Thanks for joining us everybody. I'm Terence Flynn, Morgan Stanley's U.S. Biopharm Analyst. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Very pleased to be hosting Moderna this morning. From the company, we have Stephen Hoge, the company's President. Stephen, thanks so much for being here.
Really an opportunity to get to speak with you today. I guess first what I wanted to start off with is INT program is front and center. Congratulations on the positive phase III adjuvant melanoma data. Maybe just talk to us about the implications of that data for the broader strategy at Moderna in terms of what does this mean for additional indications, what does this mean for leaning in on the program? Just high level before we dig into some of the data questions that I have.
Yeah. Of course. Well, first, thank you again for having us. Always a pleasure to be here. Look, we're obviously thrilled by the results that were announced. The idea of a T-cell priming approach, a vaccine, if you will, approach to treating cancer, has been long promised, but this is the first time that we've been able to see a statistically significant and clinically meaningful result, as we said in our press release. It was also the first time anybody's ever achieved that kind of benefit over KEYTRUDA in the adjuvant setting in melanoma. That's not because there wasn't a lot of attempts.
We think it bodes really well for the hypothesis, the scientific hypothesis, that we've been working on ourselves for over 10 years, which is if you can prime T-cells to see the tumor, are they able to mobilize a substantial response? Not just in combination with KEYTRUDA, which helps with T-cell exhaustion, but actually against new and more diverse sets of tumors. The phase II results that we had from five years ago were exciting. We recently provided some scientific updates at ASCO, and we're looking forward to sharing more, and we're quite optimistic about the large book of work we've got with ongoing studies right now.
Great. Do these data at all change the investment opportunity? As you ramp investments, are you guys going to lean in? Does that change the break-even target at all? I imagine you have a certain number of indications you are already looking at, but how do you think about a broader rollout of this in the future?
Yeah. Look, I think we are still targeting break even 2028, and that has been based on the strength of our infectious disease vaccines business. We now have five products approved, and I am sure we will talk more about it, but with approval of our flu product in the U.S., our combination product outside the U.S., in Europe. So we are looking forward to building that franchise. We have been investing in INT, in intismeran, underneath that. We currently have a very large book of work with our partner, Merck, that includes nine ongoing clinical trials, multiple phase IIIs, in fact, three randomized phase IIIs in lung cancer, as well as melanoma, as well as studies we may talk about in renal cell carcinoma and bladder cancer, both muscle invasive and non-muscle invasive.
All of that is actually investments we have really made over the last few years and is baked into that perspective. The caveat becomes then, as this data comes out from INT, how do we respond to it? In particular, where are the places we might go next? Those include looking at monotherapy opportunities, earlier stage disease, Stage I. Of course, where the data directs us, we will want to be in a position to make those investments. We are in a strong financial position thanks to the convertible debt we recently put in that we will have more than enough on our balance sheet if the data directs us to make those investments, but we want to be responsible about it. So we are going to wait and look for data and then respond to that as we go forward.
Okay. Makes sense. Maybe we will dig into the melanoma data a little bit here, but just wondering, I think there is an expectation we could see the full phase III data at ESMO. Do you think that is a fair venue for this type of data?
You know how these things go. We look forward to sharing it at an upcoming medical meeting, and that medical meeting will determine when they want to announce.
Okay. We hosted a KOL a couple of weeks ago, and he stated that he'd consider a hazard ratio of less than 0.75 as exciting, but ideally looking for 0.65. As we think about that, do you think that's a fair characterization from what clinically meaningful is for this data set?
We would agree with that. I think those are reasonable. Again, I'd come back to KEYTRUDA itself, in the adjuvant melanoma setting is a very effective drug. Obviously, Nobel Prize winning innovation, but a product that has had a huge impact on how we treat cancer. That standard is really what we compare ourselves against in this phase III trial. It's a very active comparator. We would want to provide a meaningful benefit, and as ourselves and Merck put out in the press release, we think we have provided a clinically meaningful benefit based on this first interim analysis.
But ultimately, we look for the field to look at that data and make their own determinations. We also hope that that data matures. We look forward to it over time. If you think about that phase II result from five years ago, we saw continued maturation over the full five years. We'll look forward to that. But can't wait to get the first round of this data out there so that people can start responding to that directly.
