Moderna Inc (MRNA) — Q1 2019 Earnings Call Transcript

Thank you, Operator. Good morning, and welcome to Moderna's First Quarter 2019 Conference Call to discuss financial results and a business update. You can access the press release issued this morning as well as the slides that we will be reviewing by going to the Investors section of our website at www.modernatx.com. Today, on this call, we have Stéphane Bancel, our Chief Executive Officer; Stephen Hoge, our President; Tal Zaks, our Chief Medical Officer; and Lorence Kim, our Chief Financial Officer. Before we begin, I would like to remind everyone that this conference call will include forward-looking statements. Please see Slide 2 of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments. I will now pass the call over to Stéphane.

Thank you, Lavina. Good morning or good afternoon. As you know, we believe that mRNA has the potential to become a new class of medicines. Since Moderna's inception, we have worked hard to be the company that could become the leader in this field. We believe our mRNA medicines have the potential to address large unmet medical needs and to treat diseases that are not treatable by recombinant proteins or small molecules. Due to the platform nature of mRNA, we believe our mRNA medicines provide a higher probability of technical success and faster timelines to clinical trials and to the market relative to traditional medicines. We also believe that the manufacturing capital intensity of mRNA is materially lower than recombinant proteins. We have, of course, the manufacturing at commercial scale. In order to achieve and deliver on our goals, we continue to focus on managing risk, especially technology risk and biology risk. We believe that programs will be in the same modality of similar technology risk, meaning that once we de-risk a sentinel program, they are important breakthroughs. We believe our chikungunya antibody program will be an important clinical readout, as it uses the same formulation technology as our MMA program, our most advanced rare disease candidate. As articulated before, our corporate focus is on three priorities: one, to execute on the development pipeline; two, to move new development candidates in existing modalities from the lab into the clinic; and three, to continue to invest in new development candidates in new modalities. I will review our progress against our priority one on the next slide in a minute. On priority two, we are happy to announce today a new development candidate with the potential to address the rare genetic disease, glycogen storage disease type 1a or GSD1a in a systemic intracellular modality. Stephen will provide you with an overview of the disease and our preclinical data. And priority three, Stephen will give you a brief summary from yesterday's annual Science Day presentations where we presented ongoing insights into our mRNA and delivery science that included the potential delivery of our mRNA to white blood cells. While we have additional research to perform in this area, we look forward to being able to bring candidates into development as we continue working to help patients with a wide range of serious diseases. Tal will give you an update about the modality in a minute, but I would like to focus on three programs: RSV, VZV, and GSD1a. RSV first. As you know, our strategy across the portfolio is to create the best medicine we can, taking advantage of mRNA's flexibility and the speed with which we can advance new development candidates. We've also reported that Merck has been advancing an improved version of its RSV vaccine with enhanced preclinical potency and a proprietary formulation developed by Merck. For this new candidate, mRNA-1172, Merck has filed an IND. We'll note that mRNA-1172 is now reflected in our pipeline, along with MRN-1777 which is now paused in its development. Merck and Moderna believe that mRNA-1172 is an improved development candidate and gives the company the highest chance of bringing a new potent RSV vaccine to people in need. Tal will share more preclinical data in a moment, but we're looking forward to the start of the Phase 1 study. We'll then look at the clinical data from both studies of 1172 and 1777 and decide which development candidates to move into Phase II. Now let me come to VZV. Based on the assessments of the commercial opportunity, research priorities, and other factors, Merck has discontinued preclinical development for mRNA-1278, the investigational medicine for VZV, the virus that causes shingles. Merck has returned the rights back to Moderna and the company will not continue development at this time. Let me now close with a brief note around GSD1a. We are very pleased to work with another development candidate that is moving into GSP tox in our systemic intracellular therapeutic modality and our team, as you can imagine, are working hard to get these medicines to patients as soon as we can. With this, let me now turn to Tal to give you more granularity on our pipeline.

