Good morning, and welcome to Moderna's First Quarter 2020 Conference Call. At this time, all participants are in a listen only mode. If you are part of the press or media, please disconnect at this time. Following the formal remarks, we will open the call up for your questions. Please be advised that the call is being recorded.
At this time, I would like to turn the call over to Lavina Saluddar, Salukdar, Head of Investor Relations at Moderna. Please proceed. Thank you, operator. Good morning, everyone. Welcome to Moderna's conference call to discuss our Q1 2020 business updates 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 Stephane Bancel, our CEO Al Dachs, our CMO Stephen Ho, our President and Morris Kim, our CFO. Before we begin, please note 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.
With that, I will now turn the call over to Stephane.
Thank you, Lavinia, and good morning or good afternoon, everyone. Thank you for joining the call. I hope you and your families are in good health. As you know, we believe mRNA has a potential to be a new class of medicines with the opportunity to address many unmet medical needs with medicines with higher probability of technical success, with greater speed of research and clinical development versus traditional medicines and with greater manufacturing capital efficiency and lower cost of goods than injectable recombinants. Given the end ons of working with a new technology, we have been laser focused on managing risk: technology risk, biology risk, execution risk and financing risk.
As many of you know, 2019 was an important inflection year for Moderna. We reported clinically validating data from key programs in 2 of our modalities, prophylactic vaccines and systemic secreted and cell surface therapeutics. Data that we believe fundamentally change the risk profile for which of these 2 modalities that we now call modalities. As a result, our strategy is to double down in these 2 core modalities with many important new development candidates. We have already announced 5 new development candidates in these core modalities since January 13 at the JPMorgan Conference.
3 new development candidates in infectious disease prophylactic vaccines and 2 in the systemic secreted and Telsofa's biophysics modality. While we focus on doubling down income modalities, we are still very interested in understanding the potential of mRNA technology in our current exploratory modalities: cancer vaccines, intratumoral immune oncology, localized regenerative therapeutics and systemic intracellular therapeutics. So when we think about the company, we basically have 2 distinct areas of focus. This is a significant point in our strategy. We have core modalities where we want to scale and invest, thanks to exploratory modalities that's going to be a big driver for the company's future as we await clinical data to decide the path forward.
So stepping back, I would like to share with you the progress of the company toward a new class of medicines. This is a strategic plan that we shared with you in February 2020. In the early days of the company, our goal was to enter the clinic safely. We spent years investing and developing mRNA science, formulation delivery and manufacturing technologies. The company pivoted out of that growth phase when we entered the clinic with our H10 influencer vaccine in December 2015.
In the clinic, our next goal was to learn how our technology was working or not. We explored our technology across 6 different modalities. We tested 16 different molecules in the clinic in a short 4 year period. In 2019, we generated important data in 2 of these 6 modalities and identified of just 2 core modalities, infectious disease prophylactic vaccines and systemic secreted and self suprase therapeutics. Early in the year, we entered a new phase of the company's development.
Our goal for this next phase in our history is to file multiple BLAs, while continuing our clinical programs in the 4 exploratory modalities and continue to invest aggressively in early research to invent new modalities such as our ongoing collaboration with Vertex. When we first presented this plan in early February this year, we had imagined that the next phase of growth of the company will have taken us 3 to 4 years. Our vaccine against SARS CoV-two virus, mRNA-twelve seventy three, is a major acceleration of our company's development. Today, we are very happy to announce that we received yesterday clearance from the FDA to proceed with the Phase 2. It's just 9 days from filing our IND on Monday April 27, the FDA gave us a green light.
We intend to start the clinical trial as soon as safely possible. We also announced this morning that we are finalizing the Phase III protocol and our aim is to start dosing the Phase III in early summer 2020. This means that we have a potential for a BLA approval for mRNA-twelve seventy three in 2021. That is an acceleration of several years versus the plan we had just months ago. Monash should be a commercial company edge will be a commercial stage company in 2021.
That is 2 to 3 years ahead of previous plans, plans we outlined just months ago. This is a unique opportunity, so we are working actively to get the company ready. To deliver on this acceleration of the company's plan, we're expanding our leadership team in areas where their expertise will be instrumental to allow us to successfully file several BLAs and be ready commercially. Today, we are announcing 3 new additions to the leadership roles of Moderna. First, Patrick Bestop, Patrick Jones Moderna as Senior Vice President, Commercial Vaccines.
Patrick will report to me. Patrick Jones from Merck and Company, where he most recently was Head of Global Marketing and Commercial Operation for the entire vaccine business at Merck. Patrick will start on June 1. Patrick led global initiatives with a focus on revenue growth and access expansion. With 20 plus year veteran in the biopharma industry, that Ruger has had various leadership positions within the infectious disease and global health at Merck in the U.
S, in Europe, but also in Asia. 2nd, Jackie Miller, Doctor. Jackie Miller. Jackie will be joining Moderna on May 11 from GS Care as Senior Vice President, Infectious Disease Development. Jacqui joins the company from GS where she held a variety of leadership roles since 2,005.
Most recently, Jacqui was our Vice President and Head, Clinical R&D and Epidemiology, where she built and led the clinical and epidemiology research team as the 1st ZSK vaccine research and development center in the U. S. And 3rd, Doctor. Charbel Haber. Charbel joined Moderna on April 21st as Senior Vice President Regulatory Affairs.
Charbel Jason from Biogen, where he served as Vice President Global Safety and Regulatory Science since 2017. In this role, he built and led the Global Regulatory Strategy Department, the Clinical Trial Application Group the Medical Writing Groups. Prior to Biogen, Doctor. Haver was Head of Global Regulatory Affairs for Immunology and Neurology at EMD Serono. I am very excited to welcome Patrick, Jackie and Charbel and look forward to their contribution at Modena as we embark on the commercial stage phase of our companies.
It is a bittersweet moment to announce today the departure from the company of Doctor. Laurence Kim, our Chief Financial Officer. Laurence joined the company in 2014 when the company was private. As some of you remember, it was a preclinical stage company with 0 development candidates. Laurent took a chance on Stephen, Roark and I and decided to leave a great deal by government tax to join us.
