Morning, everyone. My name is Ted Tenthoff. I'm a senior biotech analyst at Piper Sandler. And before I begin, I am required to point out certain disclosures regarding the relationship between Piper and our next presenting company, Moderna, which are listed both in the back of the room and also at the registration desk. So, as many of you know, Moderna is a leading developer of messenger RNA or mRNA vaccines and medicines. mRNA shares have been under pressure over the last two and a half years, and most recently now with the RFK nomination, concern over COVID vaccination rates. However, we believe the company is in the strongest position in its history, with a very strong balance sheet, fundamentally de-risked mRNA technology, and a late-stage clinical pipeline with several approvals in the coming years. Here from Moderna is my very good friend, Stéphane Bancel, CEO of Moderna.
Stéphane, always a pleasure. Thank you for being with us.
Thank you for having me, Ted. Thank you for the kind words.
So, let's just start with the RFK Jr. thing. I'm sure you're tired of talking about it by this point. Piper's head of policy, Andy Laperriere, who lives down in D.C., does not believe he actually will get appointed. I mean, who knows about speculation on that? I guess there's a list of targets for who won't get appointed, and he's maybe in the top. I don't even know at this point. But, you know, what are your thoughts on this? How do you manage around a potentially hostile HHS? What could really be the impact?
Sure. So, if you think about us as a business, and it's true of any healthcare company, we work with governments around the world, regardless of which party they are from, regardless of their ideology. And if you think about the U.S. and what has been the rhetoric around RFK, that's been about making America healthy again, which I'm all for, making America healthy again. That's why all of us working in healthcare, that's what we're trying to do. If you look at the vaccine, there's been historically some rhetoric around vaccines for pediatric setting. I'm not aware of any rhetoric for vaccines for the elderly. As you know, Moderna is focused on the elderly setting with our respiratory portfolio. So, the other piece too is that, as you know, the way the U.S. system is set up is that it's a system.
I mean, there's a lot of different points between what the doctors are doing, what the CDC is doing, what HHS is doing, what Medicare is doing. And if you think about the vaccine, they're actually the number one tool to prevent hospitalization in the elderly. As you know well, because you know our field very well, if you address last season, the season of Fall 2023, Winter 2024, there were three times more hospitalizations in the U.S. in the season of COVID than flu. But if you look at the numbers, there was only one third of flu vaccination into COVID vaccination, which kind of makes no sense when you add it from a scientific standpoint. What we're going to continue to do is to work with doctors, nurses, consumers to understand the facts.
I think, as you know, COVID, because this pandemic was traumatic for all of us and all the families and so on, there was a lot of misinformation. So, our job is really to get the facts out, the data out. You know, another rhetoric has been, we want more transparency on the vaccine, which we are all for. By the way, if you look, with all our reporting obligations that we have, there's already, the U.S. government has all the data. And so, if we want to have more data shared with the public, I think it's wonderful.
Yeah, and, you know, it's such a good point you bring up, you know, thanks to you and your company's work and Pfizer too, but you guys saved the world, and I don't know how we all of a sudden became the bad guys, so, I guess no good deed goes unpunished, right?
Absolutely.
Is probably where it is, but let's talk about sort of your current outlook for COVID vaccination rates and Spikevax. You know, you guys have a new, a next generation vaccine, mRNA-1283, that you're getting approved, also a combo.
Yes.
So, how does this all sort of fit together to sort of deliver what patients are looking for or subjects are looking for for vaccination going forward?
Sure. I mean, if you start at the 30,000 feet level, respiratory disease in the U.S. is a field of fifth killer, depending on the year. So, our strategy has been for quite a number of years now to build the right tools to prevent those deaths. If you think about it, if we had a vaccine against heart attack or a vaccine against cancer, I think people would be lining up in the street because those are the number one, as you know, and number two killer. But if you think about respiratory disease, we have a great opportunity. And because mRNA technology allows combinations, our vision has always been, how do we get simplification of vaccination with very, very high efficacy? So, if you look at the portfolio, it's just we're building all the pieces to get to that destination.
