Good morning and welcome to Moderna's Fourth Quarter and Full-Year 2019 Conference Call. At this time, all participants are in a listen-only mode. 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'd like to turn the call over to Lavina Talukdar, Head, Investor Relations at Moderna. Please proceed..

Thank you, operator. Good morning, everyone. On today’s call we will discuss Moderna's fourth quarter and full-year 2019 business update 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 Stéphane Bancel, our Chief Executive Officer; Tal Zaks, our Chief Medical Officer; Stephen Hoge, our President; and Lorence Kim, our Chief Financial Officer. Before we begin, I would like to remind everyone 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. I will now turn the call over to Stéphane..

infectious disease prophylactic vaccines and systemic secreted & cell surface therapeutics. We're entering a new phase of the company's development. Our goal for this next phase of our history is to sign multiple BLAs, while continuing to explore on the clinical programs in the four exploratory modalities.

We are [indiscernible] to invest aggressively in our science, including investing in new modalities such as our ongoing collaboration with Vertex. We are fortunate to be able to close the financing earlier this year, so we can maximize our potential to create value and manage risk.

Once we file multiple BLAs, our goal will be to scale the company and commercialize a large portfolio of mRNA medicines. Now Tal will take you through prophylactic vaccine programs..

Thank you, Stéphane, and good morning, everyone. I'll start with a quick reminder on the data generated to date with our vaccines.

In over 1,000 healthy volunteers and 6 positive Phase 1 datasets to date, we've observed the safety profile consistent with the safety of marketed vaccines and the ability to elicit an immune response in the form of neutralizing antibodies. Updates for the ongoing programs are shown on this slide.

The CMV Phase 2 dose confirmation study is enrolling well. We completed the second dose cohort and are close to completing the third one. We now expect data readouts to come in the third quarter of this year. Our hMPV/PIV3 combination respiratory vaccine has started the age de-escalation study and Merck is on track with their RSV program in adults.

Zika is also going well as 3 of the 4 dose cohorts have completed enrollment. Our three new development candidates announced recently are vaccines against pediatric RSV, mRNA-1345, Epstein-Barr virus or EBV, mRNA-1189 and our vaccine against the novel 2019 coronavirus mRNA-1273. Stephan, will take you through each of these candidates in a minute.

CMV is an unmet need as there aren't any approved vaccines and the burden of disease from CMV infection is significant. Of the 25,000 newborns in the U.S. affected each year, 20% will have permanent neurodevelopmental disabilities.

And the spectrum of sequelae range from hearing loss, vision loss, microcephaly and even mortality in 10% to 30% of the severely affected infants. We believe our gB and pentamer vaccine has the potential to prevent the infection and help thousands of newborns avoid these sequelae. On Slide 16, I'll review the most recent data from our CMV program.

In January of this year, we show the 7-month interim data. The safety has been generally well tolerated and we've not seen any related serious adverse events. Immunogenicity data continues to confirm earlier interim data from the trial and continues to exceed our expectations.

Specifically, we continue to see higher neutralizing antibody titers in seronegatives and seropositives in both epithelium and fibroblast assays.

If you look at those who have never had CMV, the seronegative group after the third vaccination, they had neutralizing titers against epithelial cells that were more than tenfold higher than the levels seen in seropositives at baseline. We also saw a nice increase in titers against the fibroblasts.

Even in seropositives, people who have been infected, our vaccine is able to boost them 20 to 40 fold higher above baseline level after the third vaccination. And we see early evidence of durability out to 12 months.

These data are what's behind our optimism and belief that we can take this vaccine all the way through to prevent infections in newborns. As mentioned earlier, our Phase 2 dose confirmation study is enrolling well and is currently enrolling the last dose cohort. We now expect data from the first interim analysis in the third quarter of this year.

Preparation for the Phase 3 trial that we anticipate will include less than 8,000 participants, including women of childbearing age, are underway. An early estimate of the cost of this trial is in the range of $200 to $250 million. Now as an opportunity for us, CMV is clearly a blockbuster opportunity.

We estimate annual peak sales for a CMV vaccine to be in the range of $2 billion to $5 billion in line with the estimates of others in the field. Assuming an average selling price like GARDASIL, a relevant comparator here, we estimate gross margins of about 90% and EBIT margins of approximately 50%.

We're excited about the progress towards this opportunity, supported by the fact that just one of the antigens in our vaccine, the gB when encoded for in a traditional recombinant technology in the past, have already shown a 50% efficacy, which was demonstrated by Sanofi several years ago.