Thank you, Stéphane. Let me begin by reviewing our progress by modality and I'm going to start with the prophylactic vaccines. We're capping our mRNA vaccine for respiratory syncytial virus or RSV, one of the most common causes of respiratory disease in both the very young and the elderly. In collaboration with Merck, we designed our vaccine to encode a membrane-anchored version of stabilized pre-fusion F protein, which elicits a neutralizing antibody response. In the inset, we show the intended design of the mRNA formulated in an LNP. We worked with Merck to identify and advance improvements to the RSV vaccine, which has led us to the identification of mRNA-1172. This second vaccine has an improved RSV antigen resulting in enhanced potency in preclinical models as well as a proprietary formulation developed by Merck. On the right, we have outlined data from a preclinical study in African green monkeys comparing serum neutralization titers of mRNA-1172 to mRNA-1777. In this study, mRNA-1172 was shown to be significantly more potent than mRNA-1777. As Stéphane mentioned, the IND for this new vaccine was filed earlier this month and mRNA-1777 will not move forward into the planned Phase IIa study at this time. Let me now turn to the rest of the prophylactic vaccines. Overall to date, approximately 1,000 healthy volunteers have been enrolled across seven Phase I trials at doses of up to 400 micrograms. The emerging safety and tolerability profile remains consistent with that of marketed adjuvant vaccines. We've shown promising data from five Phase I programs within the prophylactic vaccines modality and we continue to make progress. For CMV, the first three dose levels are now fully enrolled, and healthy volunteers have started to be dosed at 300 micrograms for the fourth dose level in that study. And VZV, based on an assessment of the commercial opportunity, research priorities, and other factors, as Stéphane has discussed, Merck has discontinued preclinical development of mRNA-1278. Merck has returned the rights back to us and we will not continue development at this time. Turning to our cancer vaccines. We announced that we will present Phase I updates for personalized cancer vaccine at the upcoming American Society of Clinical Oncology meeting or ASCO. As a reminder, our personalized cancer vaccines are being studied as a single agent in patients with resected tumors and in combination with pembrolizumab in patients with unresectable solid tumors. The National Cancer Institute will also present data from its Phase I study of PCV, NCI-4650, a monotherapy for patients with advanced metastatic cancers. The abstract titles and presentation times can be found in the press release that went out this morning. In addition, we're continuing enrollment for our PCV trial and preparing for the randomized Phase II, while the team at Merck is gearing up to enroll patients on the KRAS Phase I trial. For intratumoral immuno-oncology, we continue to enroll our OX40 ligand and triplet trials and prepare for the OX40 ligand Phase II cohort in ovarian cancer. Also, at AACR, our partner AstraZeneca shared preclinical data that supported advancing MEDI1191 or the IL12 program into a Phase I trial. AstraZeneca will lead an open-label multicenter study of intratumoral injections of IL12 alone or in combination with a checkpoint inhibitor. Finally, the local regenerative therapeutic modalities, which includes AZD8601, our mRNA encoding for VEGF-A, AstraZeneca recently obtained clinical trial authorization to open a clinical site in the Netherlands. As a reminder, the Phase I study showed that AZD8601 was well tolerated and led to the translation of functional VEGF-A protein, which caused a dose-dependent increase in blood flow where it was injected. Moving next to our systemic secreted therapeutics. Let me provide some context on our first program in this modality mRNA-1944, including for chikungunya antibody. As we were assessing the biology risk for our systemic secreted therapeutics, we began the development efforts by encoding a monoclonal antibody with the goal of inducing transient passive immunity in the recipient. An antibody would represent a complex protein as it requires the co-translation of two separate mRNAs in the correct intracellular folding and eventual secretion into the bloodstream. From a safety perspective, you would expect an antiviral monoclonal antibody to be fixed, and pharmacologically, we should be able to easily measure its blood levels. This would then allow us to quantify the PK/PD relationship. In other words, how much mRNA is required to produce how much protein in a relatively straightforward manner. The lipid nanoparticle delivery system used for chikungunya antibody or mRNA-1944 is shared with our sentinel rare disease program, methylmalonic acidemia. The Phase I design for this study is shown on Slide 18. We're conducting it in healthy volunteers, so it should give us a read on the safety and tolerability of this formulation. The pharmacological goal that I mentioned is to determine how much antibody we can produce as a result of systemically administered mRNA and whether we may be able to offer people passive immunity against infection by this virus, which today has neither a vaccine nor specific therapies available. We recently completed enrollment of all eight subjects in the second dose cohort in healthy volunteers treated at 0.3 milligram per kilogram in this Phase I study and I look forward to sharing more once we have a complete picture of the data. Also, our chikungunya antibody preclinical data was just accepted for publication in the Journal of Science Immunology. We're continuing to move our Fabry and Relaxin programs towards clinical trials and look forward to providing you with an update at a later date. Finally, let me turn to our systemic intracellular therapeutics. From methylmalonic acidemia or MMA, we're currently in the process of initiating sites for the Phase I trial. We have 45 patients enrolled in our MaP natural history study for methylmalonic acidemia and propionic acidemia. Among these, 26 are MMA patients and 19 are PA patients. In addition, the European Commission has adopted the recommendation from the Committee of Orphan Medicinal Products for orphan designation for mRNA-3927, our PA development candidate, further supporting its advancement. We continue to progress mRNA-3927 for propionic acidemia and mRNA-3283 for phenylketonuria with the goal of bringing them to the clinic. I'm really excited about the opportunity for the new development candidate within our systemic intracellular therapeutic modalities and will now turn it over to Stephen who will introduce this candidate for glycogen storage disease type 1a or GSD1a.

