Moderna Inc (NASDAQ:MRNA)
Q1 2020 Earnings Call
May 9, 2020, 8:30 p.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to Moderna's First Quarter 2020 Conference Call. [Operator Instructions]
At this time, I would like to turn the call over to Lavina Talukdar, Head, Investor Relations at Moderna. Please proceed.
Lavina Talukdar -- Head of Investor Relations
Thank you, operator. Good morning, everyone. Welcome to Moderna's conference call to discuss our first quarter 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; Tal Zaks, our CMO; Stephen Hoge, our President; and Lorence Kim, our CFO. Before we begin, please note that this conference call will include forward-looking statements. Please see Slide two 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.
Stephane Bancel -- Chief Executive Officer
Thank you, Lavina, 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 better manufacturing capital efficiency and lower cost of goods than injectable recombinants. Given the amounts of working with 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 into other modalities, prophylactic vaccines and systemic secreted and cell surface therapeutics, data that we believe fundamentally changed the risk profile for each of these two modalities that we now call comodalities. As a result, our strategy is to double down in these two comodalities with many important new development candidates space. We have already announced five new development candidates in these comodalities since January 13 at the JPMorgan Conference: three new development candidates in infectious disease: prophylactic vaccines and two in the systemic secreted and cell surface therapeutics modality.
While we focus on doubling down in comodalities, we are still very interested in understanding the potential of our mRNA technology in our current exploratory modalities: cancer vaccines, intratumoral immuno-oncology, localized regenerative therapeutics and systemic intracellular therapeutics. So when we think about the company, we basically have two distinct area of focus. This is a significant point in our strategy. We have comodalities we want to scale and invest and exploratory comodalities that continue to be a big driver to the company's future as we await clinical data to decide the path forward. So stepping back, I would have 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 influenza vaccine in December 2015. In the clinic, our next goal was to learn how well our technology was working or not. We explored our technology across six different modalities. We tested 16 different molecules in the clinic in a short 4-year period. In 2019, we generated important data in two of these six modalities and identified our first two comodalities, infectious disease prophylactic vaccines and systemic secreted and cell surface therapeutics.
Early in the year, we entered a new phase of company's development. Our goal for this next phase in our history is to file multiple BLAs while continuing our clinical programs in the four 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 three to four years. Our vaccine against SARS-CoV-2 virus, mRNA-1273, 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 II. It's just nine 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've 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-1273 in 2021. That is an acceleration of several years versus the plan we had just months ago. Moderna should be a commercial company sorry, Moderna should be a commercial-stage company in 2021. That is two to three years ahead of our 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 three new addition to the leadership roles of Moderna. First, Patrick Bergstedt. Patrick joins Moderna as Senior Vice President, Commercial Vaccines. Patrick will report to me. Patrick joins from Merck & Co. where he most recently was Head of Global Marketing & Commercial Operations 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. The 20-plus year veteran in the biopharma industry, Patrick has held various leadership positions within the infectious disease and global health at Merck in the U.S., in Europe, but also in Asia. Second, Jacqueline Miller, Dr. Jacqueline Miller. Jacqueline will be joining Moderna on May 11 from GSK as Senior Vice President, Infectious Disease Development. Jacqueline joins the company from GSK where she held a variety of leadership roles since 2005. Most recently, Jacqueline was the Vice President and Head, Clinical R&D and Epidemiology, where she built and led the clinical and epidemiology research team at the first GSK vaccine research and development center in the U.S. And third, Dr. Charbel Haber. Charbel joined Moderna on April 21 as Senior Vice President for Regulatory Affairs. Charbel joined us from Biogen, where he served as Vice President, Global Safety and Regulatory Sciences since 2017.
In this role, he built and led the Global Regulatory Strategy Department, the clinical trial application group and the Medical Writing group. Prior to Biogen, Dr. Haber, was Head, Global Regulatory Affairs-Immunology and Neurology at EMD Serono. I am very excited to welcome Patrick, Jacqueline and Charbel and look forward to their contribution at Moderna as we embark on the commercial stage phase of our company. It is a bittersweet moment to announce today the departure from the company of Dr. Lorence Kim, our Chief Financial Officer. Lorence 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. Lorence super-chanced on Stephen Hoge and I and decided to leave a great job by Goldman Sachs to join us. The company is now public with 23 development candidates and preparing its first Phase III. Lorence will manage with us for a smooth transition. He will do Moderna second quarter conference call in August with us before leaving the company.
I am very thankful for Lorence's contribution over the years and for the constructive discussion he and I had about entering a smooth transition. There is never a good time for leadership transitions, but the company is very well capitalized with around $2.4 billion of capital to invest to create value. And we need to focus on the next phase of readiness for the company to be commercial. We have retained Russell Reynolds for the search for Moderna's next CFO. We will focus on a CFO who has 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 wanted to take a few minutes to frame the opportunity in our vaccine modality. We believe mRNA has the potential to be a new class of vaccines, where each of the four 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 first-in-class vaccines that do not have products on the market today to protect as many people as we can. Second, a relatively high probability of technical success.
