Moderna, Inc. (NASDAQ:MRNA) Jefferies Global Healthcare Conference June 8, 2023 10:30 AM ET
Company Participants
Stephen Hoge – President
Conference Call Participants
Michael Yee – Jefferies
Michael Yee
Well, thank you, everyone, for joining us on our next session up here. I think our next guest needs no introduction. He’s the President of Moderna, Stephen Hoge. It’s good to be here with you. We just came away from ASCO. So, there’s cancer topics to discuss. I’m sure the audience would love to start off with some respiratory disease updates. So, maybe it would be a great place to start would be sort of your sense or Moderna’s sense of the state of affairs of where we are with COVID. You have guidance for COVID vaccine revenues this year. Market is a bit uncertain about that. You’ve got RSV. Talk about other stuff. And also oncology.
Question-and-Answer Session
Q – Michael Yee
So, why don’t we just start off with COVID. There’s guidance. What is Moderna’s sense of the state of affairs with COVID this year and your confidence around guidance and where we’re going with COVID vaccines.
Stephen Hoge
So, first, again, it’s a privilege to be here. It’s always fun to sit with you. I’m sure the questions are going to be great and challenging. So, let me start with the COVID bit. As you said – so we haven’t actually issued explicit total revenue guidance, as you know. We’ve said that we have approximately $5 billion worth of signed agreements for delivery this year. And we haven’t revised that up or down. We’ve said that pretty consistently since about late last year. And that really represents a floor.
The incremental sales that would come on top of delivering just those pre-purchase agreements would come from the United States, obviously, the largest market, as well as Europe or Japan, other markets. And so, a lot of the focus right now, as you might imagine, is on those additional sales and pushing that number up.
The biggest market, and the one to really talk about, obviously, is United States. I think we, as are our main competitor, continue to believe that’s about 100 million dose market in this country this coming fall.
Michael Yee
Way higher than consensus, by the way.
Stephen Hoge
Higher than consensus, but both Pfizer and us are saying the same. We get there because that’s less than flu. And so, it is less than flu in this country. But still, we think that there’s going to be pretty strong recommendations this coming winter season for people who are protected against COVID. And so, the population of higher risk individuals, whether that’s from cancer or autoimmune disease or other things as well as those over the age of 65 is actually quite sizable in this country
Michael Yee
Can I ask a question on this? So, let’s start with that because – so you have a guidance for – the APA is $5 billion. There’s a contract. So we’ll assume that stays in place. There’s some uncertainty about that. I know Europe sort of revised some of their stuff with Pfizer. But in terms of the upcoming announcements, you guys feel pretty confident that US will engage in purchasing on a commercial basis. So, I don’t think that’s a government contract, per se. So what is your confidence on announcing something with US? How would that work? How would the pricing work? And how does that go into revenue this year? So US…
Stephen Hoge
So great questions all. So, the US is a fully commercial market now at the end of the public health emergency. And so, as you know, there’s a set of contracts that you entered with certain integrated health delivery networks, but the majority of the volume will probably move through traditional channels, like pharmacy. Some extent, doctor’s offices as well. So, we’re out negotiating with groups like the VA or some of the integrated large health networks around supply to those groups. And we’re finding real appetite and demand, obviously, they all want to procure supply of the updated vaccines.
We expect within a week, actually next week at VRPAC that the FDA will recommend that you update the vaccines to the current if they follow the European example just this this week to an SpV containing variant. That’ll mean, just like flu vaccines, that all the existing supply is therefore obsolete, last year’s flu vaccine. And they can’t return that.
Michael Yee
That’s like – so if we do it no XBB, which we’re going to hear about, like in a week or so, Moderna would contract to start shipping X amount of doses of XBB to the United States?
Stephen Hoge
Correct. And the difference here is…
Michael Yee
Which is not in guidance, of course.
Stephen Hoge
That’s correct. With the caveat being that, in United States, that shipment will no longer be just to three CDC government warehouses where they distribute that out, but actually to pharmacists, pharmacies, to health systems. And so, those are the contracts that everybody’s engaging in right now.
If you take the last winter, which is a weird winter, because a lot of people got COVID in the summer going in, and it was a fatigue winter, there was 50 million, 60 million doses that was administered in the United States of the COVID vaccines between us, ourselves and Pfizer.