Thanks, Tal. So glycogen storage disease type 1a or GSD1a is a rare inherited metabolic disorder resulting from a deficiency in an enzyme called glucose 6-phosphatase, or G6Pase for short. The G6Pase enzyme is involved in the metabolic pathways to allow the liver and, to a lesser extent, the kidney to maintain the level of glucose in the blood during fasting. After a couple of hours in a normal healthy person, most of the glucose from your last meal has been consumed by tissues. So as glucose levels start to fall, most of the tissues in our bodies will convert to using other sources such as lipids or triglycerides for energy. However, cells in our brains are unable to make that switch and are dependent upon glucose to survive. As a result, our livers take over the responsibility for making and releasing glucose into the bloodstream to keep the brain alive. This process involves two different metabolic processes: first, glycogenolysis or the breakdown of liver-stored glucose for release; and gluconeogenesis or the conversion of other substrates into glucose. Glucose 6-phosphatase catalyzes the last step in both of those processes in the endoplasmic reticulum of the liver. Now the good news for most of us is that this process happens automatically every day. Particularly as we fast overnight, our liver takes over the responsibility for keeping our brain alive. But people suffering from GSD1a are unable to maintain that blood glucose during a fast. As a result, they suffer from threatening hypoglycemia or low blood glucose that can also result in debilitating neurologic effects, even death. Over time, the lack of the enzyme can also lead to a wide range of severe metabolic derangements such as hyperlipidemia from the buildup of lipids, lactic acidosis, and liver enlargement disease. In order to prevent life-threatening hypoglycemia, these patients must consume sugar regularly, almost continuously, via complex sugars such as corn starch. Patients need to wake several times a night, every night to consume this corn starch, and some younger patients even need to have gastric tubes placed to facilitate this feeding or be placed on continuous IV glucose strips. Clearly, there needs to be an improvement in the standard of care. Now GSD1a occurs in about 1 in 100,000 live births, with a slightly higher prevalence among Ashkenazi Jews. This means that approximately 6,500 patients across the U.S. and EU exist. We believe our platform can address GSD1a by replacing that missing information in those liver cells and helping those patients control their glucose. Now just to review a little bit of the preclinical data. We demonstrated proof of concept for G6Pase mRNA therapies in multiple in-vivo studies. First, looking at the upper left-hand panel, we've been able to demonstrate dose-dependent in-vivo pharmacology in the animal knockout model; in this case, mice. As you can see, at escalating doses from 0.2 milligrams per kilogram up to 1 milligram per kilogram, we achieved a dose-dependent normalization of the blood glucose levels in these animals during fasting. It's exciting to see as that translates into other markers of activity as well. The panel in the middle to the right shows triglycerides and shows across all dose levels tested here a normalization of those triglyceride levels. Lastly, in looking at the liver weights of these animals 24 hours after a dose, we showed partial normalization relative to controls of the liver weights in these animals, demonstrating broad-based metabolic effects. On the far-right side, we are showing a seven-week study with repeat dosing showing the ability to normalize blood glucose levels during fasting in these animals up to five doses. We believe this data supports the development of GSD1a, mRNA-3745 in these proof of concept studies. This data was recently presented at ASGCT and we're excited about the potential for this new development candidate to bring significant clinical benefit to GSD1a patients. So returning to the pipeline on 525, you'll now see GSD1a, our fifth rare metabolic disease, enter development. We look forward to doing everything we can to help these patients and other patients suffering from these debilitating diseases. Changing gears, I want to talk a little bit about our Science Day efforts and briefly recap some of the discussions from yesterday. We had the pleasure of conducting our second Annual Science Day, providing a window into our investments in the research platform and creating new generations of technologies that will enable our future pipeline. I co-hosted the Science Day with Melissa Moore, the Chief Scientific Officer of our platform. Now, with over 200 dedicated scientists focusing on advancing the technology underlying our investigation medicines, it's impossible to summarize everything. In the last three years, we published 25 peer-review manuscripts in leading journals with 11 in the last year alone. For Science Day, Melissa and I tried to select a few vignettes that illustrate the breadth and depth of the basic science we're pursuing at Moderna. These fall broadly into two categories: our mRNA science and our delivery science. For those who are interested in reviewing the Science Day content, I'll direct you to a link either on our website or the PR release this morning, but some of the key highlights are on the next few slides. First, in the mRNA Science Day, we demonstrated some of the ways in which we're making our vaccines and therapeutics more potent and safer. We shared some of the latest in-vivo characterization of the nature of the innate immune response and the importance of uridine modification to making immune silent messenger RNA medicines. We showed advances in how we're using design of our mRNA to maximize potency, including several-fold improvements in the amount of protein that were being produced in rare disease animal models. We also shared how secondary structure is being designed into our messenger RNA to create buffer space between ribosomes as they translate it to prevent what we've been calling ribosomal traffic jams. This can increase mRNA half-life and decrease the need for dosing. Lastly, we shared some of the exciting work we're doing in physics on nanoparticles, understanding the formulation, their surface characterization, and how to make them more potent and effective. The second half of the Science Day focused on advances in delivery science, specifically, introducing our immune nanoparticle research program. As Stéphane mentioned, this is an effort to deliver messenger RNA broadly in the immune system to a wide range of cell types including lymphocytes. We shared some of the translational data we have across species demonstrating progress in that space. The key features of the immune nanoparticle research program are dose-dependent pharmacology in all major cell types of the immune system, a system-wide effect. As always, across all of our efforts in delivery, dose-dependent pharmacology is critical to our success. We also demonstrate how we're transiently expressing proteins that confer cells with new phenotypes and functions, driving responses, and how we use mRNA software to select the cell type in which we express proteins and how we've been driving trafficking of immune cells to new tissues to drive desired cell-to-cell interactions. While this work is still in the research and preclinical phase, we are obviously incredibly excited about the potential it brings to treating a wide range of diseases, including cancer, autoimmune diseases, and neurodegenerative diseases. So with that, I'll now turn over the call to Lorence who will walk through all the financials.

