruction manual on this.
Jamey Mock
That’s right.
Michael Yee
When we tried to do it. Kudos to these who do all this because they got to do it 10 times a day. And my point is, there is multiple steps. Now that said, when we looked at it, GSK and Pfizer have sort of gotten it down to sort of like four steps. And like one of them, I think Pfizer is nine steps, but then they turn nine steps into four steps by literally just changing the numbers of the orders. I swear to you, it’s nine steps which have gone to four steps.
Jamey Mock
I’ve read it as well.
Michael Yee
But if you count the steps, it’s still nine steps. So, can you just compare and contrast because four steps doesn’t seem that hard, but like what does that mean?
Jamey Mock
I mean, it’s a lyophilized product, so you have to mix it and swirl it and then take a jab and make sure…
Michael Yee
Measure it out.
Jamey Mock
Measure it out. And so, that is prone to error or breakage, and that is cost. And if you talk to the retailers or any customer for that matter, they have two things that they care about. One is their ultimate cost and that’s not just the price of the product. That is how we deliver on time. That is the number of returns, making sure that they have the right amount of inventory because it takes money and time to actually have a return. And they’re also interested in how do we increase vaccination rates and marketing the product. So, that’s where we spend. We have a lot of creative ideas to drive vaccination coverage.
And so when you combine the PFS and being I think it’s one-fourth the amount of time it would take to actually administer or deliver a dose as well as our marketing efforts, that’s why we think we are competing pretty well and have good relationships. And we’ve proved that a little bit with COVID. So, in the United — in the US, we had 50% market share last year thereabouts, and that was our first time actually ever competing commercially. So, we’re encouraged by that and we hope that continues going into RSV.
Michael Yee
And so, again, getting into the nitty-gritty, but this is happening right now as you guys are on the phones, you’re having contracting conversations. Literally, contracting is critical to getting this done. And how does that work? It’s basically three, four, five major pharmacies, CVS and Walgreens. And they’re on the phone trying to allocate the volume this year for the winter to the three different players?
Jamey Mock
That’s exactly right. So, we think there is eight relatively large retailers and then there is a long tail. And so, we talked — we are now talking to those now that we’re able to sell the product. Beforehand, we could only talk from a medical perspective on what the product would look like. But now, we’re actually contracting and talking about, hey, what that share looks like, what’s the price look like, and hope to resolve that in the coming months.
Michael Yee
And how does the — what would — what should our expectation be from a share and price perspective?
Jamey Mock
I’ll talk long term. It’s a bit TBD for 2024. So long term, I mean, we see no reason why we shouldn’t be equivalent share in the long term based upon all the reasons I just talked about. So, that’s, let’s say, 33% share since there’s three of them. In the short term, we’ll see. Again, we did well from a COVID perspective, but that was one competitor. We were — we are obviously set third to market right now. They were here for the last year. So, we’ll see what that turns out in the short term, but in the long term, we are very encouraged.
Michael Yee
Okay. And also coming up is the ACIP meeting later in June. What should our expectation be for Moderna’s recommendation? And importantly, I believe you may present the further second season data and what should Wall Street’s expectation be around what that looks like? And does that matter for how you think about whether Moderna will be a single-shot or every two-year shot and how that plays into the profile of your drugs? So, ACIP recommendation and what should we expect?
Jamey Mock
We are expecting and hoping to be on par with our competitors from an ACIP recommendation…
Michael Yee
Which is one jab.
Jamey Mock
Expecting one jab.
Michael Yee
For people above 60…
Jamey Mock
60 years old, correct. And then over time, we will bring additional patient populations to market. So, that’s in the future, but this year, over 60 years old. And so, we believe we’ll be on par for all the reasons I talked about, efficacy. In terms of the durability, I know there was some data out around our 8.5-month time period, but that was because when we performed our trial, it was in the midst of a very severe RSV season. And when you look at the data after two years and you look at the efficacy drop or the antibodies, we think we’re very much similar. No trial is perfectly comparable, but we think that there’s no reason to believe that our product will have any differentiation versus the other two from a durability perspective.
Michael Yee
Can you help put everyone on the same page, so people see the 79, 84[ph] or whatever the exact number was in the first analysis. And then there was 8.7 or whatever month follow-up. I don’t want to get too much in the exact calendar year. But is that second season or that was just 8.5 months complete the full season plus some summer months, which [Multiple Speakers]
Jamey Mock
Exactly. Yeah.
Michael Yee
So there is not second season data in there. The second season or the second winter, that data has not been seen by the public or Wall Street. Will that be at ACIP?
Jamey Mock
That is our hope.
Michael Yee
And if you were at 84, 79, 64, what would it look like then if you go to the second season because it’s almost like one hand behind the back you already started a lower number because you are in a very difficult breakout season, which you did your primary analysis. GSK and Pfizer did their primary analysis in an easier season. So when you drop 10% or 15%, they start from a higher number. You have one hand tied behind your back because you started your first season at a very difficult level. So falling 10% or 15% technically put you below 50%. For me, how do I interpret that?