The company is now public with 23 development candidates and preparing its 1st Phase 3. Laurence will manage with us for a smooth transition. He will do more than a second quarter conference call in August with us before leaving the company. I am very thankful for Laurent's contribution over the years and for the constructive discussion he and I had about ensuring a smooth transition. There is never a good time for leadership transitions, but the company is very well capitalized with around $2,400,000,000 of capital to invest to create value, and we need to focus on the next phase, readiness, for the company to be commercial.
We have retained Russell Reynolds for the search for modern and next CFO. We will focus on the CFO, we have public company and commercial and global operation experience, given this is where Moderna is heading. Before I hand over to Tal for clinical updates, I want to take a few minutes to frame the opportunity in our vaccine modality. We believe mRNA has a potential to be a new class of vaccines, where each of the 4 drivers of value apply. We are very excited about the potential of our vaccines to drive this value.
First, as we discussed, a very large opportunity, the ability to do 1st in class vaccines that do not have products on the market today to protect as many people as we can. 2nd, a relatively high probability of technical success. As we discuss about vaccines there, Doctor. Andrew Lo from MIT has shown that from the start of a Phase II, I. E.
Positive Phase I to approval, vaccines at 42% probability of approval. This is the highest probability amongst all categories of medicine in clinical trial. We think this is a very important value driver for this franchise. 3rd, we think an important driver is speed. Speed in the labs, given we have a platform, we can study many candidates in parallel in preclinical setting.
Once we pick a development candidate to take into the clinic, we can do it very quickly as we have shown recently with SARS CoV-two vaccine. Going from design of a vaccine on January 13 to injecting the first human on March 16 in as little as 63 days. Finally, we believe the capital efficiency of our platform offers significant advantages over traditional vaccines. Because the manufacturing process to make mRNA molecule is a self pre manufacturing process, it can drive much lower CapEx, especially for convenient protein manufacturing. The second dimension is a CapEx leverage across value chain.
For example, when we tried to go after SARS CoV-two, we did not have to buy any new machine. Our team was able to leverage existing CapEx in a matter of days. With that overview, let me now turn over to Tal.
Tal? Thank you, Stefan, and good morning, everyone. I'll start with a quick reminder on the data generated to date with our vaccines. In over 1500 healthy volunteers and seven positive Phase I data sets to date, we have observed a safety profile that's consistent with the safety of adjuvanted vaccines. And we've time and again demonstrated the ability to elicit an immune response in the form of neutralizing antibodies.
I'll start with a high level progress on mRNA-twelve seventy three, our vaccines against SARS CoV-two, and we'll give more detail shortly. As you heard from Stephane earlier, we have the FDA clearance to move into our Phase II study, and we plan to start it shortly. This study will run-in parallel with the NIH run Phase I study, which has completed enrollment of the first three dose cohorts. Our CMV Phase 2 dose confirmation study is fully enrolled, and we still expect data readout to come in the Q3 of this year. Despite having had some COVID-nineteen related disruptions.
At our Vaccines Day on April 14, we announced positive interim analysis of our Phase 1 study for our Zika vaccine. At the 2 lower doses of 10 microgram and 30 microgram, we achieved seroconversion rates of 94% and 100%, respectively. The 2 higher dose cohorts of 100 microgram and 2 50 microgram are now fully enrolled. As a reminder, we paused our hMPV PIV3 Phase Ib study enrollment as a cautionary measure to protect children and their caregivers due to COVID-nineteen disruptions. Our RSV program with Merck continues.
So this has been covered in detail, but just to quickly take everybody in the same place. Our SARS CoV-two vaccine mRNA-twelve seventy three, which a subject of much work in discussion in the Q1 of this year, demonstrates the kind of speed that we believe the platform can provide from first selection of a sequence by our scientists and our collaborators at NIAID on January 13 to the production of a clinical batch on February 7, 25 days later. That had been released by February 24 and by March 4 was associated with an open IND that the NIH had filed. This strong collaboration between us and NIAID led to this the trial opening within 63 days, and we've spoken about this before. On April 17, we were awarded a contract from the U.
S. Government agency, BARDA, to accelerate the development. And on April 27, we announced an IND was submitted to the U. S. FDA for the Phase 2 study.
Last Friday, we announced a collaboration with Lonza to FDA clearance to start the Phase 2 part. In parallel, we have been working on the Phase 3 protocol, and we are finalizing that with a name to start the study in the summer of 2020. The design of the Phase I study is on Slide 17. The study started as a 45 subject trial with 3 dose cohorts, 25, 100 and 250 microgram, with each participant receiving 2 vaccinations a month apart. These three dose cohorts have now been fully enrolled and the safety and immunogenicity data from them will be shared when available.
The NIH is expanding the trial to include 2 additional age cohorts, a 56 to 70 year old cohort and a 71 and above age cohort. Each of these age cohorts will include 3 dose levels also at 25, 100 and 250 microgram at the same vaccination schedule. In terms of the late phase development for mRNA-twelve seventy three, as mentioned before, the Phase II study is expected to start shortly. This study will evaluate the safety, reactogenicity and immunogenicity of 2 vaccinations of mRNA-twelve seventy three given 1 month apart. Volunteers will receive either placebo 50 or 2 50 micrograms at both vaccinations.
This study will enroll 600 healthy participants in 2 cohorts of adults ages 18 to 55, 55 year old and above. The study is meant to both increase our safety database as well as confirm the immunogenicity seen in the Phase that we expect to see in the Phase I. We are finalizing, as I said, the Phase III protocol, and the study is expected to begin this summer. Last week, Moderna Landa announced its strategic collaboration with the goal to enable manufacturing of up to 1,000,000,000 doses a year and this is assuming a dose of 50 micrograms. Technology transfer is expected to begin this June and we anticipate the first batches of mRNA-twelve seventy three to be manufactured at Lonza's U.
S. Sites in July of this year. I would be remiss not to mention BARDA's role in this. The BARDA award is allowing us to move as quickly as we are with scale up both internally and with Lonza. Moving on to CMV, Slide 20 reviews our late stage development plans for CMV.
As previously announced, the Phase II dose confirmation study is fully enrolled and we remain on track for data readout in the Q3 of 2020. Importantly, greater than 70% of participants have now received their second vaccine dose. A protocol amendment was submitted to expand the timeframe for the remaining participants to receive their second dose as well. As a reminder, we plan to select the dose for the Phase 3 after the first interim analysis, which is the data post the second vaccination. We continue to prepare for the Phase III, which is intended to start in 2021 in the U.
