Moderna Inc (MRNA) — Q4 2019 Earnings Call Transcript

Thank you, operator. Good morning, everyone. On today’s call we will discuss Moderna's fourth quarter and full-year 2019 business update and financial results. You can access the press release issued this morning as well as the slides that we'll be reviewing by going to the Investors section of our website. Speaking on today’s call are Stéphane Bancel, our Chief Executive Officer; Tal Zaks, our Chief Medical Officer; Stephen Hoge, our President; 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 turn the call over to Stéphane.

Thank you, Lavina, and good morning, everyone. As you know, we believe mRNA has the potential to be a new class of medicines with the opportunity to address many unmet medical needs. Given the unknowns of working with a new technology, we have been laser-focused on managing risk, technology risk, priority risk, execution risk, and financing risks. 2019 was an important inflection year for Moderna. We reported clinically validating data from key programs in two of our modalities, prophylactic vaccines on the left and systemic secreted & cell surface therapeutics on the right. Data that we believe fundamentally change the risk profile of each of these two modalities that we now call core modalities. As a result, our strategy is to double down on these two core modalities with many important medicines. We have already announced five new development candidates in these core modalities since January 13 at the JPMorgan Conference, three new development candidates in infectious disease prophylactic vaccines and two in the systemic secreted & cell surface therapeutic modalities. Why do we double down on core modalities? We are still more than ever interested in understanding the potential of our mRNA technology in our exploratory modalities: cancer vaccines, intratumoral immuno-oncology, localized regenerative therapeutics, and systemic intracellular therapeutics. So, when we think about this, we have two distinct businesses. This is a significant point in our strategy. Core modalities we want to scale and invest exploratory modalities where we’re waiting for clinical data to decide on the path forward. So stepping back, I would actually share with you the progression of the company toward a new class of medicines. In the early days of Moderna's history, our goal was to enter the clinic safely. We spent years investing and developing mRNA science, formulation delivery, and manufacturing. The company pivoted out of that growth phase when we entered the clinic, we extended the influenza vaccine in December 2015. In the clinic, our next goal was to learn how well our technology was working or not. We explored our technologies across six different modalities. We tested 16 different molecules in the clinic in a short 4-year period. In 2019, we generated important data in two of these six modalities and identified two core modalities: infectious disease prophylactic vaccines and systemic secreted & cell surface therapeutics. We're entering a new phase of the company's development. Our goal for this next phase of our history is to sign multiple BLAs, while continuing to explore our clinical programs in the four exploratory modalities. We are poised to invest aggressively in our science, including investing in new modalities such as our ongoing collaboration with Vertex. We are fortunate to be able to close the financing earlier this year so we can maximize our potential to create value and manage risk. Once we file multiple BLAs, our goal will be to scale the company and commercialize a large portfolio of mRNA medicines. Now Tal will take you through prophylactic vaccine programs.

Thank you, Stéphane, and good morning, everyone. I'll start with a quick reminder on the data generated to date with our vaccines. In over 1,000 healthy volunteers and 6 positive Phase 1 datasets to date, we've observed a safety profile consistent with the safety of marketed vaccines and the ability to elicit an immune response in the form of neutralizing antibodies. Updates for the ongoing programs are shown on this slide. The CMV Phase 2 dose confirmation study is enrolling well. We completed the second dose cohort and are close to completing the third one. We now expect data readouts to come in the third quarter of this year. Our hMPV/PIV3 combination respiratory vaccine has started the age de-escalation study, and Merck is on track with their RSV program in adults. Zika is also going well as 3 of the 4 dose cohorts have completed enrollment. Our three new development candidates announced recently are vaccines against pediatric RSV, mRNA-1345, Epstein-Barr virus or EBV, mRNA-1189 and our vaccine against the novel 2019 coronavirus mRNA-1273. Stéphane will take you through each of these candidates in a minute. CMV is an unmet need as there aren't any approved vaccines, and the burden of disease from CMV infection is significant. Of the 25,000 newborns in the U.S. affected each year, 20% will have permanent neurodevelopmental disabilities. The spectrum of sequelae ranges from hearing loss, vision loss, microcephaly, and even mortality in 10% to 30% of the severely affected infants. We believe our gB and pentamer vaccine has the potential to prevent the infection and help thousands of newborns avoid these sequelae. On Slide 16, I'll review the most recent data from our CMV program. In January of this year, we showed the 7-month interim data. The safety has been generally well tolerated, and we've not seen any related serious adverse events. Immunogenicity data continue to confirm earlier interim data from the trial and continue to exceed our expectations. Specifically, we continue to see higher neutralizing antibody titers in seronegatives and seropositives in both epithelium and fibroblast assays. If you look at those who have never had CMV, the seronegative group after the third vaccination, they had neutralizing titers against epithelial cells that were more than tenfold higher than the levels seen in seropositives at baseline. We also saw a nice increase in titers against the fibroblasts. Even in seropositives, people who have been infected, our vaccine is able to boost them 20 to 40 fold higher above baseline level after the third vaccination. And we see early evidence of durability out to 12 months. These data are what's behind our optimism and belief that we can take this vaccine all the way through to prevent infections in newborns. As mentioned earlier, our Phase 2 dose confirmation study is enrolling well and is currently enrolling the last dose cohort. We now expect data from the first interim analysis in the third quarter of this year. Preparation for the Phase 3 trial that we anticipate will include less than 8,000 participants, including women of childbearing age, are underway. An early estimate of the cost of this trial is in the range of $200 to $250 million. Now, as an opportunity for us, CMV is clearly a blockbuster opportunity. We estimate annual peak sales for a CMV vaccine to be in the range of $2 billion to $5 billion in line with the estimates of others in the field. Assuming an average selling price like GARDASIL, a relevant comparator here, we estimate gross margins of about 90% and EBIT margins of approximately 50%. We're excited about the progress towards this opportunity, supported by the fact that just one of the antigens in our vaccine, the gB when encoded for in a traditional recombinant technology in the past, have already shown a 50% efficacy, which was demonstrated by Sanofi several years ago. We believe that targeting both the pentamer and gB antigens as our CMV vaccine dose will be additive to the vaccine's efficacy. As a reminder, our CMV vaccine mRNA-1647 is wholly owned by us. Let me transition it to Stéphane to talk about our new development candidates.