Thank you, Stephen. In today's press release, we reported our first quarter 2019 financial results. Please note these results are unaudited. We ended Q1 2019 with cash, cash equivalents, and investments of $1.55 billion, which compares to $1.69 billion at the end of 2018. Let me highlight two cash flow metrics, which provide a direct view of cash use. These are better given the quantity of deferred revenue, stock-based compensation, and depreciation that's embedded in our operating income. Net cash used in operations was approximately $144 million for the first quarter of 2019, compared to $111 million for the first quarter of 2018. Please note that Q1 of 2019 and 2018 include $22 million and $25 million, respectively, of in-licensing payments. Secondly, cash used for purchases of property and equipment was $8 million for Q1 2019 compared to $32 million for Q1 '18. Revenue for Q1 2019 was $16 million as compared to $29 million for Q1 '18. Note that on January 1, 2019, we adopted the new revenue recognition standard ASC606, using the modified retrospective transition method applied to those contracts which were not completed as of January 1. The decrease in total revenue was mainly attributable to the decline in collaboration revenue across all of our strategic alliances, particularly AstraZeneca and Merck, driven by the adoption of the new revenue standard. Total revenue under the previous revenue recognition standard would have been $38 million for Q1 2019. R&D expenses for Q1 2019 were approximately $131 million compared to $90 million for Q1 '18. The increase was primarily due to an increase in personnel-related costs, including stock-based compensation, mainly driven by an increase in the number of employees supporting research and development programs, along with an increase in clinical trial and manufacturing costs, an increase in lab supplies and materials for preclinical studies and clinical trials, and an increase in consulting and outside services costs. G&A expenses for Q1 2019 were approximately $27 million compared to $16 million in Q1 of '18. That increase was mainly attributable to an increase in personnel-related costs, including stock-based compensation, primarily driven by an increase in the number of employees and consulting and outside services costs, both of which were related to operating as a publicly traded company. So with that, I'll hand the call back over to Stéphane.