Okay. We're looking forward to it. The other question we get a lot is just read-through potential from this trial to other tumor types. I know you and Merck have a broad program, as you mentioned.
Yeah.
What are some of the other data points we should look for in this phase III presentation? That will give us insights into likelihood of success in these other tumor types that you're conducting right now.
Yeah. Look, when we share the data, the things that people want to look at is, to what extent do they reproduce or look like what's happening in the phase II, and to what extent do the things that we looked at in new populations look similar or different? So stage of disease. We have some Stage II population in the phase III trial. What does that look like? How does that compare against later stage metastatic or otherwise? The shape of those curves. We will look forward to understanding at what point do the curves separate. You know they separate because it was a significant result, and how does that separation shape look like over time? Median follow-up of a couple of years now, you start to get a sense, but really maybe try to predict the future.
Obviously all the subgroup analyses and just understanding what we can take from it. Based on the totality of clinical data we put out there, as well as what we understand of the phase III so far, we think it's a really exciting new space to do T -cell priming. That really creating T -cell populations that can see tumors, can see these mutations specifically, does look like something that is powerful and incremental to the checkpoint inhibitors like PD-1, like KEYTRUDA. That's exciting because I don't think we've ever really been there. There are lots of combinations that were tried, lots of IO combinations tried in the adjuvant setting around T-cell exhaustion. Think of all the other checkpoint inhibitors we saw, and we never got to something like this, even just in the top line press release we already put out.
We're looking forward to exploring all the ways in which that translates across other indications. Lung cancer is a big one. We talked about bladder and renal cell. Then, for me personally, I get very excited about the Stage I and early stage disease because one of the features of the product that we're proudest of, again, think about the publication that's already out on the phase II, is its safety profile. Any cancer drug is a benefit/risk calculation, but when your safety profile really isn't adding significant Grade 3 events, Grade 3 to Grade 5 events, it really speaks to an opportunity to treat a much broader population much earlier.
Yeah. How do we think about hot versus cold tumor types? I know that's another debate.
Yeah.
There's another competitor of yours who kind of had focused more on some of the colder tumor types like pancreatic and colorectal.
Yeah.
You guys have seemed to have leaned more into kind of the hotter tumor types. How do you think about the read-through from hot to maybe cold or medium tumors?
Yeah. I think first, what I can speak to is the data that we've already put out there, which is in melanoma, when we looked at that phase II result, all the translational data and the subsequent analyses, and again, posters at ASCO and other publications, a few things jumped out. We saw a favorable hazard ratio regardless of tumor mutational burden, regardless of PD-1 status, and so favorable hazard ratios in both situations. Then there was a tumor inflammation scoring version of the same. Again, where we saw an opportunity to improve upon KEYTRUDA regardless of the background tumor inflammatory status. I think it was a couple of years ago in a poster at ASCO. If you take the totality of this, you kind of have to pull back and say, it doesn't feel like it's following the rules of a checkpoint inhibitor.
That would make sense. It's not a checkpoint inhibitor. This is T -cell priming, not T-cell exhaustion. It should be pioneering its own rules. I just don't know how far that goes, Terence. Do we see that many of the other features about the tumor inflammation don't matter? Possibly. We've got to go explore the stage of disease. It clearly will matter. I think we feel strongly that adjuvant and earlier are places that are the most fruitful to look, because you want to get down to really minimally residual disease, and then what you're trying to do is prevent a recurrence, a relapse, and ultimately the long-term survival. That's where we're focusing our energy. But I think the rules are to be discovered, and the limits around it are to be discovered.
As far as other experiences, BioNTech's or others, we do such different things technologically, including the way that we're delivering it, the dosing regimen, the lipid nanoparticle that we use versus their approaches, and algorithmically, that I'm not sure how to compare them. I understand that it's worthwhile looking at them, but I don't think I know yet how to read through.
Okay. The next two readouts I think are phase II for bladder cancer, kidney cancer, so maybe just remind us kind of design features of those studies. You mentioned going early, so these are adjuvant combo with KEYTRUDA. But any other design features that you think are important, then frame for us, I know you're not going to put a number on it, but just likelihood of success, like where's your confidence highest amongst these next set of readouts?