S. And Europe. During the Q1 of 'twenty, we also received constructive feedback from the Type C CMC meeting that
we've had with the FDA.
Moving on to mRNA-eighteen ninety three, our Zika vaccine program. Let me recap on Slide 24 the data that we recently presented at our vaccines day where we reported an interim analysis of the ongoing Phase I trial. This study has demonstrated fairly benign safety profile consistent with
what we've seen before for other vaccines. And at
the 2 lower doses of 10 30 micrograms after a 2 dose vaccination regimen, PRIME and BOOST, the seroconversion rates were 94% and 100% respectively. These data are encouraging and we are preparing to move forward with this program into a Phase II trial. The exploratory modalities are a critical part of our strategy, and we continue to make up a significant part of what we do in the clinic. And on Slide 26, you see a you scan the page, you'll see many readouts and catalysts from each of the programs, both from our core modalities as well as the exploratory ones. With that, let me now turn the call over to Laurence.
Thanks, Tal. Let me first cover an update on the Vertex agreement. In July 2016, we entered into a strategic collaboration and license agreement with Vertex aimed at discovery and development of potential mRNA medicines for the treatment of cystic fibrosis or CF by enabling cells in the lungs of people with CF to potentially produce functional CFTR proteins. In July 2019, the initial research term was extended for 6 months. And based upon promising preclinical data generated in March of 2020, we were pleased that Vertex elected to extend this collaboration for a further 18 months.
Now let me turn to financial results. In today's press release, we reported our Q1 2020 financial results. Note that these results are unaudited. We raised approximately $550,000,000 in net proceeds from the February public equity offering, which resulted in us ending Q1 2020 with cash, cash equivalents and investments of 1,720,000,000 dollars This compares to $1,260,000,000 at the end of 2019. Net cash used in operating activities was $106,000,000 for the Q1 of 2020 compared to $144,000,000 in 2019.
And just as a reminder, that latter number includes an in licensing payment of $22,000,000 which will not recur. Cash used for purchases of property and equipment was $6,000,000 for the Q1 of 2020 compared to $8,000,000 in 20 19. Revenue for the Q1 of 2020 was $8,000,000 compared to $16,000,000 in 2019. This decrease of $8,000,000 in revenue was mainly due to cumulative catch up adjustments resulting from changes in our estimated costs for our future performance obligation, coupled with the timing of amortization of deferred revenue due to the satisfaction of our performance obligations. R and D expenses for the Q1 of 2020 were $115,000,000 compared to $130,000,000 in 2019.
The decrease of $15,000,000 in R and D was mainly driven by decrease in lab supplies and materials and clinical trial and manufacturing costs, partially offset by personnel related costs. G and A expenses for the Q1 of 2020 were $24,000,000 compared to $27,000,000 in Q1 2019. This decrease of $3,000,000 was primarily attributable to decreases in legal and other consulting and outside services spend. And net loss for Q120 was 124,000,000 dollars compared to $133,000,000 in Q1 2019. I'll turn now to what we expect for the remainder of 2020.
If you look at our cash flow line items, you can see our cash used in operating activities and purchases of property and equipment by quarter are laid out here. In Q1 of 2020, we used $112,000,000 of cash on these two items, which is in line with our expectations. If you go back to Q1 2019, we used $152,000,000 of cash on these two items. And remember, again, that number included that licensing payment. Overall, you can see the decline in our quarter over quarter cash use for these items through Q4 2019 with a slight uptick in Q1 2020.
And so consistent with our initial 2020 guidance, which we issued back in November, we expect our 2020 net cash used in operating activities and purchases of property and equipment to be approximately $500,000,000 While we have seen parts of our spend slow down as a result of the impact of COVID-nineteen such as certain clinical trial expenses and laboratory supplies, we are also investing in preparedness for the late stage development and potential BLA filing for our COVID vaccine. That results in bringing our cash flow guidance back to its original levels. We recognize that much of our COVID vaccine spend is covered by the BARDA award. Note that the award is not cash upfront, but rather reimbursement as expenses are incurred. We do expect to incur significant expenses this year in relation to that BARDA award, but we expect in general a matching of expenses and reimbursements.
Let's drill down next on our balance sheet strength and the composition of the $2,400,000,000 of cash and available funding we have to invest and create value. We ended Q1 2020 with cash, cash equivalents and investments of $1,720,000,000 On April 16, 2020, we entered into an agreement with BARDA to accelerate development of our mRNA vaccine candidate against the novel coronavirus for funding of up to $483,000,000 of which $430,000,000 has been committed. Additionally, we are fortunate to have established strategic alliances with private and government sponsored organizations, including the Bill and Melinda Gates Foundation, DARPA and another BARDA award comprising additional available funding of 180,000,000 dollars Together, this creates multiple years of cash runway considering the cash guidance that we share today and a strong ability to invest for the long run-in many aspects of the business. The next slide shows our pipeline and the programs through the various phases of development with a snapshot here. But before I turn it back to Stefan, let me just reiterate an important point from my announced departure this morning, which is that I expect to seamlessly transition my responsibilities through August.
But I'll make a brief remark now. First of all, I'm so grateful to have been invited to be a part of this company. What an opportunity to contribute to Moderna's mission of turning mRNA into a new class of medicines. I joined the company 6 years ago The time when the story was nascent, the future was full of unknowns. I'm leaving now as the company has multiple BLAs on the horizon with 23 important new potential medicines in the pipeline, and I believe many more to come.
We've invested heavily in the platform to establish the scientific foundations of this new class of medicines and the team is growing with unbelievable new talent. I'm personally most proud of the financial foundation we've built to enable the company to invest appropriately in the business. It's been energizing and motivating to partner with Stephane, the Board, its executive team and the passionate Moderna employee base. For me, I'm eager to take the next step in my career, which will be to stay close to innovation and biotech, but not as a company executive. I'll look forward to sharing more about those plans at an appropriate time down the road with many of you on this call.
And with that, I'll turn it over to Stephane for closing remarks.
Laurence, thanks again for not only your remarks, but following you as my partner for those 6 years, it has
been quite an incredible ride.