We believe that targeting both the pentamer and gB antigens as our CMV vaccine dose, will be additive to the vaccines efficacy. As a reminder, our CMV vaccine mRNA-1647 is wholly owned by us. Let me transition it to Stephan to talk about our new development candidates..

Thank you, Tal. I want to start by introducing three development candidates in our vaccine -- prophylactic vaccine modality that we've recently announced earlier this month. The first to begin Epstein-Barr virus. And just what to pause for a moment and give you an overview of the disease.

So Epstein-Barr virus is a member of the herpes family that includes CMV and it spreads through bodily fluids, mostly in the young children and adolescents. EBV is a major cause of a wide range of diseases, but is the leading cause of infectious mononucleosis in the United States, accounting for almost 1 million cases annually.

Infectious mononucleosis can debilitate patients for weeks to months and in rare cases can lead to hospitalization and even splenic rupture. EBV infection is also associated with a range of other disorders, including lymphoproliferative disorders, cancers and autoimmune diseases.

For instance, it is associated with a significant increase in risk of multiple sclerosis. There are currently no approved vaccines for EBV. So our vaccine candidate mRNA-1189 is designed to provide broad protection against EBV infection and infectious mononucleosis.

EBV has a number of surface proteins on its envelope, including gp350, a trimeric complex of gp42/gH/gL, a dimeric complex and also gB. All of those antigens are important for infecting a range of different cell types, but particularly B-cells and epithelial cells.

Now vaccination against only one of those antigens, gp350, which provides only partial B-cell protection, reduce the rate of infection in a prior study by up to -- reduce the rate of infectious mononucleosis in a prior study by up to 78%. But it does not prevent the rate of infection.

We believe that the combination of multiple antigens, gp350 plus antigens for gp42/gH/gL and gb will provide an opportunity for broader protection both of B-cells and epithelial cells, very analogous to our approach with a cytomegalovirus vaccine. Now we estimate that the opportunity is quite substantial.

Worldwide direct costs of EBV linked infectious mononucleosis reach almost $500 million annually and the indirect costs could exceed $1 billion.

But prevention of infection, EBV infection, in addition to the prevention infection mononucleosis could represent a much more significant upside because of the associated increased risk in cancers and multiple sclerosis. These represent a long-term potential, but are not currently a focus of our current clinical development plan.

Pivoting now to our second recently announced program, which is for respiratory syncytial virus in the pediatric population. I want to pause and provide a little bit of an overview of the disease again RSV is the leading cause of unaddressed severe lower respiratory tract disease and hospitalization in infants and young children worldwide.

It's a major cause of hospitalization in this country, accounting for up to 86,000 hospitalizations a year and over 2 million medically attended RSV infections in children under the age of five. Globally, the burden of disease is even more substantial, with over 30 million episodes of acute lower respiratory tract infection annually.

We estimate that the direct cost associated with pediatric RSV disease in the children under the age of five exceed 2 billion annually. So our target population for this vaccine is the young under the age of five, children for respiratory syncytial virus. There is currently no approved RSV vaccine in that population.

Our candidate mRNA-1345, encodes for a stabilized prefusion F glycoprotein, analogous to our other efforts in RSV vaccines. mRNA-1345 will use the same proprietory lipid nanoparticle as our hMPV/PIV3 vaccine, mRNA-1653 as well as the CMV vaccine that Tal just described.

And we believe that neutralizing antibodies elicited by 1345 will lead to a reduction of medically attended RSV disease in the very young.

And while that's exciting, we actually intend to combine 1345 with mRNA-1653 to create a combination pediatric vaccine, respiratory vaccine, which will address over 3 million medically attended lower respiratory tract and upper respiratory tract infections annually in the U.S. alone.

That combination of mRNA-1345 and 1653 would represent a significant opportunity to address unmet need. The current plan is to develop 1345 and 1653 independently in the near-term through their initial clinical studies. But we would combine them prior to registrational studies and ultimately advance a joint product.

Now the third vaccine that we announced earlier this month is our mRNA vaccine against the SARS-CoV-2 virus, recently named the novel coronavirus that's associated with Cov-19 disease.

mRNA-1273 is an mRNA vaccine that encodes for a prefusion stabilized form of the Spike protein of that novel coronavirus that had been selected by Moderna in collaboration with the National Institute of Allergy and Infectious Diseases, the vaccine -- and the Vaccine Research Center, which are both part of the NIH.