Thank you, Tal. I want to start by introducing three development candidates in our prophylactic vaccine modality that we've recently announced earlier this month. The first to begin is the Epstein-Barr virus. And just want to pause for a moment and give you an overview of the disease. EBV is a member of the herpes family that includes CMV and it spreads through bodily fluids, mostly in the young children and adolescents. EBV is a major cause of a wide range of diseases, but is the leading cause of infectious mononucleosis in the United States, accounting for almost 1 million cases annually. Infectious mononucleosis can debilitate patients for weeks to months and, in rare cases, can lead to hospitalization and even splenic rupture. EBV infection is also associated with a range of other disorders, including lymphoproliferative disorders, cancers, and autoimmune diseases. For instance, it is associated with a significant increase in risk of multiple sclerosis. There are currently no approved vaccines for EBV. So our vaccine candidate mRNA-1189 is designed to provide broad protection against EBV infection and infectious mononucleosis. EBV has a number of surface proteins on its envelope, including gp350, a trimeric complex of gp42/gH/gL, a dimeric complex, and also gB. All of those antigens are important for infecting a range of different cell types, particularly B-cells and epithelial cells. Now, vaccination against only one of those antigens, gp350, provides only partial B-cell protection and reduces the rate of infection in a prior study by up to 78%, but it does not prevent the rate of infection. We believe that the combination of multiple antigens, gp350 plus antigens for gp42/gH/gL and gb, will provide an opportunity for broader protection both of B-cells and epithelial cells, very analogous to our approach with a cytomegalovirus vaccine. Now we estimate that the opportunity is quite substantial. Worldwide direct costs of EBV linked infectious mononucleosis reach almost $500 million annually, and the indirect costs could exceed $1 billion. But prevention of EBV infection, in addition to the prevention of infectious mononucleosis, could represent a much more significant upside because of the associated increased risk in cancers and multiple sclerosis. These represent a long-term potential, but are not currently a focus of our current clinical development plan. Pivoting now to our second recently announced program, which is for respiratory syncytial virus in the pediatric population. I want to pause and provide a little bit of an overview of the disease again. RSV is the leading cause of unaddressed severe lower respiratory tract disease and hospitalization in infants and young children worldwide. It's a major cause of hospitalization in this country, accounting for up to 86,000 hospitalizations a year and over 2 million medically attended RSV infections in children under the age of five. Globally, the burden of disease is even more substantial, with over 30 million episodes of acute lower respiratory tract infection annually. We estimate that the direct cost associated with pediatric RSV disease in children under the age of five exceeds $2 billion annually. So our target population for this vaccine is the young under the age of five, children for respiratory syncytial virus. There is currently no approved RSV vaccine in that population. Our candidate mRNA-1345 encodes for a stabilized prefusion F glycoprotein, analogous to our other efforts in RSV vaccines. mRNA-1345 will use the same proprietary lipid nanoparticle as our hMPV/PIV3 vaccine, mRNA-1653, as well as the CMV vaccine that Tal just described. We believe that neutralizing antibodies elicited by 1345 will lead to a reduction of medically attended RSV disease in the very young. And while that's exciting, we actually intend to combine 1345 with mRNA-1653 to create a combination pediatric vaccine, a respiratory vaccine, which will address over 3 million medically attended lower respiratory tract and upper respiratory tract infections annually in the U.S. alone. That combination of mRNA-1345 and 1653 would represent a significant opportunity to address unmet needs. The current plan is to develop 1345 and 1653 independently in the near-term through their initial clinical studies. But we would combine them prior to registrational studies and ultimately advance a joint product. Now the third vaccine that we announced earlier this month is our mRNA vaccine against the SARS-CoV-2 virus, recently named the novel coronavirus that's associated with COVID-19 disease. mRNA-1273 is an mRNA vaccine that encodes for a prefusion stabilized form of the Spike protein of that novel coronavirus that had been selected by Moderna in collaboration with the National Institute of Allergy and Infectious Diseases and the Vaccine Research Center, which are both part of the NIH. The first clinical batch for our Phase 1, including finishing and filling of vials, was completed on February 7th and earlier this week that was shipped to the NIH for the Phase 1 study. NIAID will conduct that Phase 1 study under their own IND in the near-term. Now pivoting to our second core modality, earlier this year, we did announce two additional programs in the autoimmune therapeutic area in our systemic secreted & cell surface therapeutics. As we described them at JP Morgan, I won't go into great detail, but to briefly recap them here. IL-2, our IL-2 program mRNA-6231 encodes for a long-acting, tolerizing IL-2. As you can see in the lower right-hand corner on this page, we've demonstrated in a non-human primate that a single subcutaneous injection of mRNA-6231 can lead to a substantial increase in T reg cells without increasing activated cells. That provides an opportunity to reestablish immune balance across it that might be relevant for a wide range of autoimmune diseases. There are a number of different recombinant IL-2 base therapeutics that have shown potential, and we will be advancing this program into the clinic in the near term. The second program we announced earlier this year with PD-L1, mRNA-6981. It's an mRNA-encoded PD-L1 to send a tolerizing signal to immune cells. In this case, we are expressing PD-L1 on the myeloid antigen-presenting cell. The purpose of that is to drive a tolerogenic phenotype, a reestablishment of immune homeostasis in effector cells, including T cells and B cells. mRNA-6981 will be administered via IV infusion using the same LNP as our mRNA-encoded antibody, mRNA-1944, that had previously been described. In preclinical disease models across a wide range of autoimmune conditions, we've demonstrated the ability to modify the disease. As you can see in the lower right-hand corner, one example, which is collagen-induced arthritis. The first indication in which we're going to be bringing the PD-L1 program forward is an autoimmune hepatitis, a disease we see a compelling unmet need. Now with that, I'll turn it back over to Tal to talk about our other work in the exploratory modalities.