Thank you, Lorence. To close our remarks, I would like to reiterate that our team is very focused on the execution of all the three priorities: number one, advancing the development pipeline; number two, investing in new development candidates within the six existing modalities as we just announced this morning on GSD1a; and investing in new modalities like the immuno-nanoparticles presented yesterday at the Science Day to deliver and manage white blood cells. We're very excited about 2019 and 2020 as we anticipate having a lot of clinical readouts both in Phase I as well as Phase II start and readout. I believe that Moderna is operating from a place of clinical strength. I'm pleased with our progress. In effort by our mRNA platform, our large development pipeline continues to progress based on the data we're generating from now around 1,000 healthy volunteers and patients enrolled in our trials across all medicines, preprograms in or planning for Phase II, six positive Phase I readouts, five ongoing Phase I trials, and three open INDs awaiting Phase I trials. If you look at the pipeline by therapeutic area, I'm very proud of where we stand today. We have five immuno-oncology programs, OX40 ligand and PCV, which are being prepared for Phase II by our teams, the triplet, which continues the dose escalation in Phase I, and two open INDs for KRAS and IL12. With our five rare disease programs: MMA, we're continuing to enroll in the natural history study and our teams are currently in progress for initiating sites for Phase I with an open IND. PA, which recently got granted orphan designation by the EC. PKU, Fabry and now GSD1a in preclinical tox studies. Free vaccines for major unmet medical needs: RSV, CMV and our combo, hMPV PIV3. We're now more than 775 employees who are very committed to changing patients' lives through mRNA science. On the Norwood facility, which we believe is a strategic asset to enable the company to scale and ensure high-quality medicine as we do our clinical trials, and a strong balance sheet. We know that we have a very special opportunity and the team is very committed to delivering on the promise of our science and bringing forward a new class of medicines for patients. I would like to end our remarks by thanking the many people who participate in our clinical studies, including obviously our patients, healthy volunteers and the physicians. With that, we will now be happy to take your questions.

I guess, two from me. So on RSV, can you maybe just clarify a little bit what specifically is Merck hoping to achieve with the new formulation and the neoantigen selection relative to what you've achieved so far? And then, I guess, just remind us when you started a similar point with 1777, how long did it take you to progress to being Phase II ready? And then I have a follow-up.

Sure, Stephen?

Sure. We are very excited about the 1172 and pleased that Merck has already filed the IND, enabling rapid progress. The data summary in primates showed a significant improvement that is hard to dispute. The 1777 data indicates superior titers compared to a natural RSV infection, which is illustrated in gray, but the 1172 results are several-fold higher in both qualitative and quantitative terms. With those improvements in mind, we decided it makes a lot of sense to move forward. The first improvement is in antigen design; although it is based on a pre-fusion F protein, it has been further stabilized to enhance potency and immunogenicity. The second scientific advancement involves switching from a legacy lipid nanoparticle to a Merck proprietary formulation that offers additional benefits. While I will leave it to Merck to elaborate on those features at a later time, we believe they contribute to the overall improvements. The combination of the enhanced antigen and formulation leads to the qualitative improvement we see. This means we will pause the progress of 1777 moving to Phase IIa as indicated, but our goal remains to develop the best possible RSV vaccine with the highest likelihood of success. While we were eager to see the 1777 data, prioritizing the 1172 makes sense given the significant improvement demonstrated in African green monkeys. Historically, we have seen positive translations from preclinical species, such as primates, to humans for vaccines. If 1172 translates well in Phase I, which we hope and expect, this is the vaccine we should focus on advancing to Phase II and Phase III.

And Matthew, this is Tal. In terms of timelines, if you look historically, it typically takes you 12 to 18 months for a Phase I vaccine trial. It's done in healthy volunteers, so it's a fairly straightforward simple design. I can't give you forward-looking guidance here, but I would note that Merck has recently filed its IND and they will be leading the execution of this trial. Obviously, the team there knows what they're doing in terms of vaccine trials.

Okay. Great. That's helpful. And then the second question is on chikungunya. I know you've entered the second cohort. Do you have any view on how many cohorts you need to get through before you feel like you have enough data to talk about with that modality?

This is Tal. The trial that's currently designed has four dose levels, that was predicted based on our expectation that translates the data from the nonhuman primate that you've seen. I think we're on track with that design. We've been enrolling fairly consistently, and as we said, we're at the second dose level.

It's Ross on for Salveen. Just in terms of mRNA-1172 and RSV and the decision to move forward with the more optimized program, is this something that we should kind of think that may occur in other programs going forward as you continue to test new formulations of your current compounds in clinical candidates?