On Slide 34, let me close by giving you a quick update where the company stands today, starting with our pipeline. It's exciting to see that today we have 2 candidates for which we are preparing for Phase 3: our CMV vaccine and our SARS CoV-two vaccines. We have now 6 candidates that are either in Phase 2 or preparing for Phase 2, 12 Phase 1 programs and 11 positive Phase 1 readouts. What an acceleration since our IPO in December 2018. Our programs are very exciting.
We have 7 first in class vaccines where there are no approved vaccines on the market against those viruses. Most of these vaccine candidates have multibillion dollar annual peak sales opportunity. As we shared at our vaccine day presentation, we believe our innovative vaccines are going to be a very large business for Moderna with long term and new ET like opportunities at a high EBIT margin. We also have 5 exciting immuno oncology programs that are all in the clinic that are all combined with a commercial checkpoint, 4 rare disease program and 2 autoimmune disease programs. The company has never been stronger, look at our formations.
We have now dosed more than 1900 healthy volunteers and patients in our studies. The team is strong and getting stronger every month. We now have more than 900 employees who care deeply about our mission and are proud and energized by our progress and the meaning of our work. Last week, with the Lonza agreement, our manufacturing capabilities has changed league. We not only have our fully integrated GMP site in Massachusetts, who many of you know and have visited, but we've added a strategic partnership with Volanta that can enable us to work to 1,000,000,000 doses annually for our vaccine against SARS CoV-two, but also other products in our pipeline as we need to.
We are great partners with AstraZeneca, Merck and Vetex. I am very proud of the scientific progress that the team of Stephen Hogg and Melissa Monde have done in the work with Vertex over the last few years. And we are very pleased that Vertex decided to expand the relationship with Moderna. But we're also very thankful for the partnership we've had over the years with BARDA, DARPA, CP and the Gates Foundation. And of course, we are very thankful for the latest partnership with BARDA, dollars 483,000,000 to enable us to do the right clinical study as fast as we can go, of course, focusing on safety first for the SARS CoV-two vaccine.
And of course, we are well capitalized with up to $2,400,000,000 to invest in the business and continue to build the leading mRNA company in the world. We are very thankful for our investors for their trust and partnership as we build this unique company. We're energized by the opportunity ahead of us to build a new class of medicines. We are currently accelerating our development pipeline and readying the company to potentially file its first BLA for mRNA-twelve seventy three, which will be, as you can appreciate, a historic moment for the company. We're investing in the processes to get us there, to get the right foundations for potentially many additional BLAs in the future, starting with the Zika vaccine and CMV vaccines behind the SARS CoV-two mRNA-twelve seventy three.
We are already scaling up the organization to address the need to supply up to 1,000,000,000 doses for potentially first vaccine mRNA-twelve seventy three. All those efforts, investments and processes will be very enabling for additional vaccines and therapeutics to come. I have never been as excited and optimistic about the future of Moderna in the last 9 years. We are humbled and excited by the opportunity to bring forward a new class of medicines for patients that has been our North Star since we started the company. I would like to thank the great team of modern employees working very hard every day and literally many of them, 7 days a week now since January, to fight the SARS CoV-two virus.
I would like to thank the many people who participate in our clinical studies, including patients, health volunteers, physicians and nurses. I would like to recognize all our partners that work with us to share our vision and helping us to achieve this vision to help patients. With that, we are now happy to take any questions.
Your first question comes from Matthew Harrison of Morgan Stanley. Please ask your question.
Great. Good morning. Thanks for taking the questions. I guess, first, you've highlighted the 50 microgram dose on the SARS CoV-two vaccine. And I think Doctor.
Fauci in his interview also talked about good responses in low doses in animals. Can you just talk about your confidence in being able to move forward and elicit the right kind of immune response with the low dose as opposed to the other doses that you're testing? And then secondly, can you just update us on where the field is in figuring out what neutralizing antibody titers are and if you think they'll be available by the time you report initial data from the Phase I study? Thanks.
So this is Taro. Hi, Matthew. Let me take that question. 2 spot on things that we're looking at. So first of all, 50 microgram is our current best guess.
We this is short of data and it's based, as you've seen Tony Fauci's remark on what we expect the platform could deliver. That being said, the final dose selection will really be a factor of, I think, 3 elements. The first is the overall sense of a dose response of how much more do you get as you go up in dose, Because in the case of a pandemic, we obviously need to balance this with having enough doses available. And so, you don't want to unnecessarily overshoot. The second element is an understanding of what that dose could mean as you compare it to convalescent serum.
And so there's a lot of work being done on assay validation and I'll get back to that in a minute to understand what any given level of antibodies mean. And the last element that I think will enable us to connect the dots is understanding the performance of the vaccine in additional animal models of SARS CoV-two and then seeing commensurate with the expected ability to protect those animals, what levels of titers do we get? And obviously, the higher the species, the more reliable that data is. But ultimately, what we care about is being able to connect the dots for human disease. So it's a long story short, it's a best guess estimate for now.
And based on the emerging data, and we will continue to refine it as more data comes Your question about the right kind of immune response, look, I think the data we've seen to date, both across the clinical trials, across the experience that we have in the preclinical models, across the board, as I mentioned in all the other major epidemiological success. And if you think about the kind of scientific first principles of how an mRNA technology presents an antigen from within the cell and mimics the instruction set that a virus would otherwise give the cell to make an antigen, we get the right kind of immune response, however you want to characterize it, neutralizing antibodies, PH1 versus PH2, etcetera. The emerging data that we're seeing preclinically with mRNA-twelve seventy three
is all consistent with that.
Your final question on neutralizing antibodies. Yes, those assays are being stood up as we speak. They're being validated. They're being transferred to commercial vendors. And the NIAID is actively looking that in parallel with the simpler types of binding antibodies we expect to be able to report both kinds of data when we see the data from that Phase 1.
Great. Thanks for the thorough answer.
Your next question comes from Cory Kasimov of JPMorgan. Please ask your question.
Thanks for taking my questions. I've got 2 of them for you as well. So I guess, first, can you talk more about what the Phase 3 COVID vaccine design might look like? And there's obviously nothing traditional about this program. So how should we be thinking about kind of like the endpoints in term analyses and amount of follow-up you think you need for either emergency use authorization or full approval?