Yeah. Look, I think across what I would describe as the Phase III's in lung, which are going to take a little bit more time to read out, but we're quite enthusiastic to see. Obviously for all the reasons, non-small cell lung cancer, there's a huge opportunity there to continue to improve, but PD-1's have shown a great benefit. I would highlight those as ones that we're actively working hard to enroll those Phase III's, then we'll be event driven analyses. But we've really covered the gamut from a couple of adjuvant studies, looking at adjuvant and neoadjuvant interventions. A Stage I study which is really going early and I think is a place even looking at monotherapy. Then we have a Phase II study looking at metastatic at frontline, which will be interesting. But that's only a Phase II.
So we're clearly long on lung when you look across those three Phase III's and a large randomized Phase II. I think if you're looking more proximally in terms of coming readouts, which I think was your question, we've highlighted RCC, renal cell carcinoma, and muscle-invasive bladder cancer as ones that are fully enrolled in event-driven trials. There is also a non-muscle invasive bladder cancer study that's not yet fully enrolled, but all three of them are essentially approximately 300 patients randomized one-to-one against the standard of care, and particularly the muscle-invasive bladder cancer and the renal cell carcinoma, that's against KEYTRUDA. You mentioned it, but just to underscore, it's the adjuvant setting. And those are both places where PD-1, KEYTRUDA particularly, has shown a meaningful benefit. And so we know an immune therapy can work.
The real question is, just like we have shown in melanoma, can an alternative approach to immunotherapy in cancer, not checkpoint combinations, but something completely different add again on top of that? And I think those are the two that I wouldn't want to characterize optimism or pessimism, but that I'm most scientifically curious about.
Yeah.
Because they're essentially fully enrolled, randomized against the gold standard for care. MIBC has had some evolution in that standard of care since we've completed that study. But the readout, the value of that will still be there. And I think on both, I'm keen to understand, do we continue to add a benefit? RCC has a lower tumor mutational burden, and so many folks point to that one as the other extreme from melanoma in the current portfolio and book of work. And so we're hopeful for that. But I think we'll learn a lot from the MIBC study as well. Then I wouldn't lose sight of the non-muscle invasive bladder cancer study. That's a monotherapy study. It really gets to this idea of, can you intervene early and with INT alone, which will also be event-driven and also a phase II that could readout in the near term.
Yeah.
Lots of data coming. I just would tip of the hat to our team, but also Merck as a partner. The approach they've taken, we've taken for the last fur or five years is to set this up as not a melanoma and then we get started, but a melanoma and then every six months, you're seeing waves of clinical data, first RCC, MIBC, non-muscle invasive bladder cancer, several lung cancer studies and other things coming. It's many years of looking forward to clinical data in the program right now.
Great. Definitely going to be an exciting period of readouts. The one follow-up on RCC before I go to some commercial questions is just I think there's been this debate about, you said lower tumor mutational burden, but maybe a higher rate of indel mutations.
Is that the counterpoint to that, where that maybe puts a higher likelihood of success, potentially?
Yeah. I mean, they all present antigens, right? They all will be non-native antigens that your immune system or a patient's immune system will be able to use to specifically identify the cancer. And so frameshifts, indels, all those sorts of things create novel opportunities for presentation. We know that PD-1 antibodies work in the RCC context. You kind of know the immune system is ready. The question is, can we get it more focused on those things and the right things? Yeah, it's an interesting tumor in many respects. Frameshifts are something that we're obviously curious about more broadly.
Okay, great. These two trials, the phase II MIBC and RCC, if, let's say, the melanoma data support an approval, does that increase the likelihood that you think FDA will be more willing to lean in on these phase II trials as registration-enabling and some kind of accelerated approval pathway? I know you guys were optimistic back in the day around the phase II original melanoma data.
Yeah.
Obviously, you need to generate the phase III, but how do you think about registration enablement of these phase IIs in light of, let's say, you do get approval on the phase III melanoma data?
