Analyst Conference Summary



conference date: Augutst 5, 2020 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2020 (second quarter, Q2 2020)

Forward-looking statements

Overview: Continues to develop clinical-stage pipeline, including the Covid vaccine.

Basic data (GAAP):

Revenue was $66 million, up sequentially from down from $8 million, and up from $13 million year-earlier. All revenue is from collaboration and grants.

Net income was negative $117 million, up sequentially from negative $124.2 million, and up from negative $135 million year-earlier.

EPS (diluted) was negative $0.31, up sequentially from negative $0.35, and up from negative $0.41 year-earlier.


Moderna expects 2020 net cash used in operating activities and for purchases of property and equipment to be between $0.65 to $0.85 billion; this includes approximately $400 million of customer deposits received as of July 31, 2020 for potential supply of mRNA-1273.

Conference Highlights:

Stephane Bancel, Moderna's CEO, said "The second quarter marked a new growth phase for Moderna as we started to build our commercial team, a historic moment for those of us who have worked at the company for many years since it was a breakthrough research enterprise. We would like to thank the entire Moderna team for their commitment to our mission of delivering on a new class of medicines for patients. In the second quarter, we began discussions with several countries for supply agreements for mRNA-1273 and as of July 31, we have received approximately $400 million of customer deposits for potential supply. As we pivot to a commercial stage company, we recognize the need for responsible pricing in the face of the pandemic. We look forward to continuing our progress as we prepare for the Phase 3 readout and the expected subsequent filing of our BLA." Most clinical trials remained on schedule despite the pandemic. Believes CMV vaccine could have annual sales of $2.5 billion [WM: but still in Phase 2]. Sounds like the earliest the BLA for mRNA-1273 could be filed is January 2020.

Moderna currently has 23 mRNA candidates, with 13 now in clinical studies. The goal of the next phase of development is to submit multiple BLAs to the FDA.

Given the investor excitement over Moderna, the press release and conference outlined the status of pretty much all of its clinical and preclinical programs.

Raised approximately $400 million of customer deposits as of July 31, 2020 for potential supply of mRNA-1273. In May 2020, Moderna raised $1.30 billion through a public equity offering. Moderna joined the NASDAQ-100 Index on July 20, 2020. Customer deposits for mRNA-1273 will be recorded as deferred revenue.

$28 million of revenue was from collaborations, $38 million from grants, but Moderna received much more in grants from the U.S. government that were not recorded as income.

Phase 3 study of mRNA-1273 is being conducted in collaboration with NIH and BARDA on track to complete enrollment in September 2020. Working on creating manufacturing capacity for one million doses per year, with a partner working on expanding that to 1 billion per year. Barda award (up to $483 million) for development is not cash up front, but will reimburse expenses. Has another $180 million in grant funding.

Cytomegalovirus (CMV) vaccine mRNA-1647 Phase 2 study enrollment is near completion, with interim data expected in Q3 2020. Positive 12-month interim results from Phase 1 study reported in Q2 2020. 25,000 newborns infected in US each year, has proven difficult to vaccinate against. 6 RNA sequences are included in 1647. Estimates annual peak sales would be $2 to $5 billion if the vaccine is approved and adopted globally.

Three new vaccines were announced in February 2020: mRNA-1345 for pediatric RSV; mRNA-1189 for EBV; and mRNA-1273 for SARS-CoV-2.

The OX40L (mRNA-2416) Phase 2 expansion cohort in ovarian cancer will focus only on the combination with durvalumab (Imfinzi). Interim Phase 1/2 data was positive, as reported at AACR.

The collaboration with Vertex for cystic fibrosis was extended through August 2021.

In 2019 the first participant was dosed in Phase 1b age de-escalation study of hMPV+PIV3 vaccine (mRNA-1653). This is a Phase 1b study of pediatric subjects protect against human Metapneumovirus (hMPV) and Parainfluenza Virus Type 3 (PIV3).

Moderna's follow-on Zika vaccine candidate, mRNA-1893, continues to progress toward an IND filing. The FDA granted Fast Track designation for this Zika vaccine.In Q1 2020 positive interim results announced from Phase 1 Zika vaccine candidate (mRNA-1893) study.