The first clinical batch for our Phase 1, including finishing and filling of vials was completed on February 7th and earlier this week that was shipped to the NIH for the Phase 1 study. NIAID will conduct that Phase 1 study under their own IND in the near-term.

Now pivoting to our second core modality, earlier this year, we did announce two additional programs in the auto immune therapeutic area in our systemic secreted & cell surface therapeutics. And as we described them at JP Morgan, I won't go into great detail, but to briefly recap them here.

IL-2, our IL-2 program mRNA-6231 encodes for a long acting, tolerizing IL-2. As you can see in the lower right hand corner on this page, we've demonstrated a non-human primate that a single subcutaneous injection of mRNA-6231 can lead to a substantial increase in T reg cells without increasing activated cells.

That provides an opportunity to reestablish immune balance across it that might be relevant for a wide range of autoimmune diseases. There are a number of different recombinant IL-2 base therapeutics that have shown potential and we will be advancing this program into the clinic in the near-term.

Second program we announced earlier this year with PD-L1, mRNA-6981. It's an mRNA encoded PD-L1 to send of tolerizing signal to immune cells. In this case we are expressing PD-L1 on the myeloid antigen presenting cell.

And the purpose of that is to drive a tolerogenic phenotype, a reestablishment of immune homeostasis in effector cells, including T cells and B cells. mRNA-6981 will be IV infusion using the same LNP as our mRNA encoded antibody, mRNA-1944 that had previously been described.

And in preclinical disease models across a wide range of autoimmune conditions, we've demonstrated ability to modify the disease. As you can see in the lower right hand corner, one example, which is , which is collagen induced arthritis.

The first indication in which we're going to be bringing the PD-L1 program forward is an autoimmune hepatitis, a disease we see a compelling unmet need. Now with that, I'll turn it back over to Tal to talk about our other work in the exploratory modalities..

Thank you, Stephen. Let me just briefly review these modalities that we consider exploratory, but obviously make up a significant part of what we do in clinical research and give you a sense where we are in the prosecution of these programs.

Starting with the cancer vaccines, our personalized cancer vaccine mRNA-4157 is in a randomized Phase 2 trial for the treatment of adjuvant melanoma. The combination of PCV with KEYTRUDA against KEYTRUDA alone and its recruiting well.

KRAS, vaccine mRNA-5671 is an ongoing Phase 1 study and this one is led by Merck and it has a monotherapy as well as a combination with KEYTRUDA arm. Our intratumoral immuno-oncology therapeutics, we have three programs in this modality. All of them are in combination with PD-1 inhibitors.

Dosing of patients is ongoing and I look forward to the future to being able to demonstrate whether the ability to influence the immune system in this matter will be helpful to these patients. On the regenerative therapeutics modality, AstraZeneca is conducting a Phase 2a in patients with our mRNA that encodes for vascular endothelial growth factor.

And that's in patients that are undergoing CABG, coronary artery bypass grafting. That study continues to enroll. In the systemic intracellular therapeutics, we have two INDs open now in both MMA and PA methylmalonic acidemia and propionic acidemia. We are pleased to announce that the first patient in MMA has enrolled in this trial.

They’re in the observation period right now. This trial is now open at seven institutions in the United States and we're continuing to look for additional patients to enroll, while we follow this first patient closely. With that, let me turn it over to Laurence to describe the rest of our pipeline where we go from here..

Thank you, Tal. So on Slide 29, you see a graphic that represents our whole development pipeline as it stands today. First and foremost, we're focused on the investment and execution around this development pipeline. There are three significant things from us today around the CMV vaccine, where the Phase 3 preparation is very much underway.

You’ve had the Phase 2 enrollment for that. CMV vaccine is ahead of schedule and importantly in Phase 1 of MMA has enrolled its first subject. So we're really focused on executing across the entire breadth of the pipeline. And then the other key thing you heard today is that the preclinical programs continue to grow.

And you will heard that we announced in the first two months of the year five new development candidates. This is indicative of the productivity that we expect out of the research platform. If you will flip through the next slide, it's a robust list of clinical data, next steps across the pipeline.

If you scan the page, you'll see a lot of readouts coming in the near-term. We've got it for the CMV read out the Phase 2 data with a 3-month interim analysis in the third quarter of this year and a Phase 3 start in 2021.