Yeah. So the core technology in manufacturing, and if you think of it as sort of the modules of the BLA, it's common between them, right? So if melanoma's approved, you have worked out a lot of the CMC and manufacturing questions, and ultimately also the safety profile of the product in large respects, because it's, again, the same combination partners. So what you're left with is clinical evidence of substantial evidence of effectiveness. I think that will boil down to the data, and any good regulator, but also any company should sit here and say that, right? Which is, if there's a strong benefit, hopefully one that's even statistically significant, then there's really no reason why the studies can't and shouldn't be registrational. They're adequate, they're well-controlled, they're against their standard of care.
If they are statistically significant in terms of benefit, you have got all this other safety and manufacturing data, it can and should be. Now, the question is if it is taking more time for those events to accrue, or if there is some reason why the study does not quite get to a statistical threshold, and we know at that point, I think it is probably harder to believe it is registrational, but there are other pathways forward that obviously putting the data out there might allow practice to sort of begin to adopt it. But these are all data-dependent, and so I think we are all just waiting for these event-driven studies to hit their analysis.
Yeah. Okay, great. Maybe just moving over the commercial side.
A question we get a lot from investors is just manufacture readiness.
Right.
Turnaround time, scalability. A lot of chatter out there like, "Oh, this is going to be like CAR T therapy. It is so individualized, it is going to be very complicated." I know you guys have done a ton of work here over the last years to improve that vein-to-vein time. So maybe just talk to us about where you stand from a commercial readiness standpoint and your view on scalability in the event that more indications read out positive and there is-
Yeah.
... greater demand for this product.
I think we are extremely well-positioned for it. We have not broken out a lot of the investment we were doing over the last few years. And obviously there was questions about breakeven along the way, you know, that we faced. But a huge portion of that investment was building capability in INT and then running these nine global trials. As a reference point, we have treated about 3,000 patients. In the last 18 months alone, it is probably close to 1,500 - 2,000, all delivered from a purpose-built manufacturing system, and that is in 40-odd countries. That is commercial scale, because we are enrolling three phase III's in lung cancer and running the melanoma and five other studies in phase IIb's that we were just talking about.
We are already kind of operating at commercial scale across histologies and globally, and that is because we built in Marlborough, and I think we are going to host folks there at some point, would love to have you there, a completely new manufacturing system. It is highly automated, it is unlike anything else that maybe people have seen in the manufacturing space. And it has actually already been supplying into the clinical trials. So that facility that we have there, we are confident can supply launch, and as we bring people in, you will see within about 12 months of lead time, we can take that facility's capacity up another sevenfold. In fact, one of seven ballrooms is built out. All the technology is licensed, all of it is built out and sitting in that facility.
It is being used in clinical trials now, and within 12 months, we can essentially double that every time we need to. So we are very confident that we do not need more, certainly for the first few years of launch. If things really take off on us, then we will want to talk about a second facility at some point. But we believe we can get there. We are already operating at commercial scales globally in our large global clinical trial program. And I think it is where people are different than CAR T. You were talking about treating 100 patients in a clinical trial versus 3,000 globally in 42 countries. I mean, we are already kind of having to do something very different.
Yeah. Is that 1,500- 2,000, is that the steady state number for that Suite 1, or there is more room?
Much more room.
There is more room in-
Much more room.
... Suite 1.
We think that Suite 1 of 7, and we will figure out what we are comfortable disclosing in the future, but we actually do not think we need Suite 2 for launch.
Okay.
Still supporting the clinical trials, so we have capacity.
Okay, great.
What you will see when you get there is it is a beautiful automation that has been built into the system.
Great.
We took everything, all of the pain and difficulty that we had, all the engineering knowhow that we learned from scaling COVID from we had never sold a dose to a billion doses a year in 2021, 2022. We then pivoted in 2023, 2024, 2025 into establishing something completely opposite in some ways, but equally technologically a marvel, and that is now paid for. It has been established, and so again, coming from that breakeven question that you asked at the beginning, we have already kind of built it all.
Okay.
We were doing that over the last few years.
Okay, great. I know Stéphane has made some comments about potential price points of INT, so maybe just anything you can elaborate on there, and then what does that mean for the margins of this kind of product? Because that is another question that we get from investors is just, again, going back to the individualized nature of this therapy, does that necessarily mean a lower gross margin profile for the product?