Our goal is to have a combination vaccine. The flu-COVID combo, we think it's going to be really important because COVID is the number one killer for respiratory in the U.S. Flu is number two. So, if you can combine it and increase the vaccination rate on COVID, which is currently the issue, you could prevent a lot of hospitalization, you could save a lot of lives, and save a lot of costs. If you think about the next gen COVID, for us, it's all about efficacy. As we've shown in our phase three data, the next gen COVID has a higher efficacy than 1273. As you know, Ted, because you followed this very closely, some people in the room might not be aware.
During the pandemic, there's been a lot of very large-scale studies done by the VA and many governments around the world actually showing that mRNA-1273, Moderna's Spikevax product, actually has less hospitalization, has less death than the Pfizer vaccine. And we believe it is because it has a higher dose. So, if you think about it, we're showing that the next-gen COVID, Moderna, is better than Spikevax, which is better itself than the Pfizer vaccine. And this is a big deal for the elderly. So, our positioning of the next-gen COVID vaccine is for the 65 and above to gain share because we're going to provide a better product. It's a bit like what happened in flu, as you're highly familiar, Fluzone HD has really been a transformation into the elderly setting versus the standard flu vaccine given to the young population.
That product's come up with a premium price. We have not yet disclosed pricing strategy, but with a higher efficacy, you could expect a premium price, which, by the way, will be a great incentive for the retailer as well. As you know, in the U.S., the retailers play a huge part in COVID vaccination. The biggest share of vaccination in the U.S. is through the retail channel. And the retail channel, as you know, is mostly driven by financial incentives because when they sell a vaccine, they get the administration fee from the insurance company, but also they get the discount from the list price from the manufacturers. And so, if you have a higher list price because you can convince the payer that through higher efficacy, you're going to save them money while having less hospitalization, you can justify your higher price on the next gen COVID.
And so, the retailers will make more profit. And if you look at the retailers, the reason vaccination is so important for them is that sometimes they don't make profit because of the PBMs in the middle on small molecule products. And if you think about the type of profit they make on vaccines, it's actually a very large part of their EBIT as an enterprise. And so, we think the next gen vaccine is going to be good for patients, good for the retailers, and good for Moderna. And that's what we're trying to do with our products. And in the next gen product, the 1083, which is COVID flu, it has the next gen COVID inside it. So, you're going to get a very strong product with a high dose performance for COVID with the 1283 component. And then something we've shown, no inferiority to Fluzone HD.
So, if you think about the 1083 product, if you're a doctor, you're basically going to get the best of both worlds on both the flu and the COVID. And that's the product that we have showed strong phase three data. And as we said, we'll be planning to file before the end of the year to the regulator.
So, really any day now on some of those. So, that's really exciting. I'm just going to pause and just kind of check in with the audience if there's any questions on flu or COVID, and we'll kind of continue to transition to the pipeline. So, the other big approval was mRESVIA for RSV vaccine. You know, often maybe a slower start than some people expected. You know, how do you see this comparing to Pfizer and GSK's RSV vaccines? And what's your guys' plan to grow the revenue?
Sure. So, let's start first by the disease, talk about the vaccines, and then talk about the launch, if that's okay. So, RSV is the third cause of hospitalization. So, COVID, flu, RSV in terms of older people in the U.S. It's a big unmet medical need. As you know, because there's been no RSV vaccine until recently on the market, CDC is still working on the recommendation guidelines. And if you look at the history of CDC, when you have a new class of vaccines being launched, it takes a few years for a vaccination guideline to hold because they are learning based on data.
That's what we expect our public health leaders and our scientists to do, is make a hypothesis on coverage, look at the data through a season, and tweak it, take a couple of cycles, a couple of years to get to a stable place in terms of recommendation. So, we believe, because just of the hospitalization, that RSV is an important unmet medical need, and we need to vaccinate people that are at high risk of getting hospitalized or worse, dying of RSV. It's, again, the elderly and, of course, the pediatric setting. Pfizer GSK launched a season before us. We launched this year. There's been a lot of discussions about the efficacy of the vaccines. I'd just like to remind people that the GSK-Pfizer phase three study was done during what we call the Omicron winter.