The rest of the vaccines you'll see a number of additional Phase 1 readouts that we would expect to occur, as well as advancement of these new -- newly nominated devolvement candidates toward the clinic.

If you look at the next category of systemic secreted therapeutics or antibody against Chikungunya will continue to progress through further development of a dose cohort and will continue to advance preclinical work towards IND filings.

And you just heard from Tal the rest of our programs will be progressively moving forward here towards clinical data. On Slide 31, in today’s press release, we report our fourth quarter and full year 2019 financial results. Please note these results are unaudited as of this call. We'll be filing audited financials shortly with the 10-K.

We ended 2019 with cash, cash equivalents and investments of $1.26 billion. This compares to $1.69 billion at the end of 2018. Net cash used in operating activities was $459 million for 2019 compared to $331 million in 2018. And cash used for purchases of property and equipment was $32 million for 2019, a significant drop versus $106 million in 2018.

We placed our Norwood Moderna Technology Center Manufacturing Facility into service in mid 2018. Revenues for Q4 2019 was $14 million compared to $35 million for Q4 2018. And for the full-year, revenue was $60 million compared to $135 million in 2018.

I recall that in January 2019 we adopted the mandated revenue recognition standard ASC 606 using a modified retrospective transition method applied to those contracts, which weren't completed as of January 1, 2019.

And so the decreases in revenue are largely attributable to the adoption of this new revenue standard together with the completion of the initial 4-year research period under the 2016 work agreement. Total revenue under the previous revenue recognition standard would have been $15 million for Q4 2019 and $95 million for the full-year 2019.

R&D expenses for Q4 2019 were $119 million compared to $150 million for Q4 2018 and for the full-year 2019 R&D dollars were $496 million compared to $454 million in 2018. The decrease in Q4 was mainly due to a decrease in our in-licensing payments to Cellscript and its affiliates and a reduction of our lab supplies and materials.

The increase for the full year 2019 was mainly driven by an increase in personnel related costs, including stock based comp, driven by an increase in the number of employees as well as higher clinical trial and manufacturing costs.

G&A expenses for Q4 were $26 million compared to $38 million in Q4 2018 and for the full-year G&A expenses were $110 million compared to $94 million in 2018.

The decrease in Q4 was primarily driven by a decrease in stock based comp, mainly attributable to certain performance based equity awards with vesting or commencement contingent on the IPO in 2018, and the increase for the full-year 2019 was mainly due to the additional costs of operating as a publicly traded company, including the increases in insurance, consulting and outside services and facility costs.

On the next slide, we show the progression of selected cash flow line items, namely our net cash used in operating activities and our purchases of property and equipment. The table shows you our GAAP results by period with a total operating cash flow plus PP&E.

I'd point you primarily to the bar chart, which shows the quarter-by-quarter progression of this metric and you'll see that our cash is -- shows a steady reduction through 2019. I would note that Q1 contain the impact of the last of the three licensing milestone payments we owe Cellscript, which is $22 million.

I don't expect this downward trend to continue to decline quarterly in 2020, but for the full year you can see how we ended up overall flat versus 2019 when we thought about expectations even with the advancement of our pipeline through the clinic.

And so the result will reiterate our guidance for 2020, which is that net cash used in operating activities and purchases of PP&E will total between $490 million and $510 million. That approximate $500 million in cash investment into our business is put in the context in the next slide versus the cash that's available to us for investment.

Here you see our year-end cash balance of $1.26 billion, and on top of that is the net proceeds of approximately $550 million from our equity offering, which includes the exercise of the underwriters option to purchase additional shares that we anticipate to close later today.

And then as we've mentioned before, we have approximately $185 million in potential future grants available to us as well. And so these amounts sum up to $2 billion in available cash, which we expect to invest in our business, and that represents a significant cash runway of multiple years. I will now hand it back to Stéphane to close..

Thank you, Lorence, Tal and Stephen. On Slide 35, you can see a bit on Moderna's priorities. Our company has never been stronger. Our pipeline, preparing for CMV Phase 3, for medicines in preparing for Phase 2, the event Phase 1 trial is ongoing and 10 positive clinical readouts. Our programs in development.

Seven vaccines where there are no approved vaccines on the market. Most of these vaccine candidates have multibillion dollar annual peak sales opportunities. As I shared in our 2019 shareholder letter, we believe our innovative vaccines are going to be very large business Moderna. With long-term annuity like opportunity and a high EBIT margin.