Thank you, Stephen. Let me just briefly review these modalities that we consider exploratory, but obviously make up a significant part of what we do in clinical research and give you a sense of where we are in the prosecution of these programs. Starting with the cancer vaccines, our personalized cancer vaccine mRNA-4157 is in a randomized Phase 2 trial for the treatment of adjuvant melanoma. The combination of PCV with KEYTRUDA against KEYTRUDA alone is recruiting well. KRAS vaccine mRNA-5671 is an ongoing Phase 1 study, and this one is led by Merck and it has a monotherapy as well as a combination with KEYTRUDA arm. Our intratumoral immuno-oncology therapeutics, we have three programs in this modality. All of them are in combination with PD-1 inhibitors. Dosing of patients is ongoing and I look forward to the future to being able to demonstrate whether the ability to influence the immune system in this manner will be helpful to these patients. On the regenerative therapeutics modality, AstraZeneca is conducting a Phase 2a in patients with our mRNA that encodes for vascular endothelial growth factor. That study continues to enroll. In the systemic intracellular therapeutics, we have two INDs open now in both MMA and PA methylmalonic acidemia and propionic acidemia. We are pleased to announce that the first patient in MMA has enrolled in this trial. They’re in the observation period right now. This trial is now open at seven institutions in the United States, and we're continuing to look for additional patients to enroll while we follow this first patient closely. With that, let me turn it over to Lorence to describe the rest of our pipeline and where we go from here.