If you recall, when Omicron happened around Thanksgiving, then everybody shut down, JP Morgan conference was canceled, and we spent most of us working from home in January. Because of that, those two vaccines were run in seasons with very low cases of RSV. We came one season after in our phase three, which was, if you look at the last 10 plus years, the highest level of RSV ever. Why? Because for a couple of years, we've all been masking and so on. People have not been naturally boosted by being infected. And so, a very high case of infections. If you look at the antibody levels across the three vaccines, they are very similar. Of course, this is not a head-to-head study. Sometimes the assays are different, so you have to take all this with a grain of salt.
But we believe that over time, we're going to be in the same zip code in terms of efficacy. The decay of antibody across the three vaccines is very similar. And so, what's going to be interesting is because the CDC monitors all the data at the national level, we're going to get the efficacy, like we've already seen at the last CDC's of GSK vaccine, Pfizer vaccine, soon Moderna vaccine. And my bet is that the three vaccines are going to be in a very similar zip code in terms of efficacy over time. And by the way, the public health leaders do not really care. We just spoke about COVID. It is highly documented that the Moderna vaccine is higher efficacy than the Pfizer vaccine. There's been the same recommendation. Why? Because the public health leaders want people to get vaccinated.
Period.
Yeah. They would rather you get vaccinated than not vaccinated. They don't want to have more confusion, more operational complexity. And so, the three vaccines, RSV, through the three manufacturers, have exactly the same recommendation. I think time will show we're on the same zip code on efficacy. I think there's a potential upside for our vaccine in terms of safety. If you look at the phase three studies, the two of our vaccines had Guillain-Barré syndrome in their studies. This is, as you know, monitored very closely by the CDC. I think when there was a decision by the CDC in June of this year not to do recommendation in the 50 plus bracket, some people were surprised. There was a lot of discussion. I'm sure that you and your team listened to the CDC call.
Because of the Guillain-Barré syndrome, that was a key element from the CDC ACIP team to be cautious at this stage, again, early in the life of a new vaccine. So, let's be cautious. Let's gather more data. If you look at the Moderna phase 3 study, we had no Guillain-Barré syndrome, so it's only 30,000 people. So, we'll see at scale when, again, the CDC starts to report the data. But again, if you think about the platform, it's the same chemistry as the spike vaccine, COVID vaccine. So, I expect that the Guillain-Barré syndrome rate on the RSV, Moderna, is going to be really low. And so, I think that's going to be interesting if we end up with a world where the three vaccines are in the same zip code for efficacy, but potentially our vaccine looks better than the two vaccines.
We could have actually a very interesting profile. And as you know, we are the only vaccine of the three that is in the prefilled syringe that will help. So, we have everything I told you. Of course, you're going to ask me, why, Stéphane, do you have a slow uptake at launch? And I think it goes back to the mechanics of how the market works in the U.S. In the U.S., most of the RSV sales are done through the retail channel. The retail channel, because so much of our profit happened during the vaccination season, they don't want to take risks not to be able to be ready and to maximize their sales and profits through the vaccine.
And so, with us coming with a June ACIP recommendation at the end of June, if you think about a big chain like a CVS or Walgreens, you need to do a lot in terms of getting the product for your system, the training of your staff in all of your stores. And so, we just came really, really late in the season. And if you see where the RSV vaccine is used now, it's mostly independent pharmacy because all the logistical problems you don't have when you are a one-store owner, you can decide very quickly.
And actually, the prefilled syringe component is quite good for you because you don't have to be in the back of a store preparing a product when you have important customers for you coming and waiting in the stores who might decide to walk out and walk two blocks and go to the chain. And so, I think the real season for us is going to be the season coming. We're going to start doing contracting like the whole industry does early in the year. We're going to have for the first time the ability to do bundling, which is what our peers have done. If you think about CVS, you work with Pfizer, and they have Prevnar, they have COVID, you know, they have RSV. Imagine the bundling opportunities. If you want GSK, you have Shingrix and other vaccines.
So, last year, we had no ability to bundle from Moderna. We just had spike vaccine. This year, we're going to have the two products. Also, with 1283 being on the horizon, the next-gen COVID, there is no next-gen COVID from Pfizer or BioNTech. There's no from anybody else. And if you think again about the elderly segment and look what happened with Fluzone HD, we might actually be a great opportunity for the retailer to do something pretty special in terms of growth next year.