Five immuno-oncology drugs in the clinic, five readiness program with our first Phase 1 started by MMA, two autoimmune diseases program. The foundation of Moderna have never been stronger. Our clinical experience is now more than 1,700 healthy volunteers and patients.

The team is strong, with more than 800 employees who care deeply about our mission and are proud of and energized by the progress. I would like to thank my entire team. I would like to extend a special thank you to those who made the coronavirus vaccine from sequence to shipping to NIH for Phase 1 dosing in only 42 days.

And we’re proud to be included with those many companies working on the possible response to this continuing global health emergency. Now would -- these are fully digital, fully integrated facility that enables the execution of a pipeline, all the way from raw materials to finished vials ready to ship to the clinic.

We have great partners with AZ, Merck, Vertex Defense or DARPA, BARDA, CEPI and the Gates Foundation. As we said on November quarterly call, we are working on expanding that network of partners as we speak.

With the financing of our grand [ph] capital and our cash balance, we are in a fortunate position to invest up to $2 billion towards building the leading mRNA company. We are thankful to our investors for their trust and partnership as we build this unique company. For 2020, our priorities are very clear.

Priority number one, execute on our development pipeline with a special focus on CMV Phase 2 restart. Priority number two is creating a new development candidate in the into two core modalities. We already have five in the last two months only. And priority number three is to develop new development candidate in new modalities. Stay tuned here.

As a reminder, these are the events we are hosting for analysts and investors in 2020. First, Manufacturing and Digital Day is next week on Wednesday at our Norwood facility in Massachusetts. A webcast would be available on our website.

Juan Andres and his team will share many new insights, including how the team deliver coronavirus vaccine in 42 days from sequence to shipping. Marcio Damiani and his team will share the progress since opening Norwood in July 2018 on the digital front, including use cases of artificial intelligence and machine learning.

We hope to as many of you for first Vaccines Day in New York City on April 14 for a deep dive into mRNA vaccine modality. We'll discuss some of our things clinical data, business model, how we think about value creation, capital allocation and probability of success of mRNA vaccines.

In June, we look forward to hosting our first Science Day to be able to share with you the many progress the team has made on mRNA science and delivery in Science Day 2019. In September, we'd also like to welcome you for our fourth R&D Day, where as usual in New York, we'll review in detail clinical data.

As I said in my introduction, Moderna is entering a new phase of its development as a company. Our goals are clear. One, file multiple BLAs and launch multiple medicines, which we own commercially. And two, continue to explore modalities in the clinic and invest in science.

We have two core modalities and are now laser focused on filing multiple BLA and then scaling model to maximize the impact on patients. We are continuing to realize our vision. We have got 12 innovative medicines currently in the clinic. We are only getting started. mRNA is an information molecule.

Because of that we believe that the probability of technical success for our medicines from the lab to approval will be much early higher than traditional medicines. Speed. Our track record speaks louder than words. Coronavirus from sequence to shipping, clinical grade product, 42 days.

Evidence of greater capital efficiency relative to traditional recombinant technology is becoming apparent. We can do new DCs like EBV and pediatric RSV without additional capital invested. I’ve never been more optimistic about Moderna's future and potential since joining as employee number 2 in 2011.

I believe mRNA is going to be a new class of medicines and I believe Moderna is the leading company in that field. With $2 billion to invest, the great team of science or IP and the manufacturing site at Norwood, we will work to accelerate our leadership in the months and quarters to come.

We are excited by the opportunity to bring forward a new class of medicines for patients. I would like to thank the great team of Moderna employees working hard every day and sometime every week to make these vision a reality.

I would like to thank the many people who participate in our clinical studies, including patients, healthy volunteers and physicians. I would also like to recognize all our commercial partners -- all commercial partners who work with us and share our vision to deliver transformative medicines for patients.

With that, we are now happy to take any question..

Thank you. [Operator Instructions] Our first question is from Matthew Harrison from Morgan Stanley. Go ahead with your question please..

Hey, good morning. Thanks for taking the questions. I guess, two from me. So, one, on coronavirus and I think this is just so people understand. Could you just broadly comment. It sounded like NIH needs the file on IND and then they would obviously start the clinical study.

What is your involvement at this point? And are you taking any steps related to ramping manufacturing or any other steps related to this? And then secondly, maybe just on CMV -- well, actually on MMA.