Thank you, Tal. So on Slide 29, you see a graphic that represents our whole development pipeline as it stands today. First and foremost, we're focused on the investment and execution around this development pipeline. There are three significant things from us today around the CMV vaccine, where the Phase 3 preparation is very much underway. You’ve had the Phase 2 enrollment for that. The CMV vaccine is ahead of schedule and, importantly, the Phase 1 of MMA has enrolled its first subject. So we're really focused on executing across the entire breadth of the pipeline. The other key thing you heard today is that the preclinical programs continue to grow. In the first two months of the year, we announced five new development candidates. This is indicative of the productivity that we expect out of the research platform. If you will flip through the next slide, it's a robust list of clinical data, next steps across the pipeline. If you scan the page, you'll see a lot of readouts coming in the near term. We've got a readout for the CMV Phase 2 with a 3-month interim analysis in the third quarter of this year and a Phase 3 start in 2021. The rest of the vaccines you'll see a number of additional Phase 1 readouts that we would expect to occur, as well as advancements of these newly nominated development candidates toward the clinic. If you look at the next category of systemic secreted therapeutics or antibodies against Chikungunya will continue to progress through further development of a dose cohort and will continue to advance preclinical work towards IND filings. And you just heard from Tal that the rest of our programs will be progressively moving forward here towards clinical data. On Slide 31, in today’s press release, we report our fourth quarter and full year 2019 financial results. Please note these results are unaudited as of this call. We will be filing audited financials shortly with the 10-K. We ended 2019 with cash, cash equivalents, and investments of $1.26 billion. This compares to $1.69 billion at the end of 2018. Net cash used in operating activities was $459 million for 2019 compared to $331 million in 2018. Cash used for purchases of property and equipment was $32 million for 2019, a significant drop versus $106 million in 2018. We placed our Norwood Moderna Technology Center Manufacturing Facility into service in mid-2018. Revenues for Q4 2019 were $14 million compared to $35 million for Q4 2018. For the full year, revenue was $60 million compared to $135 million in 2018. I recall that in January 2019 we adopted the mandated revenue recognition standard ASC 606 using a modified retrospective transition method applied to those contracts that weren't completed as of January 1, 2019. So the decreases in revenue are largely attributable to the adoption of this new revenue standard together with the completion of the initial 4-year research period under the 2016 work agreement. Total revenue under the previous revenue recognition standard would have been $15 million for Q4 2019 and $95 million for the full-year 2019. R&D expenses for Q4 2019 were $119 million compared to $150 million for Q4 2018, and for the full-year 2019 R&D dollars were $496 million compared to $454 million in 2018. The decrease in Q4 was mainly due to a decrease in our in-licensing payments to Cellscript and its affiliates and a reduction of our lab supplies and materials. The increase for the full year 2019 was mainly driven by an increase in personnel-related costs, including stock-based compensation, driven by an increase in the number of employees as well as higher clinical trial and manufacturing costs. G&A expenses for Q4 were $26 million compared to $38 million in Q4 2018, and for the full year, G&A expenses were $110 million compared to $94 million in 2018. The decrease in Q4 was primarily driven by a decrease in stock-based compensation, mainly attributable to certain performance-based equity awards with vesting or commencement contingent on the IPO in 2018, and the increase for the full year 2019 was mainly due to the additional costs of operating as a publicly traded company, including increases in insurance, consulting and outside services, and facility costs. On the next slide, we show the progression of selected cash flow line items, namely our net cash used in operating activities and our purchases of property and equipment. The table shows you our GAAP results by period with a total operating cash flow plus PP&E. I'd point you primarily to the bar chart, which shows the quarter-by-quarter progression of this metric and you'll see that our cash shows a steady reduction through 2019. I would note that Q1 contained the impact of the last of the three licensing milestone payments we owe Cellscript, which is $22 million. I don't expect this downward trend to continue to decline quarterly in 2020, but for the full year you can see how we ended up overall flat versus 2019 when we thought about expectations even with the advancement of our pipeline through the clinic. And so the result will reiterate our guidance for 2020, which is that net cash used in operating activities and purchases of PP&E will total between $490 million and $510 million. That approximate $500 million in cash investment into our business is put in the context in the next slide versus the cash that's available to us for investment. Here you see our year-end cash balance of $1.26 billion, and on top of that is the net proceeds of approximately $550 million from our equity offering, which includes the exercise of the underwriters' option to purchase additional shares that we anticipate to close later today. And then as we've mentioned before, we have approximately $185 million in potential future grants available to us as well. And so these amounts sum up to $2 billion in available cash, which we expect to invest in our business, representing a significant cash runway of multiple years. I will now hand it back to Stéphane to close.