And then my second question for you is regarding COVID also regarding COVID-nineteen. There have been some conflicting reports out there on emerging mutations with the virus. Be very interested to hear your views on this and what it could potentially mean for the effectiveness of your vaccine. Thanks a lot.
Thanks, Corey. This is Tal. I'll take those questions. So look, the Phase III design, let me make a couple of points. Any pivotal trial in order to demonstrate efficacy as well as safety has to be placebo controlled and large enough so that the people among the people that you will vaccinate, there will by chance occur cases, right?
And so it's a case driven design and you set your statistics based on what you expect to see and how many cases you expect to
see in the placebo and
then how many fewer cases do you expect the vaccine to demonstrate. Now any such trial to be effective depends on 3 things. How big it is when you start? How good are you at predicting the attack rate in the population that you vaccinate? Because a case driven design, then we can vaccinate a whole lot of people.
But if they end up over the months to come not being exposed to the risk of an infection, then we won't know whether the vaccines work. And the 3rd element is how good our vaccine are is because the higher the point estimate for the vaccine efficacy, the clearer the results are and the sooner you can find them. Somewhere between those parameters, we are going to have to have a conversation that's ongoing between us, our collaborators at NIAID, at the NIH and ultimately FDA. The length of follow-up here and how soon can we see the data, I think, is a function of all those design elements as well as where you sort of set the bar for cases and what expected benefit is. Now you asked an interesting question on where does EUA come into this, where does approval and what kind of interim data one could expect.
So I think as you get closer to it, my sense is that we're not looking at a binary event in the sense that one day we know nothing and the next day it's suddenly available for everybody. I think as we learn more about the potential benefits, first based on Phase 1 and 2 and potentially surrogate data in animal models and understanding what those levels could mean from convalescent serum, we will gain more confidence as to the potential benefit of this vaccine. We will still not be talking about an approval. We will not have a full safety database. But you start to generate an anticipation of potential benefit.
And in the context of a rising pandemic, I think that's important. The next step of data is then to get a sense that the vaccine is safe when given to a larger group of individuals, both healthy people, people with who are older with comorbidities, and we need to
go and build that safety database and
final piece is then to actually demonstrate clinical utility benefit, and that requires to have an endpoint that's meaningful. And I think the two endpoints that are relevant for thinking about a pivotal trial are going to be COVID-nineteen disease. So however you define disease, the appropriate symptomatology, severity and having a microbiological confirmation. And of course, infection per se is also a relevant endpoint because we know that asymptomatic people, even if they themselves are asymptomatic, if you can prevent infection, you will, on a population basis, actually prevent others from getting infected and then being sick. So there's a benefit to society here of preventing infection, even if less so to the individual vaccine.
So between the disease endpoint and infection endpoint, I think that's where you're going to see the pivotal trials in this space emerge. I hope that answers your question on the design. As we get closer to it and we lock it down with the NIH and the FDA, we will, of course, be describing it in public. Your question regarding the emerging mutations, we're all following that closely. I would make 2 points here.
Number 1, so far from what we've seen, none of the mutations that have been described are expected to significantly interfere with binding or neutralizing activities of antibodies generated to the full length spike protein. And here I would make the remind you that our mRNA-twelve seventy three actually encodes for the full length spike protein. I think the mutation that everybody kind of saw last week had to do with potentially increased submissibility, but that mutation doesn't necessarily alter the critical neutralizing binding domains as we understand them. So we're clearly watching this area closely like everybody else to assess the potential impact. The second point I'd say sort of with a more longer term vision, should such a mutation arise and be relevant for the immunity of the population that's been exposed or the effectiveness of any vaccine, I would contend that actually our platform is going to be uniquely suited to address that for two reasons.
Number 1 is, as we've demonstrated, you can move very fast based on just understanding the sequence of a new mutation and you immediately generate a vaccine against it. But importantly, as you look to the future, one could envision a world where if we've demonstrated efficacy and benefit against this virus and the appropriate randomized controlled trials, if there's a slight mutation and you alter the vaccine to kind of chase the virus, the path to approval and expected benefit for the next one should be much quicker. And you can think of the way the world has evolved to deal with flu mutations, whereby as soon as there's a new sequence, that sequence is actually put into production and millions of doses of vaccines are generated. You don't need to replicate the entire Phase I III development path every time there's a minor mutation once you've established the platform. So as I look to the future, I think we're in a very good place from the fundamentals of our platform to envision that sort of response to any arriving mutations.
Okay. Thanks for the thorough responses and great to see the impressive progress you guys are making.
Thanks,
Your next question comes from Ted Tenthoff, Piper. Please ask your question. Ted, you might be on mute. Operator, we'll come back to Ted. Can you go to the next question please?
Yes. Your question comes from Salveen Richter of Goldman Sachs. Your line is open. Hello?
Hello? Were you looking at challenging animal models and then examining the antibody levels in humans? And then a second question around with regard to supply and demand constraints, is the Lonza partnership really just kind of where you I guess, is that are you going to expand beyond that to kind of handle demand and supply?
This is Tal. Let me try and take your first question. I think you got cut off. But if I understood you correctly, you asked whether we're running Animal Channel challenge models and whether we will be able to connect the dots between those and what we see in human vaccinees. And I think the answer is yes.
That work is ongoing. It's been done in close collaboration with Barney Graham's team at the VRC of the NIH. And the assay development work that is ongoing is being deployed so that we are able to connect the dots between the challenge models, convalescent serum and the serum that we eventually expect to see from people who've been vaccinated. So I hope that answers that question. So let me turn it over to Juan to talk about or Stefano, but about the Lonza question.
Hello. This is Juan Andres, Chief Clinical Operations and Quality Officer at Moderna. So let me take the second question that you Lonza's
capacity,
Launcest capacity, together with the capacity that we have in our site in Massachusetts and the capability will be a great help for Moderna scaling up and also producing the quantities. We are going to manufacture together with Lonza, the formulated bulk, and I expect that we will have more partnership with existing CMOs for free finish and distribution and if needed with new ones. Thank you.
Thank you. Thank you. Your next question comes from Ted Tenth with Piper. Please ask your question.
Great. Thank you. Can you hear me okay?
Yes.
Great. Sorry about that before.