And so, at a minimum, you need to get some multiple of that into the channel, so that those folks can show up and get a booster again. We do believe there’s going to be strong public health recommendations. We do believe that that will come first from the FDA and then from the CDC, and then from your providers and your provider networks. Because the truth of the matter is, we know – let’s say you’re Medicare or Medicare Advantage plan or a hospital system, we know that you can prevent costs by administering COVID vaccine that year because the health benefits are sufficient. This is still third leading cause of death in this country. It causes a huge amount of hospitalization, causes a huge amount of health care costs. And so, there’s going to be, we believe, a pretty strong, no longer from the central government in the same way, but actually pulling through from payers and providers demand for the vaccine.
Michael Yee
Let me quantify that. So you are estimating 50 million to 60 million jabs in the sort of second half of last year as a proxy for this year.
Stephen Hoge
As a low end. Because that was a time where you’re facing the Omicron surges, BA.4-5, and there were at least that many…
Michael Yee
50 million to 60 million, and how did you guys get to 100 million because the 50 million to 60 million that was done last year…
Stephen Hoge
That was last year.
Michael Yee
There will be 100 million into the system, into the channel.?
Stephen Hoge
Yeah. We think 100 million will get used. So the channel might have a little bit more.
Michael Yee
Does that include what already happened in the first half of the year?
Stephen Hoge
No, that’s seasonal. So, let me give you a sense of how we think about this. So last year was actually a pretty exceptional year because so much infection was happening, and so many people had received the spring booster, right? So, a lot of people received a booster and recommendations in the spring, and they were only a few months out. And then there was a Omicron, BA.4, BA.5 wave, and the updated vaccine. So, actually, we see that 50 million to 60 million dose number in the US market from last year as low ebb.
As you look forward, and you say there’s going to be strong recommendation language, similar to what you see with flu, you might say, well, why not the flu number. That flu number is north of 150 million. And the answer there is, actually, we still think that this will be a little bit less than that, than flu, but not as low as last year. And you kind of get between 50 million and 150 million and you kind of say, well, about 100 million. Now, we’ve done more work than that. But we continue to have pretty high conviction that those high risk populations are going to get stronger – those Medicare populations are going to get strong recommendations. That is substantially…
Michael Yee
So, let’s quantify that and then we’ll move on to the next topic. 50 million to 60 million last season it was jabbed.
Stephen Hoge
US number.
Michael Yee
US. That you think it could be a multiple of that. That’s how you got to 100 million. It’s not formal guidance. It’s just a guess.
Stephen Hoge
Market. By the way, it’s not Moderna. This is market.
Michael Yee
So, 50 million times rough $100 price is $5 billion that would be split between two companies. There was 100 million times $100, that’s $10 billion split between the companies. You think there will be billions, plural, to Moderna for this year.
Stephen Hoge
Absolutely.
Michael Yee
All right.
Stephen Hoge
And it’s now subject to things we don’t control.
Michael Yee
The market thinks it’s subject to demand of jobs. It’s going to be less this year than last year. So even though you said 50 million to 60 million, people feel that the urgency is less.
Stephen Hoge
Yeah. I think that’s completely right. I think we would say, we actually think the number is going to start approaching the flu number over time.
Michael Yee
Yeah. So I think the more relevant question is, rather than just sort of guesstimating this year, which we walked through, 2024, do you think the same math applies to whatever degree that is, in the US alone, 50 million to 100 million for 2024 and beyond every year, and that the numbers outside the US would mirror something around your APA guidance because you think those are something of recurring contracts. I would say the $5 billion is a mix of some deferments. Without getting into complications, it’s a few billion from O-US and a few billion from US. That’s a recurring tale every year.
Stephen Hoge
We have not specifically guided on a recurring revenue number, but I would agree with the logic you laid out.
Michael Yee
The math. Right. Okay, good. Okay. So we will see some of that play out. And the next announcement would be possibly some US progress, would that be the next thing people would hear about.
Stephen Hoge
The market sets up quite differently in the US. There is no longer like the government does a single contract. And so, what you’ll see us doing is we’ll be doing deals with the channels and with the health systems. And I don’t know if we will provide an update in the future on those specific things or we’ll just look to perform financially over the next couple of quarters.
Michael Yee
Here’s an interesting question, the last question, I promise, on COVID. So if you’re going to announce – you’re going to be shipping into the channel, you can be booking that as revenues, for example, in the third quarter, it’s into the channel. What happens if only half of the vaccines into the channel were shipped? Do you have to account for stuff getting shipped back? Or, hey, they purchased it, just a little bit of an accounting thing because I don’t want to see like a – then there’s a negative $1 billion the following year because you have to actually rebate that back.