Thank you, Lorence, Tal, and Stephen. On Slide 35, you can see a bit on Moderna's priorities. Our company has never been stronger. Our pipeline is preparing for CMV Phase 3, medicines in Phase 2, and the Phase 1 trial is ongoing with 10 positive clinical readouts among our programs in development. We have seven vaccines where there are no approved vaccines on the market. Most of these vaccine candidates have multibillion-dollar annual peak sales opportunities. As I shared in our 2019 shareholder letter, we believe our innovative vaccines are going to become a very large business for Moderna, with long-term annuity-like opportunity and a high EBIT margin. We have five immuno-oncology drugs in the clinic and two autoimmune disease programs. The foundation of Moderna has never been stronger. Our clinical experience is now more than 1,700 healthy volunteers and patients. The team is strong, with more than 800 employees who care deeply about our mission and are proud of and energized by the progress. I would like to thank my entire team. I would like to extend a special thank you to those who made the coronavirus vaccine from sequence to shipping to NIH for Phase 1 dosing in only 42 days. We’re proud to be included with many companies working on the possible response to this continuing global health emergency. Our fully digital, fully integrated facility enables the execution of a pipeline, all the way from raw materials to finished vials ready to ship to the clinic. We have great partners with AZ, Merck, Vertex, Defense, DARPA, BARDA, CEPI, and the Gates Foundation. As we said on November quarterly call, we are working on expanding that network of partners as we speak. With the financing of our grand capital and our cash balance, we are in a fortunate position to invest up to $2 billion towards building the leading mRNA company. We are thankful to our investors for their trust and partnership as we build this unique company. For 2020, our priorities are very clear. Priority number one is to execute on our development pipeline with a special focus on the CMV Phase 2 restart. Priority number two is to create a new development candidate in the two core modalities. We have already had five in the last two months only. Priority number three is to develop new candidates in new modalities. Stay tuned here. As a reminder, these are the events we are hosting for analysts and investors in 2020. First, Manufacturing and Digital Day is next week on Wednesday at our Norwood facility in Massachusetts. A webcast will be available on our website. Juan Andres and his team will share many new insights, including how the team delivered the coronavirus vaccine in 42 days from sequence to shipping. Marcio Damiani and his team will share the progress since opening Norwood in July 2018 on the digital front, including use cases of artificial intelligence and machine learning. We hope to see as many of you as possible for our first Vaccines Day in New York City on April 14 for a deep dive into the mRNA vaccine modality. We'll discuss some of our clinical data, business model, how we think about value creation, capital allocation, and probability of success of mRNA vaccines. In June, we look forward to hosting our first Science Day to share with you the many progress the team has made on mRNA science and delivery. In September, we'd also like to welcome you for our fourth R&D Day, where, as usual, in New York, we'll review in detail clinical data. As I said in my introduction, Moderna is entering a new phase of its development as a company. Our goals are clear. One, file multiple BLAs and launch multiple medicines that we own commercially. Two, continue to explore modalities in the clinic and invest in science. We have two core modalities and are now laser-focused on filing multiple BLAs and then scaling models to maximize the impact on patients. We are continuing to realize our vision. We have got 12 innovative medicines currently in the clinic. We are only just getting started. mRNA is an information molecule. Because of that, we believe that the probability of technical success for our medicines from the lab to approval will be much earlier than that of traditional medicines. Speed. Our track record speaks louder than words. The coronavirus vaccine went from sequence to shipping, clinical grade product, in 42 days. Evidence of greater capital efficiency relative to traditional recombinant technology is becoming apparent. We can explore new DCs like EBV and pediatric RSV without additional capital investment. I’ve never been more optimistic about Moderna's future and potential since joining as employee number 2 in 2011. I believe mRNA is going to be a new class of medicines and I believe Moderna is the leading company in that field. With $2 billion to invest, a great team of scientists, our IP and the manufacturing site at Norwood, we will work to accelerate our leadership in the months and quarters to come. We are excited by the opportunity to bring forward a new class of medicines for patients. I would like to thank the great team of Moderna employees who are working hard every day and sometimes every week to make this vision a reality. I would like to thank the many people who participate in our clinical studies, including patients, healthy volunteers, and physicians. I would also like to recognize all our commercial partners who work with us and share our vision to deliver transformative medicines for patients. With that, we are now happy to take any questions.

Good morning. Thank you for taking my questions. I have two. First, regarding the coronavirus, could you provide a general update? It seems that the NIH needs to submit an IND before starting the clinical study. What is your current involvement in this, and are you taking any actions to increase manufacturing or for any other related steps? Second, about CMV, or specifically about MMA, can you share how enrollment is progressing for additional patients? What factors contributed to enrolling the first patient? Do you believe there is potential for quickly enrolling more patients? Thank you.