Good morning everyone and thank you for all of the hard work. It's been just an incredible run during this last couple of weeks and the company has really risen to the challenges. Lawrence, it's been so nice working with you and I'm wishing you all the best too. My question actually has to do with CMV. And I know you guys have talked about sort of the challenges just with getting the final data sets and the final doses and all those things.
I wanted to see if there's an update on that and whether or not there's any changes to the expectation for data in the Q3? And also how this general progress and investment in the vaccine platform will really help what you're doing in CMV? Thanks so much.
Thanks, Ted, for the kind words. This is Tal. Let me try and take maybe both of those questions and Stephane can add on. On CMV, I believe we remain on track and it's you can do the simple math here. If we've already vaccinated over 70% of people with the 2nd dose and it's that critical post second dose interim analysis that should confirm our dose for Phase 3.
If you recall the data from the Phase 1 with much smaller numbers of subjects, we had pretty tight error bars and a pretty good understanding of the dose response curve. Now with a much larger study, even if it ran into some sort of difficulty because of COVID-nineteen, we're going to be more than powered to understand the immunogenicity. And the size was really driven not just by the need to understand immunogenicity, but also to validate the safety profile that we see here. So I'm confident that with the numbers of people that we managed to get into the 2nd dose, the amendment of the protocol as mentioned for the remaining less than 30%, that we will stay on track, as we've discussed before to have the data and be able to move on. And our plans for Phase 3 continue and remain fully on track for CMV.
Your question on how it's preparing the platform, I'll give you sort of a brief answer from a Perch of maybe medical and development and then I'll let Stephane talk as it relates to the company becoming moving to its commercial life phase. The COVID experience is doing really three things for us. It is accelerating our understanding of the safety and immunogenicity at a much wider level for the platform, sort of the leading edge of data, if you will. And I expect that the ability to run a large placebo controlled trial and expand the safety database at a much more rapid manner than we had so far in Phase I will be informative for all of us as to the performance of this platform. And here I sort of speak as a Chief Medical Officer with a keen eye on the safety profile of our platform.
So far, we've seen nothing unexpected and it's all been sort of consistent across the application. But of course, a database of 1500 subjects will benefit greatly when we go into 1,000 with COVID. The second element has to do with expanding our capabilities, building up a development team that can integrate and build a BLA file, building up our competencies on the regulatory front, the pharmacovigilance front, etcetera, all of that ahead of a large Phase III effort on CMV, I think, is a tremendous benefit for us. And I will sort of I'll let Stephane speak to all the other elements where this is accelerating the progress of our company.
Thanks, Tal. Good morning, Ted. I would just add a few things.
And
I think Tal started to allude to it, which is the power of our platform, which really create some very powerful network effects, where if you take an example of something new we shared today, which is we had a positive Type C meeting last quarter around CMV for CMMC, so for manufacturing. As you can appreciate, this dialogue we had with the agency around CMV Phase III is going to be very instrumental in helping us on the Phase III for SARS CoV-two and MDR-twelve seventy three. Because of the urgency that the agency has, we've had an amazing dialogue with the FDA. The responsiveness, 7 days a week, they're very engaged, they're very willing to find a way to shave a day for a process without making any shortcut on safety, obviously. So for this BLE process that we should be able to go through in the next months, both on the clinical side and also on the manufacturing side, this access to reagent this ability to ask question, to get clarification quickly, will really help us really build that capability within the team, whether it's the processes, of the digital infrastructure in terms of data gathering, which is critical both on clinical and on CMC.
Then you're going to be able to use that very quickly on Zika, on CMV. And I think that's going to be very powerful. The network effect, I think, are sometimes underappreciated because most companies, as you know, do not have platforms, whereas here, because mRNA being an information molecule, there's really an ability to make Moderna very robust and to take it to the next server. So that's what we do on SARS CoV-two BLA wise can be replicated much faster and much stronger on Zika, CMV and all the other programs. I think the same things around commercial, With the arrival of Patrick, we are going to build very rapidly in our commercial infrastructure.
We'll give you updates on that in the coming months. But as you can appreciate, all that work that's going to happen very quickly on COVID will help us on the other products, not only as a company branding standpoint because as you appreciate, the Moderna brand has been transformed in the last few months because of the results that the team has been able to accomplish. First, we had a product level, at the scientific level, at the clinical level. So I think the momentum of Moderna is going to be extremely strong and extremely enabled by the SARS CoV-two data filing process.
Your next question comes from Nesini Rahimi of Roth Capital Partners. Please ask your question.
Hi, team. Thank you for the continued amazing progress that you're making day over day. Two quick questions for you. The first question is related to how are you are you defining age cutoff that in the Phase II you mentioned there will be a cohort of patients who are 55 and above. Is there maybe a range above which you're not going to be going after?
And then is there going to be a cohort among the Phase 2 and as you're thinking about Phase 3 that are healthy but are at highest risk given that maybe they have obesity or cardiovascular disease. How are we thinking about this patient population that are at the highest risk to incorporate that into the Phase II and Phase III enrollment? And then the second question is in regards to manufacturing. If you could help us understand what is the single largest unknown when it comes to scaling up mRNA therapeutics? And thank you for taking your questions.
Hi, this is Carl. Let me start by answering the clinical ones and then I'll let Juan take the manufacturing question. The in our Phase II, there is no upper limits, I think above 55, you've seen the NIH Phase I sort of parse it out a little bit more finely. I think for us, we're going to take all comers above 55 with no upper age limit. In terms of your question on cohorts at higher risk for disease, should they get infected, this relates to both the elderly and people with distinct comorbidities.
As we build the safety database, obviously, we need to get there, but get there responsibly. I think the Phase 2, the initial sort of expansion into larger numbers is people that do not have a high risk of disease should they get infected. In the Phase III, we will clearly then open it up and we will do that in a manner that's responsible and takes the appropriate interim looks to make sure that we expand into that population who needs it the most in a way that's careful. And that's an ongoing discussion, obviously, between us, NIAID and FDA, how to best achieve that goal. Let me let Juan take your manufacturing question.
Okay. Thanks for the question. Obviously,
one of
the unknowns was discussed before, which is the assumptions associated with those. And then in terms of the industrialization of the product, obviously, we're working very hard is in bringing the equipment, bringing the raw materials, bringing the people capabilities together as we scale up. I don't think it is a very single unknown in dose. We have done this before, probably not at the scale at which we are going. Having the partnership with Lonza gives me a tremendous confidence that we are going to be doing this very rapidly.