We continue evaluating any program we advance for potential improvements. There are often small enhancements we can make. The situation becomes more complex when we identify significant improvements, such as the five-fold advancements we see with 1172, where the qualitative enhancement is notably strong. Given the context of recent developments in RSV vaccines, it makes sense to prioritize bringing forward the best vaccine quickly, especially being so close to our lead candidate, 1777. However, we cannot predict whether similar advancements will happen broadly across other programs or efforts. Generally, as you may observe with our other vaccines in the pipeline, we have not approached this in the same way. Historically, this has been an exception rather than the rule, and that is likely how we will view future expectations.

This is Tal. I mean, just to add a couple of points, I think it's one of the fascinating things of the beauty of our platform that we have relatively rapid improvements and that the coding-like nature of mRNA lends itself to those improvements. So if you look at our history, for example, in the personalized cancer vaccine, we've been able to take it to the next level by increasing the number of neoantigens from 20 to 34. And as the team worked through what that means both in terms of mRNA length and sequence optimization, we found a way within the clinic to actually introduce that within the current clinical paradigm. Now, of course, the PCV is a unique type of drug in that regard, and I give the FDA a lot of credit for working with us to enable that. So where we can, we always try to optimize for the best medicine that we can and it depends on the specifics of the product as to what's the best way to do it.

Great. And then I just have one follow-up on the chikungunya antibody. How can we think about the clinical bar here as we approach the data readout, like what are the levels of the antibody that we should expect to see to confer this passive immunity in humans?

So as you will see in the preclinical data that as we said that's recently been accepted for publication, so it should come out soon, the target expression for this antibody is about 1 microgram per mL in terms of what we think is going to be a therapeutic concentration or a concentration that should prevent infection based on the totality of the preclinical data. And that was easily achieved within the dose levels that we've cleared for in the toxicology studies and the preclinical studies. So from a target product profile for this application, what we're shooting for is 1 microgram per mL. If you look at where most therapeutic antibodies live in terms of concentrations, if you pull the FDA label for REMICADE, the trough levels are between 0.5 microgram per mL and about 6 micrograms per mL. So it's within the range of what monoclonal antibodies have achieved for therapeutic levels from many indications.

I have two of them for you as well. So first one is I'm curious how this RSV decision changes how you're thinking about your CMV program, if at all? And maybe what the latest in terms of timelines for when we should expect data from that fourth dosing cohort from CMV? And then I have one follow-up.

Yes, this is Tal. In my opinion, our perspective on CMV remains unchanged. Our data so far indicates a consistent safety and tolerability profile among the approximately 1,000 healthy volunteers who have participated in various programs. The focus now is on identifying the most effective vaccine and optimal dose for specific applications. For CMV, both the dose and its efficacy need to be established within the framework of a clinical trial. I can't provide guidance on the timeline, as clinical trials can be influenced by many external factors. However, based on our previous performance and the current status of this trial, you can draw some conclusions. We are currently at the fourth dose level. The objective with this vaccine, being in Phase I and undergoing dose escalation, is to understand what a tolerable profile would look like for advancement. As we continue to increase the dose, we will eventually determine what the acceptable level of tolerability is. This is how it is defined in Phase I. At that point, we will ensure we understand the immunogenicity before presenting the data.

Okay. And then, the follow-up question is on MMA, and curious when we should expect the first patient to be dosed in that program? And can you just kind of give maybe a little overview of what that dose escalation strategy might be there?

Yes. As we mentioned, the IND has been open for a couple of months now. It takes time to engage with the sites and start the studies. The first group we will be working with, after discussions with regulators, will be adolescents aged 12 to 18. We are actively talking to the sites to get them set up and the study underway. Simultaneously, we are in discussions with the investigators and patient advocacy groups to identify potential patients. Regarding the dosing regimen, this will follow a traditional dose exploration approach. We will begin with an effective starting dose for this disease. This is a requirement for pediatric development. Even with the initial dose of 0.2 milligrams per kilogram, we believe there is an opportunity for benefit, and we will increase the dose from there based on tolerability and the effects we observe in biomarkers.

Thanks for hosting us yesterday up in Cambridge, that was really interesting. I want to pick up on Cory's first question just with respect to CMV development path, and maybe you can kind of outline sort of where you would expect to take the Phase I data sets and what the next studies would be? And then I just have one quick follow-up please.