Jamey Mock
Yeah. So I mean we look at antibodies and what the amount of antibodies are there after two years. And I think those will remain strong. We hope those will remain strong. And so, I think we’ve seen about a 20-point efficacy drop for our two competitors. And we see no reason that our data wouldn’t be something similar to that.
Michael Yee
So 79-ish after the first season falls 20 points like others. So that should fall to like 60 or high-50s?
Jamey Mock
Correct.
Michael Yee
Okay. And that’s still above 50 and that’s still the similar type of numerical result drop. And so do you believe that your injection or that the ACIP is going to move to an annual, or are they going to keep it every two years or three years or would there be different recommendations for different vaccines? And that’s kind of confusing to people.
Jamey Mock
Yeah. I don’t — I hope that it wouldn’t be different recommendations if we’re seeing the same durability. So, that answers that part.
Michael Yee
Durability defined by antibodies?
Jamey Mock
[Multiple Speakers] by antibodies and efficacy overtime. In terms of I think ACIP could move to an annual booster based upon some amount of waning efficacy, but that remains to be seen, and we’ll have to see that overtime and that could simplify things for people, for consumers, for the healthcare system that you don’t have to measure which season did you take it, which season did you not take it. But right now, obviously, it’s every other year, and we’ll see what happens [Multiple Speakers]
Michael Yee
Now if I may push on that a little bit because GSK and Wall Street has seen the numbers, which is that in the last ACIP, GSK offered two injections, and they offered one injection. And when you compare those literally, they were both like 56% in the second season, by the way, they are 56%, you are 80% to 60% in the same winter season, by the way, you’re actually higher. But the point was that whether you gave someone two jabs or one jab, it was basically the same for GSK. And I have gone through a long debate and I was actually correct about GSK, but that is totally true.
And that is why GSK people and others believe that GSK is going to be at least in every two years, and their third year data is coming. How do you — why would you say it’s going to be annual if it’s pretty clear that GSK is at least every two year.
Jamey Mock
It would mostly be if you believe in the convenience of it, I think.
Michael Yee
Convenience [Multiple Speakers]
Jamey Mock
So, you know, and it’s still 58% or 56% versus 80%-ish is still a drop. And so, I think it would have to be a recommendation that says the convenience matters and that 20, 25 point difference matters, but again, we don’t know, we don’t — we’re not guessing, we’re just saying that there is a chance that it could be an annual boost.
Michael Yee
Okay. And then lastly on RSV to close out, the number of RSV jabs last year, I think was 10 million-ish, and I believe that there are around 60 million-ish people above 60, ballpark, so that’s one-sixth of the market has been vaccinated there. Do you believe that approximately the same number of 10 million should still get vaccinated for RSV this season? Some people believe, oh, all the people who are above 60 years old, yeah, they want to get vaccinated, they care about vaccination, they got it. The next season year two, although there’s greater awareness of it, that’s a less that’s like a second-tier level of people above 60 who didn’t have to get in the first season. What would Moderna’s view be on the types and the numbers of jabs for the market. Higher, lower or same?
Jamey Mock
Yes. And so, we looked at all those possibilities and that’s what went into our $1 billion guidance in both RSV as well as of international COVID. And I think the short term is difficult to predict. But like you said, I think we’re very encouraged by the uptick. And I think in the long-term, it certainly should be much more than 10 million total out of those 60 million. So whether that’s going to 20 million, whether that’s going to 30 million or whether that’s going to 40 million [Multiple Speakers]
Michael Yee
And then after revaccinate. [Multiple Speakers]
Jamey Mock
Exactly right, and revaccinate. So, we’re not trying to predict exactly whether it’s 10 million or not this year, but I certainly think that the education and awareness is out there and that the burden is necessary.
Michael Yee
Okay. Well, the good news is even though you have $1 billion, the Wall Street consensus is around 280, which is at $200, not very many jabs. And I think $200 times 1 million is already 200 million.
Jamey Mock
Correct.
Michael Yee
So, that’s one-tenth of the market share.
Jamey Mock
Correct.
Michael Yee
Decent math. That’s not a very big number, one-tenth of the market share.
Jamey Mock
Yeah.
Michael Yee
In the consensus. Okay. And let’s transition away from that. One last question. What is going on in Europe? So Europe is a big market. Let me ask on two points. You expect to file or is GSK and Pfizer expected to be there? And what about COVID European tender, given this update overseas?
Jamey Mock
Have filed with EU [Multiple Speakers] for RSV and a few other markets. And I think that will be — that will continue. I mean, we prioritize the market based upon size and in 2025, we’ll continue to file in other jurisdictions as well. So, I think it sets up a kind of a long-term. [Multiple Speakers]
Michael Yee
Those wouldn’t be for this winter season?
Jamey Mock
Not for this winter season, it’s more for [Multiple Speakers]
Michael Yee
Next? Okay, alright.[Multiple Speakers]
Jamey Mock
Exactly. So I think that sets up to your point, the $200 million or $300 million. We believe there’s a long-term growth here. And I think we said our peak sales would be in the $2 billion to $3 billion range. That includes other patient populations as well. That’s not just 60 and above, but I think – [Technical Difficulty]
Michael Yee
[Technical Difficulty] or do you just have to wait for the full data, or confused?