Can you just talk about how enrollment is going for additional patients? What sort of led you to be able to get that first patient in? And if you see, promise in terms of being able to rapidly enroll additional patients. Thanks..

hanks, Mike. This is Tal. Let me take both of these questions. As it relates to coronavirus, our part here was to manufacture and ship it. I think the trial now will be run by the NIH and I defer to them to provide updates when they will. You asked about scale-up. I think we're looking at everything that it would take and how to actually get it done.

But we'll update everybody once we have a clear picture of that. Obviously, this is a rapidly changing environment. On MMA enrollment, so right now, we've got one patient enrolled. We do not yet have the second and third, but we're actively working with sites to find them. The age barrier, I think, continues to be a difficult one.

We only have to find the first three. So -- and then we can go down in age. So I am confident that we will eventually, but I continue to have a dialogue with the agency on trying to reduce that need, so that enrollment can be unhooked from that. And we can get into the age population where we believe the greatest unmet needed potential for benefit is.

So I'll update everybody as soon as we have progress in that field..

Thank you..

Thank you. Our next question is from Ted Tenthoff of Piper Sandler. Your line is open..

Great. Thank you very much. And just following up on Matt's question first. What -- maybe you can just remind us again so that everybody understands it because we've been giving a lot of questions on this.

What is the process for licensure of a bio threat or pandemic vaccine such as coronavirus? And then with respect to CMV, again, great progress just across the board here. Ultimately, what do you see as sort of the vaccination paradigm or timing of vaccinations for women of childbearing age? Thanks so much..

Thanks, Ted. It's Tal. Let me take that. I think what does it take to get licensure is an evolving field. I mean, the pathway to licensure are well understood and they encompass everything from finding surrogates of protection to demonstrating efficacy. What is it going to take here? I don't think anybody knows.

I think all options are currently open, but it's a rapidly evolving field. And you can imagine that there actually isn't not yet a surrogate of protection because this is a very new virus and now people are still working to develop those assays and models.

I would give NIH a lot of credit for being at the forefront of that effort and work closely collaborating with them on these efforts. As it relates to the vaccination paradigm for CMV, I think the starting point here is clearly going to be in women of childbearing age. That's where you would anticipate the greatest benefit.

And I think the next phase is going to be -- to get into a [indiscernible] population of adolescents, because obviously you want to start protection as early as possible, given that's what the disease we're trying to prevent here is ultimately going to be infants born to women.

So we're going to try and get down to that age group as we develop this vaccine..

Okay, great. Thank you very much..

Thank you. Our next question is from salving Salveen Richter of Goldman Sachs. Go ahead, please..

Thanks for taking the question. It's Ross on for Salveen. Just a few here from me. So just quickly on coronavirus, what's the potential monitory opportunity here? Do you guys have any details around agreements with the NIH about, funding to you guys? So just thinking about the monetary opportunity there to Moderna.

And then on the Chikungunya antibody program, how much follow-up time exists since like the initial patient was first dosed and then since he was -- since he receive the second dose? And are you guys seeing any signs that they can meet immune response? And then I have a follow-up..

It's Stéphane. I will talk about first of all on corona, only focus as a team is public health. People are sick all over the planet. People are dying. But it's our only focus is to get a vaccine as fast as we can, safely, partnering with the right people to get it done..

Let me answer -- if I understood correctly your question on the Chikungunya monoclonal antibody, these data are emerging. We're giving you an execution update on to in terms of where we are, once I have a full sense of the data set there, I will, of course, update everybody..

Great.

And then just lastly, so outside of the Phase 2 CMV update in 3Q, what programs are you expecting to have data this year?.

We -- as you know, we don't guide to specific timing on various milestones. I'd refer back to the slide which had the rich catalyst calendar and clinical data calendar that we referred to. That list of events that included data readouts as well as advancement of programs is a list that comprises all the next steps.

Some of those have advanced fairly far along. For instance, I would note that the phase one vaccine studies for RSV and Zika running since last year. And other instances you'll recall that as you pointed out, the Chikungunya antibody program is a relatively small study in healthy volunteers.

But again, we're focused on advancing all these programs as rapidly as we can towards data..

Great. Thanks..

Next question is from Geoff Meacham of Bank of America. Go ahead, please..

Hey, guys. This is Alec on for Jeff. Thanks for taking our questions. Two questions for me.