Yeah. So, it's premature to talk about pricing, notwithstanding anything Stéphane might've said, because ultimately we're going to price to value, and we need to get the data out there, and then have conversations with payers about that value. Obviously, the stronger the impact, the more value you create for a healthcare system, and obviously that impacts pricing. So let's get the data out, and we'll talk through the specifics of it. But suffice it to say, we do believe that there's a clinically meaningful benefit here, and we have already.
Again, I would come back to you've seen our operations on top of everything we've been doing scaling a respiratory vaccines business has been baked into our P&L over the last few years. So what people probably don't fully conceptualize is the degree to which we are already doing all of this and paying for that in terms of the P&L perspective. As we move forward, we're pretty confident about that margin profile. Now, everything will be scale-dependent and pacing when we build out capacity and bring it online versus when there's demand there will sort of be a bit of an art in the first few years of launch as it is for any product.
But if you want to talk about steady state for INT, yes, it is individualized, but the actual manufacturing technology and the actual chemical matter that goes in the vial at the end of the day is essentially the same across all of the patients. The sequence, the information is different, but that isn't the biggest driver of cost for us. It is not taking cells from a patient and engineering them and all the things that went into CAR T. It is much more like a traditional complex biologic, but not a cell therapy. We hope over time that the margins are very competitive with other complex biologics.
Okay.
But not cell therapy.
Okay, great. The other one, it's a good segue to one of the other ones we get, is just the antigen selection process. I know that's something proprietary. You guys have spent a lot of time perfecting that. Talk to us about if you do make changes to that down the road because of additional learnings, let's say, in other tumor types, what that means from a kind of FDA approval process. Is this something where it's kind of like a flu-like change, where you can just roll that out, or do you need a whole clinical program? That's the first part, and then somewhat related is retreatment potential.
Yeah.
You talked about metastatic. Obviously, the field is focused more on adjuvant given some of the data, but you guys still do have some metastatic trials. Let's say, theoretically, in a future use scenario, you have a patient that received one INT for an adjuvant setting, but then unfortunately the disease relapses, metastasizes down the road. Is there some reason to think that they could get retreated with a different INT product or something like that?
Yeah.
Again, kind of somewhat related, but two-part question.
Yeah. Maybe I'll take the second part first. I think so. We don't have any data on it, so I don't want to create expectations. But if you ask me from a hypothesis perspective, or us from a hypothesis perspective, if you have a relapse and it's because the mutations that went into your INT were essentially removed from the tumor, the cells that express those mutations were killed by your immune system, then there's no reason why you shouldn't then take the new mutations and create a new product against it.
Retreatment with the exact same product, probably not, but retreatment with a product that reflects your tumor as it has changed to relapse, for sure. In fact, you could almost just argue that's a different cancer, even if it kind of came clonally in its distant past. And in that sense, I look forward to the day when we have that data. I really can't come up with a reason why it wouldn't actually benefit. Again, this is about unmasking your tumor, and if it puts on a mask or loses those features that your INT was targeting, it should be valid. The first part about, I forgot, Terence. I'm sorry.
The FDA approval process for a new
Right. Yeah.
If you make, let's say-
Yeah.
Let's put it in two categories. One is minor changes to the antigen selection process, but the other would be-
Yeah.
Again, I'm assuming if you're making major changes, it's definitely a totally new product.
This is the most exciting part of the field. Again, scientifically, we have put out at ASCO some of the data on T-cell clonality and actually showing in individual patients what are the T-cell clones that are really associated with their not having a relapse or not. Across the population, I think there was seven patients, we went very deep on that, but more broadly across the population, can we start to show what's the mechanism action? What's the root cause? Now what you start to be able to do is say, "Now how do I predict that clonality, and how do I" That was on a phase II where we had 100 patients treated. We've got several thousand now, and in the melanoma study, about 800 patients.
You're going to massively expand your ability to say at a population level, what are the features of these T-cell clones that predict survival? We're in the early stages of looking at that, but if you got to the ability to say, "Well, no, actually, among these 100 options, there are a few here that are going to have a higher propensity to predict survival," which is something we'll look very closely at with our partner, Merck, then you might want to do maybe a more substantive update, right?