Thanks, Mike. This is Tal. Let me take both of these questions. As it relates to coronavirus, our part here was to manufacture and ship it. I think the trial now will be run by the NIH, and I defer to them to provide updates when they will. You asked about scale-up. I think we're looking at everything that it would take to actually get it done, but we'll update everybody once we have a clear picture of that. Obviously, this is a rapidly changing environment. On MMA enrollment, so right now, we've got one patient enrolled. We do not yet have the second and third, but we're actively working with sites to find them. The age barrier continues to be a difficult one. We only have to find the first three. And then we can go down in age. I am confident that we will eventually, but I continue to have a dialogue with the agency on trying to reduce that need so that enrollment can be unhooked from that. We can get into the age population where we believe the greatest unmet need potential for benefit is. So I'll update everybody as soon as we have progress in that field.

Thank you.

Thank you very much. Following up on Matt's question, could you remind us of the process for obtaining licensure for a bio threat or pandemic vaccine like the coronavirus? Also, regarding CMV, there has been significant progress across the board. What do you envision as the vaccination approach or schedule for women of childbearing age? Thank you.

Thanks, Ted. It's Tal. Let me take that. I think what it takes to get licensure is an evolving field. I mean, the pathway to licensure are well understood and they encompass everything from finding surrogates of protection to demonstrating efficacy. What is it going to take here? I don't think anybody knows. I think all options are currently open, but it's a rapidly evolving field. And you can imagine that there actually isn't yet a surrogate of protection because this is a very new virus. People are still working to develop those assays and models. I would give NIH a lot of credit for being at the forefront of that effort and working closely with them on these efforts. As it relates to the vaccination paradigm for CMV, I think the starting point here is clearly going to be in women of childbearing age. That's where you would anticipate the greatest benefit. I think the next phase is going to be to get into a broader population of adolescents because you want to start protection as early as possible, given that the disease we're trying to prevent is ultimately going to be infants born to women. So we're going to try and get down to that age group as we develop this vaccine.

Okay, great. Thank you very much.

Thanks for taking the question. It's Ross on for Salveen. Just quickly on coronavirus, what's the potential monetary opportunity here? Do you guys have any details around agreements with the NIH about funding to you guys? So just thinking about the monetary opportunity there for Moderna. And then on the Chikungunya antibody program, how much follow-up time exists since, like, the initial patient was first dosed and then since he received the second dose? Are you guys seeing any signs that they can meet the immune response? And then I have a follow-up.

It's Stéphane. I will talk about, first of all on corona, our focus as a team is public health. People are sick all over the planet. People are dying. Our only focus is to get a vaccine as fast as we can, safely, partnering with the right people to get it done.

Let me address your question about the Chikungunya monoclonal antibody. The information is still developing. We are providing an update on our execution strategy for this. Once I have a complete understanding of the dataset, I will certainly share updates with everyone.

Great. And then just lastly, outside of the Phase 2 CMV update in 3Q, what programs are you expecting to have data this year?

We don't provide specific timing on various milestones. I would direct you to the slide that shows the catalyst calendar and clinical data calendar we mentioned. This list of events includes data readouts and advancements of programs that outline all the next steps. Some of these are quite far along. For example, the phase one vaccine studies for RSV and Zika have been ongoing since last year. In other cases, you'll remember that the Chikungunya antibody program is a relatively small study in healthy volunteers. However, we are committed to advancing all these programs as quickly as possible towards data.

Great. Thanks.

Hey, guys. This is Alec on for Jeff. Thanks for taking our questions. Two questions for me. My first is on your PCV program and I guess the KRAS vaccine as well. Have you guys seen any updated data from these studies, including the ongoing Phase 1 for the PCV since ASCO? Just trying to get a sense of why this modality hasn't made the cut for your core franchises, given it's one of the more advanced in terms of clinical development? And then I've got one more.

Thanks, Alec. It's Tal. Regarding the personalized cancer vaccine, we're in Phase 1. Data is still coming in, and once we have a complete dataset, we will share it. As for why we don't view this as core, we consider core to mean that we have the necessary pharmacology to believe it will lead to clinical benefits. This is true for the vaccines, and it's also the case for the secreted and surface protein expression, as these can allow the monoclonal antibody to achieve therapeutic levels of a protein. That's why we categorize it as core. In oncology, until there's clear evidence that the pharmacology, specifically in immunology and T cell immunology, translates into clinical benefits for patients, it's difficult for me to classify it as core.

Got it. That's very helpful. Thanks. And then secondly, do you have any updates on the CF partnership with Vertex? We've seen Vertex partner with some other gene therapy approaches from CRISPR Therapeutics and others. Any color you can give on this partnership would be great. Thanks.