Stephen Hoge
First of all, you don’t naturally – it depends on the structure of relationship. There are situations where, obviously, we don’t get reimbursed, and therefore it’s not used until somebody gets injected in the arm. And so, I think it’s a more – slightly more nuanced analysis, and I would let you follow up with Lavina. But we’re fully aware of it. And we would not…
Michael Yee
That’s a great question because normally drugs are booked generally as it’s shipped in the channel. There’s some accounting thing for it, but because this is a guesstimate based on the user stockpiling it, that’s more of a guessing…
Stephen Hoge
And so, our financial team and Lavina are fully aware of, but we’re going to try and avoid any surprises in how we report these numbers.
Michael Yee
RSV, so this is something the team here at Jefferies, just a big global report, I saw we have obviously a team covering GSK and Sanofi for the antibodies and Pfizer – another analyst covers Pfizer. And so, here we are here with Moderna with your high end efficacy RSV vaccine, two people are about to launch an RSV vaccine this year, what is your thought around the uptake and then how Moderna will play for that in 2024? Because this could be billions of dollars for you, according to the Jefferies report?
Stephen Hoge
Yeah. Look, I think we’ve come out and said, we see it as a very large market. If you look at the big three, very round numbers, COVID, RSV and flu, they’re all trending towards $10 billion, maybe more, as healthcare burdens, cost burdens.
Don’t forget that when you really want to get to those total addressable markets, you’ve got to CAGR out the ageing of populations, right. And populations are actually aging faster across all of these markets, then population is growing and then economies are growing. It could go up from there, I would just make as a comment.
Now, your question about how do we see that playing out? We see this as a huge opportunity. We’re very proud of our product right now. I think there’s a lot of good news in RSV. We believe there will be three products in short order. And that’s good news because this is a huge burden of disease and a lot of costs can be offset as we play in that market.
Now our own product, we’re very pleased with the efficacy profile. You mentioned, we’re pleased with the safety and tolerability profile, which, to date, we have not seen the acute demyelinating events of concern that have been reported with some of the others. And the tolerability profile is, we think, quite strong.
And then, the last bit is, we like our presentation. We’re moving towards single dosage forms, prefilled syringes. We think that that will also be really important as a larger portion of the product in this country, which is largest market, will likely go through the pharmacy channel. We’ll have to see that as it plays out.
So, the combination of things, we’re actually really pleased with. We still have to file and we’re doing that shortly. And we have to get approved. And we will be one year behind the first two. I think that’s the sort of the part of your question.
Michael Yee
Well, it’s a seasonal thing, not a cure. It’s not a race to get the first year.
Stephen Hoge
We believe it’s a seasonal thing. There is some question out there, in our minds, in everybody’s mind about is it possible that the efficacy lasts two seasons? Don’t know. Like, literally, we don’t, nobody knows. And we’ll follow the data on that. If it is, then maybe it’s an every other year, or maybe people give the vaccine every year anyway, because it’s just easier for people to remember, right. And so, that’ll be a public health decision, not ours.
But either way, to your point, launching a year late, if you believe, as we do, that there’s going to be a regular recurring vaccination boosting of older adults and high risk adults across markets, we want to go and compete and win. We think the product profile is really strong.
Michael Yee
So let’s quantify some of that. So, COVID, you said 50 million to 60 million just for the seasonal COVID.
Stephen Hoge
That was last year in the United States.
Michael Yee
Last year. And you sort of put some numbers around 50 million to 100 million for this year.
Stephen Hoge
We think the market in the US is going to be about 100 million doses.
Michael Yee
Okay.
Stephen Hoge
The market.
Michael Yee
For RSV, we know that the elderly population in the US is roughly 80 million.
Stephen Hoge
That’s right.
Michael Yee
Mostly for elders. So 80 million is sort of the opportunity. If you do half of those people, you probably think it’s more than half, but if it’s half…
Stephen Hoge
We always want to be more than half. I agree that half of 80 million is 40 million.
Michael Yee
But you think it’s more. So there’s your guidance. So more than 40 million. How do you think about price? What is the COVID price ballpark? And what is the RSV price Presumably that’s higher.
Stephen Hoge
So we haven’t announced a list price on RSV. We don’t have one. It’d be premature. We’re also waiting to see what Pfizer and GSK will do because that will obviously be important in the market to understand as well. We’re not the only product there.
In the case of COVID, as we previously said, we’re approximately $130 a dose as the list price. Now, there are discounts, either the channel or individual payers that will happen around that. But I think if you look at what GSK and Pfizer have indicated in some of their health economic analysis and even some of their commentary, they’re seeing prices in that similar sort of range, $150. I’m just taking a rough – somewhere between $100 and $200 of the numbers. And I think we’re fully aware of that. And would expect that – although we have a very – we really like our product profile. We’ll also be cognizant of the competitive environment as much. And so, I think that’s probably as much as I can say because that’s as much as we have at this point. It’s similar.