The goal of Phase I is to demonstrate tolerability, safety, and immunogenicity. Specifically, we aim to show immunogenicity against both components of this vaccine. We have a complex pentameric protein, which is a unique aspect of mRNA, as well as gB, so that needs to be resolved. Regarding the complete development path, we have work ahead to engage with the FDA and other regulators, as there is a significant unmet need, but it's within a challenging context of preventing maternal transmission to babies in utero. Achieving this is not straightforward. Over the years, there have been discussions with the FDA by other companies, providing a framework for what full development entails. We are just beginning these conversations. Leading our efforts is Wellington Sun, who previously served as Division Director for Vaccines at the FDA for a decade before joining us. He is currently busy assembling this information, coordinating with experts, and planning our next discussions to define the full development path.

Great. That's super helpful. And then one more for you Tal, if I may. Just with respect to the triplet program for IL, for cancer, so I was pleased to see that you guys are expanding to the second dose. I think this thing is going to really carry a big hammer, and safety is going to be one of the primary focus areas. Was there anything you saw to date that gives you any pause there? Or how is that looking from an early standpoint from a safety side?

So look, it's hard for me to comment on a trial that's in progress. The data continues to come in, and we're obviously evaluating it on an ongoing basis. I can tell you that we're at the second dose level. As a reminder, for OX40 ligand alone, for the membrane protein, we got up to 8 milligrams, which was the intended dose and that seemed to be tolerated well. So in terms of the contribution of OX40 ligand itself and the lipid nanoparticle delivery technology, I'm pretty comfortable with their tolerability profile. I think your question is correct with locally secreted cytokines; do you get to a level that is worrisome? I don't know yet. I would point that the preclinical data in totality was pretty supportive of going to much higher doses. I think that's the unique ability of mRNA to set up this local paracrine effect within the tumor with minimal spillover into the blood. These are obviously things we'll measure, so we will be looking at the expression of these proteins both in the tumors and systemically to see if they're detectable. We will be looking at the typical safety parameters, labs, et cetera. It's frankly too early to say.

I would like to know more about the rare disease programs or preclinical programs that you recently presented. It seems like there are quite a few running simultaneously. How do you decide which ones to advance? Also, could you provide some expectations regarding when these might progress to clinical stages? Additionally, can you elaborate on the proprietary formulation developed by Merck for 1172? How involved are you with Merck in creating new delivery formulations for these specific programs, and how do those collaborations extend to other programs that are not part of a license with Merck?

Sure. There were two questions. First, regarding the ASGCT abstracts, five were presented to various academic collaborators and institutions. We maintain an active research collaboration with academia across a broad spectrum of rare diseases. What you observed was just a sampling of that effort, and many academic labs were prepared to present that data. By engaging with these partners, we ensure they have the opportunity to present their findings at relevant forums and publish them. You can expect a continuous stream of such collaborations in terms of publications and presentations, but that doesn’t necessarily align with our portfolio strategy or the programs we are advancing into development. Our publication record over the past couple of years includes several programs published in high-impact journals that are not currently part of our development pipeline. The selection process for what goes into development involves different criteria, including our assessment of unmet needs and development feasibility. Therefore, I can’t confirm whether you should expect those items to progress, but I can assure you that a significant amount of activity in both publication and presentation collaborations with academia will continue. Regarding the 1172 delivery vehicle, we have had a multi-year collaboration with Merck where we discuss the insights we gather to facilitate the best development of our partnered programs, including RSV vaccines. I can’t specifically comment on the improvements made to the 1172 formulations that Merck has been working on. However, we published a paper last year discussing some of the deficiencies of earlier lipid nanoparticle formulations concerning local tolerability within the vaccine context. This led to our efforts years ago to create our own proprietary lipid nanoparticle delivery technologies, which are already being utilized in programs like CMV and hMPV PIV. The RSV initiative began before that effort, and we shared data with Merck prior to its publication, allowing them to make their own assessments regarding its implications for their development program. I’ll let them provide specifics about any improvements at the appropriate time, but they are indeed aware of all our collaborative work. We share information regularly, and your question about collaboration is valid; we were exchanging information with Merck well before the publication, and as they make advancements in formulation, it becomes a two-way exchange, which we find very promising.

For the new GSP program, the disease ideology is pretty complicated with multiple organs involved. I guess, the question is, just help us with how you're thinking about the regulatory path down the road post proof of concept? I imagine there's been some discussion of endpoints already. And I have a follow-up.