The randomized Phase 2 study to assess whether post-operative adjuvant therapy with mRNA-4157, in combination with Merck's Keytruda, improves recurrence-free survival in adjuvant cutaneous melanoma compared to Keytruda alone continues. The Phase 2 patients are at 34 neoantigens, more than the Phase 1 trial used.

The Phase 1 KRAS cancer vaccine (mRNA-5671 or Merck V941) study continues. About 20% of human cancers are driven by mutated KRAS. 5671 codes for the most common mutations.

The Phase 1 study of mRNA encoding IL12 (MEDI1191) injected intratumorally continues. Collaborator is AstraZeneca

mRNA-3927 for PA, is paused for the open-label, multi-center Phase 1/2 study of multiple ascending doses of mRNA-3927 in pediatric patients with PA in the U.S.

AZD8601 is in an ongoing Phase 2a study led by AstraZeneca.

First patient enrolled in Phase 1/2 MMA (mRNA-3704) study; actively recruiting patients at U.S. sites following a protocol amendment expanding the first cohort eligibility criteria to patients 8 years and older. The FDA previously granted Fast Track designation for mRNA-3704 for MMA (Methylmalonic Acidemia).

Cash ended the quarter at $3.0 billion, up sequentially from $1.72 billion. $130 million cash used in operating activities. $25 million used for cap ex. Cash infusion was from $75 million of the government grants for coronavirus vaccine development and a $1.3 billion stock issuance.

Operating expense (GAAP) of $188 millon consisted of $152 million for R&D and $37 million for SG&A. Operating income was negative $122 million. $7 million interest income; $2 million other expense. Income tax $0 million.

Q&A summary:

Vaccine inventory so far? Not sharing numbers. But making commercial product and stockpiling it. Capacity in 2021 should be 500 million doses per year, but looking for a path to 1 billion doses in 2021.

FDA panel for vaccines in October, real time reviews? We can't comment on media reports. We work closely with the FDA to give them visibility to data as it emerges. The Phase 3 has interim analyses, happy to see proactive FDA.

Assumed infection rates? It is hard to build the assumptions, it correlates to the number of cases for the interim, which is 50 to 100. When we set up the trial we took a cross-country average, but rates have gone up since then.

In pricing, for small v. large volume, what is the break point? Not a precise cutoff. Small is probably less than one million.

Comparing assays to competitors? The assays have not been standardized, but they do correlate with each other pretty well. There is no standard for what convalescent plasma is. Our data is pretty robust, but other vaccines seem to be close to that. Ultimately, it depends on Phase 3 results. We believe our data is as good or better than anything that any competitor has shown.

Phase 3 primary endpoint, how do you count infections? It is just the number of cases and split of cases, definition is symptomatic disease.

Phase 2 data update? Do not expect data on convalescent plasma.

How can you price higher than others who have agreed to lower prices? There are many factors going into a pricing agreement. Efficacy may differ. Volume is a factor. Time of payment vs. assumption of risk. We have signed agreements at $32 to $34.

Adverse events? People may figure out whether they have placebo or active. Should not affect reporting of symptoms. Flu like symptoms can come from the vaccine, in the first few days after injection. Will do objective measures on both arms at the same time points.

T cell response importance? Not sure T cells are important to cure covid, but they are an indicator of antibody. The best predictor is if there is a boost after a reintroduction. T cells are an adjunct, the protection is from antibodies. For cancer T cells are very important, we look for that in our cancer therapies.

An important question for efficacy is how it does with the elderly and different ethnic groups. Duration of protection too. We believe it will be an endemic market once the pandemic is over.

CMV timeline? Phase 3 trial should follow particpants for a couple of years, on track to start next year, after Phase 2 data and FDA interaction. We are looking at women of childbearing age, not prevention for babies.

Cystic fibrosis? Vertex is expanding the collaboration. The challenge is in delivery to the lung. Vertex determines data readout timing.

Why don't neutralizing antibodies appear until after the second injection? It is interesting, it is basic immunology. If your immune system thinks it can clear an infection easily, it does not try hard. After the first dose, if infected, you should see some benefit that prevents the more severe manifestations of the disease. We should see some cases like that in the Phase 3 trial. Antibodies over time do not correspond to immune response, that is based more on immune memory mechanisms.

Your talk about T cells, that was for cancer. You did not report T cell activation in your primate or human studies so far? Correct.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2020 William P. Meyers