Michael Yee
So you think it’s more than half, but 40 million to 50 million, then times $100 and $150 is like…
Stephen Hoge
You’re trying to get me the revenue forecast.
Michael Yee
And then split that between three ways is sort of your thinking. Okay.
Stephen Hoge
Okay.
Michael Yee
I’m trying to do the sum of the parts here. So that’s COVID.
Stephen Hoge
We see a very large recurring market.
Michael Yee
Okay.
Stephen Hoge
Yeah. And we want to have a lot of share.
Michael Yee
And then, third is flu and combination. So let me put these three together. Because flu, the market is very confused. The flu data came out, it wasn’t statistically non-inferior. It was very confusing for people on the B strain. People are like, okay, how do we do that? Because it’s a big market. Do you have a flu vaccine? Are you going to file something? And does that lead to a combo?
Stephen Hoge
Yeah. So we are still running – well, actually, we’ve enrolled and hope to read out flu this year. I won’t say more because I don’t think we’ve got more on timing. A final Phase 3 study in flu, an immunogenicity study that we believe, we hope, we expect will answer the B question and resolve it.
Michael Yee
You’re talking about the infection set…
Stephen Hoge
No, this is the P303 study we’ve described it as the – but this is the study that enrolled in the United States in the second quarter to look at immunogenicity in the B strains because…
Michael Yee
With the improved…
Stephen Hoge
With the improved B strains. But just to paint that picture for those who don’t follow it that closely, this is our third Phase 3 study that we’ve run in a program that started two years ago, less than two years ago. So we’re able to move incredibly quickly.
In the first one, where we’re pursuing accelerated approval, we ran into a surprising result on the B strains. Now 99% of the disease is in the A strains. And so, we weren’t as focused on the B strains, but it was a bit of a hiccup. Because at the end of the day, it became a question we were going to have to address.
We had run in parallel an efficacy study, 302, that read out and we shared it at our vaccines day. Actually, we were good on the B strains and we were superior on the As. And in that study, we didn’t – it was in the northern hemisphere, it was much larger, it was the populations we mean principally to commercialize the product, but we didn’t look at the B strains statistically because it was mostly an efficacy study. So, we’re running this P303 study quickly to just plug that question. And then, we would pursue, as we said before, approval out of that combination of those three studies because we have the answer, we hope, which is superiority on the As in terms of neutralizing titers, which is where we want the product to be, non-inferiority on the B or better. We’ll see what comes out of P303.
And our goal is to get that product launched next year. Now, we haven’t got the P303 data. And we haven’t yet therefore been able to sit down with regulators and talk about that plan. But if everything went perfectly, our goal would be to launch that product next year.
Michael Yee
There are combination studies going on right now.
Stephen Hoge
Yes, that’s right. COVID/flu, RSV/COVID…
Stephen Hoge
Five or six combination vaccines in clinical trials. That’s great.
Michael Yee
So, all of those are going on, will Wall Street hear about the results of these combination studies from immunogenicity standpoint and from tolerability standpoint. I think Icosavax just put out some combination data that showed the antibody levels. Are we going to see levels that, say, you can inject COVID and RSV in the same injection, the antibodies are just as high, here it is guys, see we have a combination.
Stephen Hoge
Yeah. So, we have previously shown that we can do combinations – the COVID, flu, RSV, three. And as you pointed out, we have almost every doublet, we’ve got a triplet, and we’ve got multiple generations of products, including our second generation COVID vaccine, which will be refrigerator stable. We’ve got that also in a combo study.
To the question on Wall Street, so the path forward on those, we’re running a bunch of Phase 1, Phase 2 studies to find the optimal combo product, first generation combo product. It’s competitively quite important for us that we don’t share too much as we’re doing that. And so, we’ve been pretty coy about releasing the early clinical results as we kind of identify the one that we want to take into a pivotal study. That pivotal study will be a registrational study for the first generation combo. It’s not an efficacy study. So this is relatively small, maybe 3,000 people for six month kind of study if it falls to previous precedent from an FDA perspective. No specific guidance I’m going to offer on that, again, for competitive reasons. But if that’s the case, that’s a pretty quick studies.
And as we move into a pivotal study with a leading formulation, we would obviously be transparent about that decision.
Michael Yee
2024 pivotal type combination study, immunogenicity to antibody levels, showing that the antibodies are comparable to your approved products, that would be a valid combination.