You know, we don't generally comment on research. We continue to work with Vertex; we're pleased to be working with them in the CFTR space, but we don't have any updates at this time.

Good morning, guys. Thank you for taking my questions. Two of them for you. First is another one on coronavirus. Thinking a little bit further out, just curious what kind of manufacturing capacity you anticipate having, say, looking out to 2021, should you need to manufacture mRNA-1273 for coronavirus? And then secondly, for the CMV program. I mean, could you broadly talk about what a win would look like in that interim update for the Phase 2 we will get in 3Q? Is this more or less looking to replicate the Phase 1 results in a larger group of patients or other nuances we should be thinking about? Thanks.

So, Cory, good morning. It's Stéphane. I will take the first one on manufacturing capacity. I think the answer is just too early to know precisely. First, we don’t have those, then fill finish, there's Norwood CMO capacity at new sites. So just way too early to comment on that. But we’re working out to get as much as we can.

Hi, Corey, it's Tal. Let me answer your question on CMV Phase 2. So I think, in a nutshell, the goal here is, as you say, to replicate what we saw in the Phase 1, but I’d like to be able to do that, of course, in the larger data set, so that our confidence in picking the right dose for Phase 3 is there. That has to do both with replicating the nice immunogenicity that we've seen but also being able to plan a clear flag on what we expect in terms of the safety and tolerability profile, that would enable us to go into the Phase 3 trial.

Okay. Thank you.

Thank you. I have a question regarding CMV. With the Phase 2 results expected in the third quarter and the initiation of Phase 3, could you elaborate on how you might accelerate the timeline to market? I understand much of this hinges on the Phase 2 results, but could you provide an estimate for when the Phase 3 results could be available and whether you anticipate being on the market by 2024, 2025, or 2026? Additionally, you mentioned a $5 billion opportunity, which seems quite possible as you expand immunity. Could you outline the patient populations you aim to target with the vaccine to reach the upper end of that range? Thank you.

Hi, Hartaj. This is Tal. Let me start by answering the first question. The timeline for CMV, roughly speaking, once we get in, we anticipate fairly aggressively to be able to complete enrollment within 18 months. I anticipate the duration of the trial to be 2 years. Now, that still needs, of course, vetting with regulatory authorities, so I want to caveat that appropriately. Once we have 2 years on everybody on study, then it's a matter of analyzing, looking at the results and filing, and that's where I think the timelines are pretty well understood for what's achievable in our industry. So you can do the math from there.

Yes, Stéphane, I will address the second question regarding the $5 billion figure for CMV. There are several key factors. Firstly, as we outlined during our R&D Day in September, we need to secure indication approval for women of childbearing age as a preliminary step. Following that, we aim to achieve approval for adolescents, similar to what we did with the HPV GARDASIL vaccine. The next step is to target pediatric populations. As we mentioned, CMV presents a crucial public health opportunity for vaccinating newborns, significantly impacting both individual health and public health overall. Additionally, we must consider the competitive landscape; it's uncertain whether we'll be the sole provider for the next decade or face one to five competitors. I can provide updates on this matter as we continue to progress. Lastly, population growth in many emerging markets is noteworthy, as they are not only increasing in size but also in health expenditures.

Great. Thank you.

Hi, team. Thank you for taking my questions and thank you for the tremendous progress that you're making quarter-over-quarter. A few questions for you, all related to CMV. The first one is can you give us a little bit more color on how we think about how current the numbers are regarding infection rates? If there are differences between U.S. and Europe, how current they are as it guides you for powering assumptions in your Phase 3? And then a second question that was often that is, as you’re in a predominant part of being able to scale up and we’re going to learn more in manufacturing on March 4. Can you enlighten us on what aspects are unique when you're scaling up in mRNA therapeutics versus other RNA modalities? Just we have a little bit of color, do you want to give us here? Thank you for taking the questions.

Hi, Yasmeen. It's Tal. Let me take your first question. It's a great question and one that obviously keeps me up at night. I think the literature is out there in terms of incidence rates and infections. But it's clear from that literature that there is a high level of variability. And it's not just on a continental level, U.S. versus Europe; it's actually local geography, socio-economic status, and a lot of things that play into that. So how are we thinking about it in terms of designing the trial, which is obviously where your question is going? The goal here is to design both a large trial and a broad enough trial in terms of size and population, so that on average, we are able to hit the incidence rate that people have described. I'm pretty confident in the ballpark of where we are powering this study to be able to reach it. Finally, I would note that in the trial of this type, you have the ability to actually monitor the incidence in real time. So the only risk you're really taking if you're missing it is to follow subjects for longer and catch up on cases.