And obviously, speed is at the essence. Bringing these three things together is what it's all about, and that's what we are doing.
Yes. And maybe Yasmin, just to add something. We are extremely fortunate to have Juan and his leadership team. As you know, he and the team have all come from large organization. They have managed a very large manufacturing complex organization.
They have a lot of experience. They know that every extra million dose we can get out of our system will be helping a lot of people. So I'm very thankful for the team. They are literally working 7 days a week, pulling all nighters to shave every day we can so that we can really maximize the monthly output of the system. And I'm tremendously thankful for them.
Thank you, Stefan. And so are we. We're very grateful for all the work that everyone at Moderna is doing on behalf of humanity.
Your next question comes from Jeff Nucham with Bank of America. Please ask your question.
This is Alex on for Jeff. For taking our question. And Lawrence, we're sorry to see you go, but assume you're moving on to bigger and better things. So my question is on capital allocation in the near term. You reiterated your 2020 expense guidance, but I was hoping you could give a bit more color on the gives and takes within that vis a vis OpEx versus CapEx and how much manufacturing build out and commercial readiness activities for COVID-nineteen are reflected within that?
And my second question is on the commercialization front. Do you intend to take the vaccine forward yourselves? Or do you think it will take partnering to deliver it at scale? Or would the U. S.
Government potentially step in as well? Any color you can give here? And if there's some historical context you could point to, that would be great. Thanks.
Alex, it's Lawrence. Let me handle the financial question. With respect to the guidance and the components, so as I mentioned around sort of the pre COVID business, if you will, I've mentioned that we're seeing a bit of a slowdown in expenses OpEx related to lab work and some of the clinical trials as we've noted. So those expenses will be coming down relative to what we thought when we originally set out guidance. The offset is investments that we are making to be ready for all that's coming down the road.
We've mentioned this the rapid acceleration of the COVID vaccine timelines, and there's a lot that we need to do as a company to be ready for being commercial in 2021. And so those offset. We will continue to update you all as you as we scope those investments and as we move forward. With respect to CapEx, it is not a huge component here right now of the anticipated budget, mainly because of the leverage we've got in the platform as well as the benefit of having a great partner like Lonza on board. And again, we'll continue to update that guidance should anything change.
And then the last thing I would just reiterate is that there is substantial OpEx expected with respect to the COVID vaccine work being funded by BARDA, the clinical development at scale up, but that will be paid for by BARDA reimbursed on a very rapid cycle time. And so that's why I mentioned that there would be this matching of expense and reimbursement through the course of the year that would substantially offset.
Yes. Thanks, Lawrence. And Alex, on commercialization, as you can appreciate, as we've said before with the case of CMV, we do not anticipate having the capability and investing to sell the products in other than 40 countries. For SARS CoV-two, I think it's important to think about the product in 2 different time horizons. There is a pandemic phase, in which obviously we all are.
And then we believe as a company, there's a certain opportunity for this product in the endemic phase because we do not believe this virus is going away. So from a pandemic phase, it's going to be mostly a partnership with governments. So in that case, you don't have to necessarily manage complex sets of potential buyers because we're going to be, as we discussed, at the global level across the industry, we're going to be supply constrained for some time, which is why, as we said publicly many times, we are working for everybody who is working on the vaccine. We are hoping that many vaccines are going to a finish line because if you think about it, there are actually very few companies that have both the manufacturing scale that is required for the task ahead and are already in the clinic, meaning they can have a short to mid term impact with our vaccines. In my opinion, they're just a couple of companies that have those two things.
And so if you think about it in a very supply constrained world in 2021, it's going to be mostly partnering with government that they will do the allocation in the different geographies. We do not intend, for example, in the U. S, to decide who gets the vaccine. That will not be appropriate. So we intend to continue our partnership with the U.
S. Government that we've already done with NIAID and Doctor. Tony Slarshid team for a few years, as you know, and in the clinic more recently with BARDA and eventually, I assume, the CDC to be able to supply to the U. S. Government the doses for them to decide the allocation that makes sense for the country.
Your next question comes from Alan Carr of Museum and Company. Please ask your question.
Hi. Thanks for taking my questions and congratulations on your progress. I got a couple of them in your increased focus and success with vaccines. Are you able to accelerate or what sort of extra emphasis are you putting on these early stage vaccine programs? And giving us an update on 1345 and 1189, your RSV and EBV programs that are internal.
How are those moving along?
And I
know you don't give high res info on time lines, but to the extent you can. Then the other question is around your COVID-nineteen program. To what extent is it feasible to have even an interim analysis of your planned Phase III trial in 2020?
Thanks. So let me start maybe with your first question on EBV and RSV Pediatric. As you know, we do not guide on programs' time lines. So the team is working on advancing those important vaccines as fast as possible. But we have given no time lines and we will not give time lines.
On the return, as you appreciated over the quarters, to give time lines where we get closer to kind of late stage development. And especially with the SARS CoV-two, given the pandemic and given the suffering around the world, we think it's important to communicate our best plans. And I hope everybody appreciate that When we say we aim to start a Phase III early summer, this is the best possible physical plan. 50 things can derail that, but for the early programs, we are not communicating. Tal, do you want to take the COVID interim data question?
Yes.
Yes. Yes. It's a good question. I believe we should be able to have a sense of the cases and a potential early look by the end of the year. But again, that is a function of how soon can we start, how big the trial is and how good are we at immunizing people who are then at risk for cases occurring because as I mentioned, it will end up being a case driven design to be able to analyze it.
And we'll share the data we'll share the details and the expectations once we lock down the design with our partners and vet it with the agency.
Now do you expect it to be just a U. S. Trial or would you go global? And I think another follow-up to this to what I mean, as we talk about the possibility of a larger trial with multiple vaccines. Are you contemplating that too?
Or is this the trial that you're planning to face is just a Moderna versus Moderna candidate versus the results?
Yes. So let me take both questions in turn. This first pivotal trial is going to be a partnership with NIAID with the NIH. So it will be at this stage either SOLO or predominantly U. S.