Stephen Hoge
Yeah. So, we’ve said that we expect to launch the first generation combo in 2025. That requires us to be…
Michael Yee
Finishing and filing in 2024…
Stephen Hoge
And get it out would require…
Michael Yee
And you’re confident because everyone tells me, Mike, the reactogenicity, putting these two things together, they can’t do it, they’re knocked out for three days, no one’s going to do that.
Stephen Hoge
Yeah, we are.
Michael Yee
People think that.
Michael Yee
Well, I understand – I can’t disagree with people’s own thoughts.
Michael Yee
But tell me what you guys…
Stephen Hoge
Look, I think it’s a little bit more nuanced than that, which is that, for different populations, you generally don’t see that reactogenicity, particularly the higher – the older you get, you see much less reactogenicity than you do with younger populations. So, it’s who’s having the thought, what do you think about it? For high risk populations, those that are immunecompromised, that is a large population, highest value. Actually, they really don’t genuinely see as much.
And then the different combination, different things. Our RSV reactogenicity profile was 1% grade 3s above placebo. So just contextually, I don’t know what RSV is going to do to make that more difficult, but it certainly seems like it’s a quite favorite one. So we’re aware of those. One of the things we’re looking at in the Phase 1/2s in the combinations is both can we combine the antigens and we find the optimal formulation for different populations. I do not believe at this point, but we’ll see. We’ll have to prove it to everybody. I do not believe that reactogenicity is going to be limiting for the creation…
Michael Yee
But the interesting thing you said is that – I believe that people who are going to keep getting a lot of these are the older populations. And your point is, not only do they need the highest efficacy stuff, they have the least reactogenicity because of their weakened immune system. So, purveying the average 35 year old for side effects is not the same as purveying a 75 year old who is going to be taking this.
Stephen Hoge
Right, which is where the most of the value is.
Michael Yee
They have lesser side effects.
Stephen Hoge
Most of the value is. And if you’re delivering better efficacy, it’s where that – remember, there is an adjuvanated flu vaccine that actually is in this country that’s actually used for populations recommended preferentially actually.
Michael Yee
One last nuance too about that is, I understand the whole competitive thing, yes, Pfizer is doing flu/COVID combination, their RSV is not mRNA.
Stephen Hoge
Correct.
Michael Yee
And so, even though they talk about combination, the RSV – I don’t know if they can mix that in the same injection. No…
Stephen Hoge
The combination of proteins and lipid nanoparticles in a product, nobody’s released any clinical data on that ever.
Michael Yee
So an RSV combination is really a Moderna thing.
Stephen Hoge
We believe we’re – well, I know – I believe that we’re pretty uniquely positioned, we think, to put RSV in the product.
Michael Yee
I know I’m one minute over. On PCV, we’ve just come out of ASCO, so you’re going to have to summarize in one minute. ASCO had great PCV data in adjuvant melanoma. People, like, that’s great data, awesome, don’t know what to do with it, Merck’s in the other room, they say we’re going to run Phase 3, see you in a couple of years is Wall Street thinking. What is the next step there? Do we have to wait a couple of years or you think we can file?
Stephen Hoge
Look, I think – I’ll try and be consistent. It is an evolving picture. If you saw the ASCO data, we spoke about it there, we are now seeing – I don’t think there’s uncertainty in the in the benefit that’s been seen in the DMFS curves. And again, that’s a primary analysis, the alpha transferred to that secondary endpoint. And the hazard ratio is 0.34, p-value is 0.006. That’s just in metastasis free survival. So if you play the movie forward six months, as we had hoped, the data is maturing and it’s maturing more clearly towards a benefit for the I&T, for the combination.
I think the question is where are we in six months and 12 months. Because if that continues to happen, and as we do, we’re going to do a follow up analysis, as you know, on 51 events, say that’s at a median three years and those hazard ratios continue to mature in that direction and the stats continue to go there, the question is, is there residual equipoise or uncertainty about the benefit?
Now the good news is there’s not much uncertainty about the safety profile. Just as a vaccine like safety profile, like your COVID booster, and as was presented by the folks at ASCO, the investigators and discussing at ASCO, it’s really not adding anything in terms of safety or tolerability concerns over Keytruda. So benefit and risk are clarifying. In the meantime, our job is execute the Phase 3, get the Phase 3 enrolled…
Michael Yee
[Multiple Speakers] agency starting the Phase 3, take the second cut that you will have later just from the 51 events, hazard ratios are getting better, I hope that you and your partner, Merck, can have a great discussion with the agency. Thank you.
Stephen Hoge
We will look forward to it.
Michael Yee
Thank you, guys, very much for the update. Appreciate it.
Stephen Hoge
Thank you.
Michael Yee
Thank you
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