My first is on your PCV program and I guess the KRAS vaccine as well, have you guys seen any updated data from these studies, including the ongoing Phase 1 for the PCV since ASCO? Just trying to get a sense of why this modality hasn't made the cut for your core franchises, given it's one of the more advanced in terms of clinical development? And then I've got one more..

Thanks, Alec. It's Tal. Look, on the personalized cancer vaccine, it's a Phase 1. So, data continues to come in once we have a full cogent dataset there, we will be disclosing it.

And the question of why we don't consider this a core? I think for us core is one that we have gotten the requisite pharmacology to believe it will translate into a clinical benefit.

And I think that's true both for the vaccines clearly, and it's also true for the secreted and the surface protein expression, because that you can give the monoclonal antibody actually reached what would otherwise be therapeutic levels of a protein. So that's why it's core.

I think in oncology, until you actually show that you’re -- the pharmacology that you're describing in this case immunology, in T cell immunology, until you actually demonstrate that, that translates into a clinical benefit for patients. It's hard for me to call it core..

Got it. That's very helpful. Thanks. And then secondly, do you have any updates on the CF partnership with Vertex? We've seen Vertex partner with some other gene therapy approaches from CRISPR Therapeutics and others. So any color you can give on this partnership would be great. Thanks..

You know, we don't generally comment on research. We continue to work with Vertex, we're pleased to be working with them in the CFTR space, but we don't have any updates at this time..

All right..

Our next question is from Cory Kasimov from JPMorgan. Go ahead, please..

Good morning, guys. Thank you for taking my questions. Two of them for you. First is another one on coronavirus. Thinking a little bit further out, just curious what kind of manufacturing capacity you anticipate having, say, looking out to 2021 event? Should you need to manufacture mRNA-1273 for coronavirus? And then secondly for the CMV program.

I mean, if you guys could kind of broadly talk about what a win would look like in that interim update for the Phase 2 we will get in 3Q? Is this more or less kind of looking to replicate the Phase 1 results in a larger group of patients or other nuances we should be thinking about? Thanks..

So, Corey, good morning. It's Stéphane. So I will take the first one on manufacturing capacity. I think the [indiscernible] is just too early to know precisely. First, we don’t have those, then fill finish, there's Norwood CMO capacity actually new sites. So just way too early to comment on that. But we’re working out to get as much as we can..

Hi, Corey, it's Tal. Let me answer your question on CMV Phase 2. So I think in a nutshell, the goal here is, as you say, to replicate what we saw in the Phase 1, but I'd like to be able to do that, of course, in the larger data set so that our confidence in picking the right dose for Phase 3 is there.

And that has to do both with replicating the nice immunogenicity that we've seen, but being able to kind of plan a clear flag on what we expect in terms of the safety and tolerability profile that would enable us to go into Phase 3 trial..

Okay. Thank you..

Our next one is from Hartaj Singh of Oppenheimer and Company. Go ahead, please..

Great. Thank you. I’ve just a question on CMV. With the Phase 2 results coming up in the third quarter and then the Phase 3 getting going, could you talk a little bit about how you could speed it to market? I know that a lot will be depending on the Phase 2 results.

But can you give us some sort of -- kind of a confidence interval as to when you think the Phase 3 could read out and by which time you could be in the market, 2024, '25, '26? And then just a follow on to that, which is that, you've [indiscernible] as [technical difficulty] $5 billion, which seems to make a lot of sense because as you get to broader and broader immunity, can you just broadly walk us through what kind of patient populations would you want to sort of have the vaccine brought into to get to that higher point of that range? Thank you very much..

Hi, Hartaj. This is Tal. Let me start by answering the first question. So, look, the timeline for CMV roughly speaking, once we get in, we anticipate fairly aggressively to be able to complete enrollment within 18 months. I anticipate the duration of the trial to be 2 years. Now, that still needs, of course, vetting with regulatory authorities.

So I want to make sure I caveat that appropriately. Once that we have 2 years on everybody on study, then it's a matter of analyzing, looking at the results and filing and that's where I think the timelines are pretty well understood for what's achievable in our industry. So you can do the math from there..

Yes. And -- Stéphane, I will take the second one on CMV, what we take to get to $5 billion number. I think a few things. The first one is, as we explained, the R&D Day in September, it will take -- get an indication approval in women in childbearing age, which, as you know, is a first one. Then to getting to an adolescent approval like the HPV GARDASIL.

And third is to getting to pediatric. As we shared, humans are [indiscernible] for CMV. We believe it is a very important public health opportunity here to vaccinate newborns in the pediatric setting.