As we discussed at our Vaccine Day, Dr. Andrew Lo from MIT has shown that from the start of a Phase II, i.e., post the Phase I, to approval, vaccines have 42% probability of approval. This is the highest probability among all categories of medicines in clinical trial. We think this is a very important value driver for this franchise. Further, we think an important driver is speed, speed in the labs. Even we have a platform. We can study many candidates in parallel in preclinical setting. Most difficult development candidates to take into the clinic, we can do it very quickly, as we have shown recently with SARS-CoV-2 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 cell-free manufacturing process, it can drive much lower capex versus recombinant protein manufacturing. The second dimension is the capex leverage across value chain. For example, when we decided to go after SARS-CoV-2, 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?
Tal Zaks -- Chief Medical Officer
Thank you, Stephane, and good morning, everyone. I'll start with a quick reminder on the data generated to date with our vaccines. In over 1,500 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-1273, our vaccines against SARS CoV-2, and will 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 II dose confirmation study is fully enrolled, and we still expect data readout to come in the third quarter of this year, despite having had some COVID-19-related disruptions. At our Vaccines Day on April 14, we announced positive interim analysis of our Phase I study for our Zika vaccine. At the two lower doses of 10 microgram and 30 microgram, we achieved seroconversion rates of 94% and 100%, respectively. The two higher dose cohorts of 100 microgram and 250 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-19 disruptions.
Our RSV program with Merck continues. So this has been covered in detail, but just to quickly pace everybody on the same place, our SARS-CoV-2 vaccine, mRNA-1273, which was a subject of much work and discussion in the first quarter 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 NIAID had filed. The 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 II study. Last Friday, we announced a collaboration with Lonza to manufacture mRNA-1273 at scale, with the goal of producing up to one billion doses a year. And of course, today, we announced the FDA clearance to start the Phase II part. In parallel, we have been working on the Phase III protocol, and we are finalizing that with an aim 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 three dose cohorts, 25, 100 and 250 microgram, with each participant receiving two vaccinations a month apart. Phase III 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 two additional age cohorts, a 56- to 70-year-old cohort and a 71-and-above age cohort. Each of these age cohorts will include three dose levels also at 25, 100 and 250 microgram at the same vaccination schedule. In terms of the late phase development for mRNA-1273, as mentioned before, the Phase II study is expected to start shortly. This study will evaluate the safety, reactogenicity and immunogenicity of two vaccinations of mRNA-1273 given 1-month apart. Volunteers will receive either placebo, 50 or 250 micrograms at both vaccinations. This study will enroll 600 healthy participants and two cohorts of adults, ages 18 to 55 and 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 and Lonza announced a strategic collaboration with the goal to enable manufacturing of up to one billion 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-1273 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 for 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 third quarter of 2020. Importantly, greater than 70% of participants have now received their second vaccine dose. A protocol amendment was submitted to expand the time frame for the remaining participants to receive their second dose as well.
As a reminder, we plan to select a dose for the Phase III 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 first quarter of 2020, we also received constructive feedback from the Type C CMC meeting that we've had with the FDA. Moving on to mRNA-1893, 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 a fairly benign safety profile, consistent with what we've seen before for other vaccines. And at the two lower doses of 10 and 30 micrograms after a two 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 if 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 Lorence.
Lorence Kim -- Chief Financial Officer
Thank you, 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 in that discovery and development of potential mRNA medicines for the treatment of cystic fibrosis or CF by enabling cells in the lungs that people see us to potentially produce functional CFTR proteins. In July of 2019, the initial research term was extended by six 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 first quarter 2020 financial results. Note that these results are unaudited. We raised approximately $550 million in net proceeds from the February public equity offering, which resulted in us ending Q1 2020 with cash, cash equivalents and investments of $1.72 billion. This compares to $1.26 billion at the end of 2019. Net cash used in operating activities was $106 million for the first quarter of 2020 compared to $144 million in 2019. And just as a reminder, that latter number includes an in-licensing payment of $22 million, which will not recur. Cash used for purchases of property and equipment was $6 million for the first quarter of 2020 compared to $8 million in 2019. Revenue for the first quarter of 2020 was $8 million compared to $16 million in 2019. This decrease of $8 million in revenue was mainly due to cumulative catch-up adjustments resulting from changes in our estimated costs for our future performance obligations, coupled with the timing of amortization of deferred revenue due to the satisfaction of our performance obligations. R&D expenses for the first quarter of 2020 were $115 million compared to $130 milli