In terms of increasing vaccination, that's really cool. So, we're looking forward to the phase 3 CMV data on mRNA-1647. Tell us about this vaccine and the CMV market, and what is the latest in terms of timing on data?
Sure, so CMV is a horrible latent virus. Some of you are familiar with some latent virus, like, you know, HPV is a great example of a great vaccine that our colleagues at Merck have developed to prevent cancer. Of course, Shingles and the Shingrix vaccines from GSK is also a great product from public health. CMV is one of those viruses that has been the number one priority of the National Academy of Medicine for 20 years and no vaccine available. Everybody has tried to do a CMV vaccine. You can go back to publication. Merck has tried, Sanofi has tried, GSK has tried. All the big vaccine players have tried because they know it's a very bad virus. It's a very bad virus because it creates a lot of damage into the human body.
One of them is its number one cause of birth defects due to an infectious agent during pregnancy in this country. Around 20,000 kids in the U.S. this year are going to have birth defects with lifelong disability in terms of brain cognition, a lot of miscarriage actually due to a CMV infection where the baby is so damaged because of a virus transmitted from the mother that nature takes care of the baby, unfortunately, so huge unmet medical need. There's also more and more data. If you look at long-term epidemiology studies like the one in Sweden and so on, how CMV has an impact because of inflammation on cardiac disease in the later years of life in some forms of cancer because of how much it puts a lot of weight on the immune system. Of course, the immune system is important to fight cancer.
So, a lot of bad things happen with CMV and CMV because it's a latent virus, meaning that once in your body, in your body forever. So, it's a very, very bad thing. And so, we are very pleased to have developed a vaccine that looks very exciting. If you look at the preclinical model, the phase one and phase two data, it's a six mRNA product. So, it's a very complex product from a biological standpoint, trying to do what we believe and a lot of scientists in the field believe is the right biology. There's an antigen to gB, which is what others have tried in the field, and an antigen to pentamer, which, as the name says, is a very complex protein structure made of five different proteins folding together. That is the second route that the virus used to go into human cells.
So, what people have done in the past, which is why we believe the vaccine has failed, is only give you antibodies against one route of the virus getting into human cells, but the other route was not available because of protein technology. But with mRNA, even we can do cocktails. We were able to do both. The clinical data are very exciting. Of course, the proof in the pudding is going to be efficacy. And that's what the phase three is working to demonstrate. As we've said, like any vaccine study, the way things work is it's case-driven. You need enough case in the study. It's, of course, 50% placebo, 50% active in terms of a study design, as you see most of the time in vaccine.
When there's enough cases across both arms, the independent safety board will look at the data, and based on the data, will inform the company. That's how things work. What we said is we said we believe we should reach and above cases for the first interim readout this year. We confirmed that recently. I confirmed again, this is the trial design. When that is reached, then we will inform the DSMB. Then this DSMB will run the analytics and will then inform us of what is the outcome. Did we meet the primary endpoint, or did we not meet it? If we don't meet it, then the study keeps on going. As you know, because you were there, we gave a lot of detail of what the statistics means. We are like everybody waiting.
When we have the data, of course, we'll share the data. I know nothing more than I knew yesterday when I knew last time I saw you, but we're totally on track with this plan, and when we have the data, we'll be very happy to share it. I know a lot of gynecologists I've spoken to are very excited about the vaccine, are waiting for the data, and are waiting to have a tool to protect women before they become pregnant. There's a low awareness of CMV in the general population. It's around 9%-10% in the U.S., and it's mostly women who are aware because a friend has been infected.
If you think about the incidence rate I mentioned and you think about a woman's network, friends from high school, college, family members, and so on, coworkers, the women who are aware of CMV is because somebody they care about has had to go through the trauma of having a baby with CMV disease. So, we need to do more on education. But if you look at OBGYN, who's going to be a key component of this, they know. Why? Because if a woman gets infected during pregnancy, they have to manage the very complicated pregnancy and the baby. So, there's no OBGYN who doesn't know about CMV. Very high awareness. The reason they don't talk about it, which I've seen being part of focus group myself with OBGYN, is because you can do nothing.