At that point, the real question, and we've been working with the FDA closely, with EMA and other regulators, because software is a part of the drug, to define what kinds of software updates constitute a major change and require an sBLA versus more just kind of a process change, a prior approval supplement type approach. The basic answer won't surprise you. The more you expect a meaningful improvement in clinical outcomes, the more it starts to look like a new product or a new version of a product. That doesn't necessarily mean that you need a new clinical trial.
You can imagine how you used the flu example, how there's lots of instances where you change a product to make it more relevant for today, but where you don't have to go back because your product is still, you're able to look at translational biomarkers and data like I was just describing and say, "Look, I'm going to get you all that benefit and then some." We're pretty excited about that because it's a space where we think with continued improvement and ultimately the flywheel we have with more data coming in from our translational data and more opportunities to drive those improvements, that we're going to have an opportunity, again, with that proprietary data set, to really advance the field pretty dramatically, and maybe even ultimately advance the label.
Okay, great. Maybe just in the last few minutes, and pretty amazing we've gone half an hour without talking about your vaccines portfolio. But again, obviously a key part of the commercial business, the breakeven plans, you guys now have three vaccines in the portfolio. Just talk through what that scale means as we think about the forward outlook for this. How much of an advantage does that give you versus when you were kind of a single product vaccine company?
It's transformational. We've come a long way. You go back sort of three years ago, we were pursuing our first approval. We had a COVID vaccine, and dreaming of a day where we would have a more diverse portfolio because flu and RSV are the other sort of big respiratory threats, and then opportunities for combination that could be differentiating. You said three products. It's actually five now product approvals that we've achieved. Obviously, COVID, flu, and RSV, the first combination product, and then a second-generation COVID that has really shown in the real world, as well as in its clinical trial, phase III trial, mNEXSPIKE, we think superior performance. We're excited by that. That just gives us, it's a completely different conversation. Most respiratory vaccines contracting is at a portfolio level.
A portfolio of one is substantially inferior to a portfolio of five. Internationally, we have established through strategic partnerships, with U.K., Canada, Australia, other governments coming online, the ability to offer them flexibility across that portfolio. If it is a big flu year, you can buy more flu. If it is a big COVID year, if you want some combo. That allows a completely different conversation with those governments. Then within the U.S., with healthcare systems, with pharmacies, portfolio-based contracting is obviously an advantage for us. We are having our first taste of that in some ways this year. In the years ahead, we look forward to taking full advantage of it.
Yep. Any early insights you can give us as we think through to next year in terms of how you said you have had some early learnings from that scalability? Just any insight in terms of how that is going or how to think about it? It seems like we should be maybe more optimistic for kind of a more meaningful growth inflection.
I do not want to raise expectations anymore. Our guidance for now is up to 10% growth on the top line for this year, and as we look forward towards break even, we kind of have retained that. We think that is the right sort of mental model for us. I think across the board, what we are seeing is enthusiasm for that portfolio. What is great for us is we do not need more commercial infrastructure, we do not need different manufacturing infrastructure. It is all basically diversification of our sources of revenue and gives us new products to sell into customers that are already familiar with us from COVID.
I do think there are a couple features that we are really excited to bring to the market. So flu is one, mFLUSIVA, our approved product in the U.S. It is the first really enhanced efficacy profile for seniors that comes without egg-based manufacturing. 95% of flu vaccines are currently made in eggs. That matters because eggs lead to antigenic drift and mismatch in more than half of years. So about half the time you will have one of the three strains with an egg adaptation mismatch, and that was talked about at the FDA at VRBPAC, it has been talked about for decades in the CDC and WHO.
We finally have a solution to that because mRNA allows us to make a perfect match to what they are targeting. So we are excited to bring that innovation into flu, because we think it will add a lot of value. In Europe this year, we are launching combo, a flu/COVID combo, so one shot, more protection. We are pretty excited to bring that as a way for healthcare systems to improve their public health outcomes without adding the cost of having to store two shots, of paying for two administration fees. There are lots of places where we think we are positively disrupting the system and hopefully will add a lot of value.
Great. Well, I think we are up against time, but thank you so much, Stephen, always a pleasure.
All right. Thanks, Terence.