Jamey Mock
I think yeah. [Multiple Speakers] So it’s our — so I’m not going to get into too much of the FDA and regulator commentary. I think we’ve been very clear about what our belief would be — what would be necessary to actually file for accelerated approval and that was three things. One was the Phase 2 data being durable and we believe that has been evidenced now through the data we released at ASCO, I mean, we released it a little bit earlier, but also at ASCO. And we can get into that data, but it’s quite strong after three years. The second is the Phase 3 enrollment, which is progressing nicely. There were some comments made at ASCO by some investigators on what percent enrolled we are. But — [Multiple Speakers]
Michael Yee
Can you give us a fair disclosure?
Jamey Mock
I would just say that we are encouraged by the enrollment or the disclosure of what that person has since [Multiple Speakers] — one of the investigators said that we were 80% enrolled.
Michael Yee
80% enrolled?
Jamey Mock
[Multiple Speakers] On the Phase-3 trial, which is about 1,100 patients. In total, 80% would obviously be a lesser number of that. But so we’re not commenting, we’re not confirming, denying that. We’re just saying that there has been great enthusiasm for and which is encouraging just for the product, how quickly it is enrolling and we’re excited by that. And the third is manufacturing readiness. We purchased a facility in Marlborough, Massachusetts just outside of Boston to set up a commercial facility solely for INT.
Michael Yee
Okay.
Jamey Mock
All of the — all of the patients and drugs that we’ve made to date have been out of Norwood, Massachusetts, which is our R&D facility. Obviously, we could have made the commercial product there, but we are taking the long term view here that a new commercial, very fairly-sized facility is the better approach for patients.
And it has a ton of capacity to be continue to grow out. We will put in one line, which can serve a certain amount of patients, but it can take up to seven or eight lines in that facility. And we did — started that in March of 2023. So, we are whatever that is, 16 months along or something like that.
Michael Yee
So this is a new facility. This will be making INT, and you do need to get CMC and FDA inspection on this factory in order to do that. Now that’s for approval. There’s certain steps in order to file that you would need. It’s not getting a full sign office for approval. There are certain steps to at least file, they would have to have certain CMC requirements.
Jamey Mock
And we have to believe that we are inspection-ready.
Michael Yee
I see.
Jamey Mock
And so, we’re very far along, but not yet done.
Michael Yee
What about this public commentary. So if we’re going to trade public commentary tidbits that Peter Marks apparently has said that AI-based drugs are complicated and the FDA is not necessarily ready to review or approve those. Can you characterize this idea of AI drugs and what you think or maybe what Moderna thinks are put into context that comment versus the idea that technically you do use an algorithm? I’m not saying it’s an AI algorithm, but there’s an algorithm that for each patient, it is a different mixture of the antigens such that every product is different. Now on TILs just had IO advanced 30 minutes ago, that is also a personalized thing where every product is different. Yours, every product is different. How is the idea of AI versus just, no, maybe it’s more TIL like?
Jamey Mock
Yeah. I think it’s an algorithm, not necessarily AI. I think AI can fluctuate and you don’t know the science behind the algorithm necessarily, whereas I think it’s different here where you actually do know the algorithm and it obviously kicks out different neoantigens for individuals…
Michael Yee
But there’s a computer algorithm and that is applied to everyone. Now Lavina looks like she wants to say something or Lavina wants to say something, maybe we let her
Jamey Mock
Feel free yeah. You want to use the mic right here.
A – Lavina Talukdar
I just wanted to. Yeah. So just wanted to highlight that the Peter Marks commentary was really talking to a future state AI-driven product, which would learn the algorithm would learn when there is a lot of data in thousands, hundreds of thousands of people where we could then tweak that algorithm. At this very first Phase 3, the algorithm is exactly the same as the Phase 2, it’s static. And so, there isn’t any changes. So given your example of some of the other personalized products that have been approved, FDA does have experience with that.
Michael Yee
Right. I kind of analogized more TIL-like. There’s an algorithm to how that is done, every product is different. AI is — this idea that, oh, next year, the same INT, the algorithm has changed. You don’t know whether that’s going to kick out and so that we don’t have efficacy on that based on the change in algorithm. Thank you for that. So thank you very much, Jamie, for walking through all that. That’s an exciting time period as you go on. Let me — one last thing, avian flu.
Jamey Mock
Avian flu.
Michael Yee
Avian flu deserve 60 seconds.
Jamey Mock
Yes.
Michael Yee
Where are you with that?
Jamey Mock
Yes. So we’re in a Phase 1/2 trial. And I think we should have a readout in the not-too-distant future. And I mean, the burden is unknown.
Michael Yee
There is a data coming there on avian flu in patients to vaccinate.
Jamey Mock
Correct.
Michael Yee
And that press release could be coming.
Jamey Mock
Correct.
Michael Yee
Okay. Thank you guys very much. Appreciate it. I know you got a busy day today.
Jamey Mock
Thanks Mike. Thanks, everyone.