And what I've heard many times by KOL or practicing daily OBGYN, they say, "We don't talk about it, Stéphane, to women that we take care of because they can't do nothing." And we don't want to freak them out about something that could be terrible for what should be a very joyful moment in bringing a child to life. But as soon as there's a vaccine that's working, oh boy, we're going to make sure they know.
You know, everyone will use it because if you don't, maybe you're at liability. So, you know, usually when the pregnancy works up, anything that's proven and safe is going to be incorporated, especially something that's profound.
Yeah. And as you know, because you have children, I have children. I remember, I mean, it's a long time ago. Now it's 20 years ago, but I remember how, you know, we care deeply about the health of a baby. It's such an important and magic moment for a woman to bring a baby to life. I mean, as you look at all the magazines that exist and all the books and so on that women read to understand, to ensure their baby is healthy, and they do everything they can. And so, again, we have not wanted to do much right now because we don't have a phase three data. But assuming the phase three data are good, trust me, we have already a lot of plans set up by our marketing and media team to start educating consumers.
Again, there's so many between books and pregnancy magazines and so on. There's so many conduits and TV shows and so on to really get the word out. We are very close to the CMV Association, which is a patient association. So, there's a lot of things that we are ready to do in the starting blocks. We have not done it because we don't want to raise hope to women, in case, God forbid, that the phase three is not positive. But if the phase three is positive, you're going to see us to be very active because we're going to use the time of preparing the BLA to our advantage, to do a lot of education, of course, OB-GYN. So, I want to tell the team, every OB-GYN in the world to know before we launch the phase three data.
We'll do the very typical KOL cascade through conferences, both international conferences, domestic conferences, local KOL focus group, and so on, to get the data out to OB-GYN, just that they are aware of the data and the vaccine is coming soon, but we'll do also awareness on consumers, women, to make sure they're aware of the vaccine. Also, strategy like playing with educating older women because, again, think about the role of a mom or a grandma-to-be in terms of their daughters. You could have a huge leverage there, especially social media, because you can do so many cool things today to address a very targeted population, to go after, let's say, the grandmother and grandfather's category for them to go and to really drive to be a mom, just the awareness about, hey, there's this virus, are you aware, and by the way, there's a vaccine.
So, there's a lot of things that we've prepared that people have not seen yet that is in the starting blocks ready to go.
I'm glad we spent a lot of time on this because this is going to be a really important vaccine for you guys in the next couple of months.
I mean, if you think about it, sorry, just to finish, if you think about it, we've said we believe it's a $2-$5 billion opportunity per year. The higher end of the range will depend on our ability to go down in age because what most people don't appreciate about CMV, it's like rubella, meaning it's only in humans. So, we've already had discussion with the CDC. We're very interested to go and to take the vaccine down to the pediatric setting because if you had to run a 20-year campaign on CMV for newborns, you will eradicate CMV, like rubella was eradicated. The CDC is very, very interested. Because of COVID, that's why the beauty of the mRNA platform, we know our vaccine technology is safe in children because the COVID vaccine has been tested down to six months of age.
It's being used with a lot of safety data over many countries over several years now, over safety of vaccine in children. As you know, vaccine has no adjuvant, going back to where we started the discussion earlier about the political noise and so on. It's quite interesting that if you play this movie with this vaccine cannot be done using recombinant. mRNA could be the only way to do it. We are the only company that is even in a clinic, and we have days or weeks to get phase three data. This could be an extraordinary franchise for Moderna. From a cost of goods standpoint, because we use the same manufacturing platform, if I make CMV vaccine production in Q1 where our respiratory vaccine is low, I use basically free capacity.
So, think about a product that would be in the 90%, 95%, 98% gross margin that you use at the $2-$5 billion range forever in terms of DCF. This is an incredible opportunity for the company for which we're going to be pushing really hard, and I'm really, really pleased, and I'm hopeful that we're going to get good data.
We're excited for that data card to flip pretty soon. So, thank you so much, Stéphane, for being with us. It's always a pleasure. We could have spent an hour. We only got like.
Yeah, talk about cancer though.
We didn't talk about cancer or my favorite stuff though, or if it is stuff. But appreciate you being with us and keep up the great work. It's really good to see you.
Thanks.