Geoff, this is Tal. It's a great question. This disease is a different one, as you rightly point out. The unmet need here is not just the multiple organs that are affected; if you think about the patient experience and the quality of life, it's the frequent feeding at night. If you actually meet one of these patients, which I had the opportunity to do, when I sit for a meeting for two hours, I typically take a cup of coffee. A GSD1a patient who sits for a two-hour meeting needs to have a cup of corn starch that they're drinking. If you think about that day in, day out your entire life, there's obviously a high unmet need there that's manifest in many dimensions. Now to your point about regulatory path and endpoints, I think it's still early days. This is just the declaration of our intent in the development candidate; there's work ahead of us. We have to go talk to the agency. We have to go figure out the strategy for the Phase I first, and then we have to understand what is going to be the development path to bring and demonstrate that we can actually impact not just the basic biology of these diseases, as you've shown quite remarkably, I think in the mouse model, but actually how do we demonstrate that we're able to address all those manifold manifestations of this disease spanning from the biochemistry all through the quality of life, preventing relatively rare but very severe events, but at the same time actually changing their day-to-day quality of life in a much more consistent fashion. That's a lot of work that's still ahead of us.

Got you. Okay, that's helpful. And then, on the cancer vaccine and the IO programs, I know you're in an enrollment ramp at this point, but maybe can you speak to whether we’ll see any clinical updates at the upcoming ASCO meeting?

So the – you know it’s a medical meeting. You like to show the data that you have. I’ll point you that to the abstracts once they will be live I think in a couple of weeks, so they will describe the contents of the data that we will be sharing there.

I want to ask about the GSD1a program. First of all, we now have five rare disease programs in the pipeline. Does that indicate a growing emphasis on this area compared to others? Secondly, there is a competitor conducting a trial in gene therapy for this specific disease. Can you discuss the advantages and disadvantages of this approach compared to the mRNA method? And based on the recent data we obtained, what improvements do you foresee?

This is Stéphane; I am going to take your first question, and Stephen will talk about gene therapy. So as we indicated since early 2018, rare disease is an important point of focus for the company, obviously because of the unmet medical need, because of a quick path to approval, and also because what we believe is a lower biology risk against some of the things we're trying to do. So as you know, as we build the pipeline of the company, as I said in my introductory remarks, we focus very much on managing risk. And so the way we think about our pipeline now in development is, we have some very interesting vaccines in infectious disease that got a big unmet medical need that I think we have an opportunity to be able to help a lot of people. With five other programs now we think we have a nice portfolio of IO and what we were looking for is great execution in the clinic to see what we can do for patients with those programs. Given the more straightforward biology of rare disease where clearly missing instructions for the DNA, and as you have seen in a lot of publication work that we have done, there's very exciting preclinical model data. We really want to focus on rare diseases and this is consistent with the strategy we are outlining now and 1.5 years ago. And also what you saw at the ASGCT a few weeks ago, there's a lot of work going on there. This is a very important area for the company.

Yes, and on GSD1a, and gene therapy specifically – or generally, we – starting with mRNA, our focus is on dose-dependent pharmacology. I think the defining feature of our platform is our ability to have predictable dose-dependent pharmacology. You give a dose today, you get a response. You give it next week, you get the same response. If you need a more response tomorrow, I give twice the dose; you should expect to get twice the response, and that's what we mean by sort of dose-dependent pharmacology that functions like a traditional drug. We focus a lot of our rare disease efforts in metabolic diseases where you would expect the needs of the patient based on metabolism to change over time. Sometimes in a week, sometimes over years as they age; and in particular, as they're growing, they can be highly dynamic. We focus on looking at diseases like GSD1a, mRNA is another example of this, where we are expecting to need to titrate to the dose response that's desirable to manage that disease. Now there are, as you mentioned, a gene therapy approach going after GSD1a as we speak, and we really don't view those as necessarily competitive. In fact, we think these are different tools that physicians will use hopefully in combination for different purposes to help patients manage this disease. We can easily imagine a world where sort of analogous to insulin, there are sort of basal long-acting forms, but you're still managing the disease day in and day out by testing blood glucose for weeks in, week out by controlling for it. That would give, frankly, the physician we hope that – personally, I would hope that they're successful and we're successful because more tools for clinicians as they are treating patients will be a great thing. So we don't necessarily view it as competitive; we view it as adjunctive, and we are focusing on different areas of pharmacology.

Well, thank you very much for joining us today and for your questions. We look forward to talking and to seeing many of you in the coming weeks, including at the ASCO around the PCV posters. Have a great day.