Trial. We're in parallel looking at opportunities to launch parallel pivotal trials in Europe and globally because I think ultimately the more data we have here, the wiser we will be. I think can you please remind me your second question?
Well, I think you answered it. I was wondering if you were contemplating a trial or the government was contemplating a trial
Right, right, the multi arm trial. Yes, yes, yes. So there's been a lot of talk about that both on the WHO side as well as the NIH. As you can clearly intuit, it's not front and center in my brain for two reasons. First is, we expect to be the first one out there for a pivotal trial.
And so we just have to get on and demonstrate our trial our vaccine's potential. But the second one is more fundamental. I think it is important for the field to use more or less case where it actually makes sense to run many vaccines in a single trial. It's not like we're lacking for volunteers who would line up to be immunized and understand the benefit of a vaccine. And frankly, the epidemic is so unpredictable in where it shows up and to what degree and how it comes down that there is no expectation of a consistency of attack rate over time that would make that add any scientific value.
So from my end, this is a personal opinion here. I question the merits of that design from a scientific and a public health need perspective. I think what's critical here is that for every vaccine candidate, as Stephane alluded to, we're going to need more than one of them. But it matters less whether there's a few percent difference on the apparent estimate of the point efficacy. What matters is you know it works and you're able to scale it up and make it available to those who need it the most.
Okay. Thanks very much.
Your next question comes from Govind Singh of BMO. Please ask your question.
Hi, everyone. This is Govind on for George. Just thanks for taking our questions. 2 on 12/73. The first one would be, can you help us understand if there's any profit share agreements in place with any other parties, including the NIH around the vaccine?
And just how do you guys see the commercial landscape evolving with so many other vaccine candidates in development? And then just a follow-up maybe with Naya's comments about their preclinical results that they saw. I understand they're probably doing their studies separate from you guys, but maybe you can help us understand what kind of preclinical results you've seen? And when might this data be presented? That'd be really helpful.
Thanks a lot.
Yes. So it's Stefan. I'm going to start and then the team might take the pieces. I'll drop. So it is pretty as Tal said, there's preclinical work being done both in all labs and in NIAID, Doctor.
Thomas Farci's team. As soon as there is a body of data that makes sense, makes sense and is complete and holistic, we intend to publish that work. So as soon as it's public, you'll be aware. In terms of the profit share, we have not disclosed previously any arrangement. So I will not comment on this one.
And what was your other question?
The commercial landscape and how other coronavirus vaccines are developing?
Yes. Thank you. So on the commercial landscape, as I briefly mentioned a few minutes ago, as you know, I mean, there are 100 plus, last time I checked on Wikipedia, vaccine candidates being worked on around the world. The thing I think that's very important is manufacturing scale and where are those projects in research of a clinic. As I said a few minutes ago, I believe that the project at this stage in research with a group that doesn't have the ability to do tens of 1,000,000 of doses per month, ramping up to 100 of 1,000,000 per month is not going to be able to have a big dent on this pandemic.
And so if you use those 2 as a screen, which is what we do, I think you end up with very few number of players that have again a chance in the 2021 time frame to have an impact on this. Obviously, like always in drug development, not every candidate is going to get to the finish line. And I could also anticipate that once a few vaccines are in late stage or commercially approved, A lot of the early projects might just stop investing because we are deploying capital and talent for something that might have no commercial end. So I think while there's a lot of people on the start lane, my sense is very few are going to get to a finish line. With manufacturing scale, that matters.
1,000,000 or 2,000,000 doses a year is going to be very, very helpful at the global scale. Thank you.
Your next question comes from Justin
from Oppenheimer.
Please ask your question.
Hi. This is Satji Hartaj on for Justin. So one thing first, Laurence, thank you so very much. It was a real pleasure working with you. Look forward to seeing you again sometime in the future.
And then secondly, just to Moderna, for all the work that you're doing, I think people a lot of people really don't understand just the compression of the timelines that you and the government are engaging. It's really, really a thing of beauty. Now, Kamalu. So two questions. 1 is on manufacturing and second on regulatory strategy worldwide.
So on manufacturing, if you could just talk a little bit about going from clinical to commercial batches. I know you've talked about going from 1,000,000 to tens of 1,000,000 to not 1,000,000,000 with Lonza. Can you just talk broadly about the timing? When can you go from that clinical? I know you mentioned that Lonza will start manufacturing first batches in July and how that maps against the BLA that you'll be starting to file?
And then second on regulatory strategy, Japan just approved remdesivir. I guess the EU is going through an approval process, a fast approval process for remdesivir. So how are you thinking of the worldwide approval strategy aside from the United States where it will probably be towards the end of the year? And thank you for the question.
So Akash, let me maybe start quickly on manufacturing. We have not done and not shed no precise output per month. What we've said is that given we're ramping up both Norwood, which we say could do up to 100,000,000 doses per year at the 15 microgram dose And then the RONDA side, as you can appreciate, you see every month this year, every month next year, the output per month is going to increase. And so the team is working as well as they can because they do understand personally that every extra one hundred thousand we get out of the system, we will protect more people, we will spread on the spread of this virus. And so it's not a linear process where you start now at 100,000,000 because those per month of cost not.
So it's just going to be an acceleration process, which is why this dialogue will be going in terms of allocation and we're going to be hand to mouth for quite some time where as soon as the product is made and QCD will go to the government and then decide that they are located and we'll just kind of be on a regular basis. Sal, you want to take the regulatory question, I mean?
Yes. Thanks, Stefan, and thanks, Hartaj, for the question. Look, we're in active dialogue now with regulators beyond the U. S. I think having the partnership with Wanda is a huge enabler to envision the ability to scale up and eventually supply the vaccine on a global footprint to those who need it the most.
That will take shape over the coming weeks months. The expectation I have is that we will do more than one trial to demonstrate the benefit. That being said, at a certain point, once you have data, both potential benefit and ultimately for benefit, by and large, that data should be applicable for filing in other territories. And so we're actively mapping it out and our intent is absolutely to eventually be able to make this vaccine available to those who need it most.
There are no further questions at this time. Christian, sir, you may continue.
So thank you so much everybody for participating, and we look forward to talking to you or seeing you at the latest on June 2nd for the Monona farm they have given in this stimulus. Thank you very much. Have a good day and stay safe. Bye bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.