Good morning, Yasmeen. It's Stéphane. On the manufacturing process and why mRNA is such a powerful molecule, I think a few things. The first is that it's a liquid-based process to make mRNA, which is cell-free. So that drives to a very small reactors compared to other technologies, especially when compared to recombinant technology. This represents a significant change compared to the size of our reactors, which has a big impact on your CapEx, including all your purification technologies because you have fewer details in comparison. Everything is much cheaper across the board. As we talked about in the past, because mRNA is a new formation molecule, it is the same process for Zika, for CMV, or for coronavirus. That drives incredible flexibility and quick time to clinic because we do not have to invent the process for every vaccine or every molecule. As the team has shown in the last two weeks with coronavirus, if we had traditional technologies, we would still be working on it. Instead, we were able to optimize slightly for a very large molecule that is mRNA and proceed directly to production. The time to make mRNA is days, not weeks. When you think about that, we can use assets and once you make with determinants you can basically change with this possible equipment use and use the same room or the same team to produce another product. By delivering in a few days for mRNA versus a few weeks to make components before going to fill, this is a massive utilization of your capital infrastructure in terms of CapEx turnover.

Thank you, team, and look forward to seeing you in Boston.

Right.

Hi. Thanks for taking my questions. A couple of them. One of them is, can you clarify between your exploratory and core modalities? Does this mean that you don't plan to add any more new programs to your exploratory until they become core? And then also around RSV, 1345 versus 1172, how are they different and how does this fall outside of the agreement that you already have with Merck around RSV? And the last thing is, can you go over your overall manufacturing capacity at the Norwood facility right now across all programs, the total capacity? And without regard to coronavirus, what were your long-term plans in terms of your needs for capacity, in terms of adding manufacturing capacity in the long-term? Thanks. As you go commercial.

Good. Thanks for those three questions. Let me take the first one on exploratory and core. Yes, if you go back to the strategy we started with six modalities in the clinic to manage the unknown unknown risks. Because of the exciting opportunity to create a new class of medicine, we are very focused on managing the unknown technology risk. We explored those six technology modalities in parallel. We could learn from the clinic where to invest more. mRNA is a new formation molecule making it a platform. We wanted to fix science or stop investing in that opportunity, and we want to deploy our capital wisely, where we know the technology works. That was the premise as we started. With the data we've gathered from prophylactic vaccines and systemic therapeutics, we believe those are core, meaning we believe the technology risk is off the table. We want to deploy our capital to make innovative medicine that goes to the clinic, as it is the same technology, same manufacturing process than the ones that have positive clinical data. On the exploratory front, we want to be very cautious, and that has been our case for years; we will not invest more shareholder capital on more infrastructure, for example, we will do programs with those exploratory modalities. The answer is no right now. We want to see what we get from IL-12 and the triplet. However, just like we’ve done with those two modalities that migrated from exploratory to core in the last few months, if we get a signal, the team has a lot of ideas of what other things we could do. Of course, if we get positive signals, we will take those as fast as we can to BLA because those medicines will be needed for patients. Stephen, do you want to talk about RSV?

Yes. Just quickly on RSV. So, Alan, as you referenced, we have a partnership with Merck in respiratory syncytial virus, just a monotherapy vaccine. There are two candidates in Phase 1 study. V172 is the one currently being conducted, targeting the elderly, with a significant burden of disease in the elderly, 170,000 hospitalizations a year in this country. We're excited to work with Merck on that. We have a right in our agreements to conduct the development of an RSV vaccine towards a respiratory combination, and that has been our intent. That is separate from Merck's progress in RSV.

Thanks, Stephen. And last question on manufacturing capacity at Norwood. Our plan is to use Norwood for making development material and to launch our commercial product like CMV, Zika, and others from Norwood, to manage financing risks. We do not want to invest in large manufacturing capacity, commercial plants, until we have, of course, BLA approved, clearly for risk management. Our long-term vision is to have Norwood focus on development. We hope down the road we can scale the company with several commercial sites across the planet dedicated to commercial products. Based on our experience in previous pharmaceutical companies, we've seen that dedicated focus per site is essential for success. Development requires nimbleness, while commercial requires scale and efficiencies, which are two very different worlds. So that's our plan from pre-coronavirus. Post-coronavirus, in the last few weeks, I reverted to the same mindset I’ve shared with you, that we are looking at all options, both internally and externally, CMO partners, to ensure we develop the right plan going forward. When we have a better picture, we will share it.

Great. Thanks for taking my questions.

Well, thank you for your questions, especially thank you for your trust in our ability to make mRNA an important new class of medicines. We hope to see many of you next week in Norwood for what I believe will be an exciting Manufacturing and Digital Day. Thank you.