That has been done, as you know, successfully, with Rubella to eradicate the virus and to make sure that humans don't get infected by this virus, which has a lot of long-term negative impact on health at a population as well as for individuals and their own immune system and their own health. Another dimension, of course, is competitive landscape.

We will be the only one on market for next 10 years or we’re going to be with one competitor, or two competitor or five competitors. I can come back on that if you adjust it moving further. And then it's the population growth.

There is a lot of emerging markets that's not only growing in size with our population growth, but also in terms of dollar invested in [indiscernible], if you take about 5-year, 10-year, 15-year timeframe. And that’s what impact the model that we’ve for getting to around $5 billion annual peak sales..

Great. Thank you..

Our next question is from Yasmeen Rahimi of ROTH Capital Partners. Go ahead, please..

Hi, team. Thank you for taking my questions and thank you for the tremendous progress that you're making quarter-over-quarter. Few questions for you, all related on CMV. The first one is can you give us a little bit more color on how we think about how current the numbers are in regards to infection rate? If there are differences between U.S.

and Europe, how current they are as it guides you sort of for powering assumptions in your Phase 3? And then a second question that was often that is, as you’re in a predominant part of being able to scale up and we’re going to learn more in manufacturing on March 4.

Can you enlighten us what are aspects that are unique when you're scaling up in mRNA therapeutics versus other R&A modality? Just we have a little bit of color, do you want [indiscernible] here. And thank you for taking the questions..

Hi, Yasmeen. It's Tal. Let me take your first question. It's a great question and one that obviously keeps me up at night. I think the literature is out there in terms of incidence rates and infections. But it's also clear from that literature that there a high level of variability. And it's not just on a continental level, U.S.

versus Europe, that is actually local geography, socio economic status, a lot of things that play into that.

So how are we thinking about it in terms of designing the trial, which is obviously, I think where your question is going to, I think the goal here is to design both a large trial and a broad enough trial in terms of size and population, so that on average we are able to hit the incidence rate that people have described.

And I'm pretty confident in the ballpark of where we are powering this study to be able to reach it. And finally, I would note that in the trial of this type, you have the ability to actually on an ongoing basis, monitor the incidence in real time.

So that the only risk you're really taking if you're missing it is you follow subjects for longer and you catch up the cases. So it will -- ultimately the trial size will come down to the number of cases. And that's one that you can monitor in almost real time..

So -- good morning, Yasmeen. It's Stéphane. On the manufacturing process and why mRNA is such a powerful molecule. I think a few things. I mean the first thing is, it's a liquid based process to make mRNA, which is cell free.

So that drives to a very small reactors compared to other technologies, especially compared to recombinant is the most staggering changes to forgiven up just the size of our reactors, which of course has a big impact on your CapEx, including all your purification technologies because you just have less details [indiscernible].

So everything is much, much cheaper across the board. As we talked in the past, because mRNA is a new formation molecule. It is the same process for Zika or for [indiscernible] CMV or for coronavirus.

So drives incredible flexibility and incredible time to the clinic because we do not have to invent the process for every vaccine or every molecule as the team has shown in the last two weeks with coronavirus. If we’ve had like traditional technologies to invest a new process just for corona, we still be working at it as we speak.

And we most probably not even have started to make the product. In that case we are able to just do a tiny bit of optimization for a very large molecule that this mRNA is. And then go right into production. Thanks to this aspect of a platform that we have. And definitely it is time which is -- the separate time to make mRNA is days, not weeks.

And so when you think about that, we can use an asset, I mean, once you make with [indiscernible] you can basically change with this possible equipment and use the same room or the same team to make another product. And so if you can deliver in a few days, make mRNA versus a few weeks to make component before you’re going to go into fill finish.

That’s a massive use of your capital infrastructure in terms of just CapEx turnover..

Thank you, team and look forward to seeing you in Boston..

Right..

Thank you. [Operator Instructions] And next one is from Alan Carr of Needham. Please go ahead..

Hi. Thanks for taking my questions. A couple of them.

One of them is, can you clarify between your exploratory and your core modalities? Does this mean that you don't plan to add any more new programs to your exploratory until they become core? And then also around RSV, 1345 versus 1172, how are they different and how does this fall outside of the agreement that you already have with Merck around RSV? And the last thing is, can you get over the -- your overall manufacturing capacity at the Norwood facility right now across all programs, the total capacity? And without regard to coronavirus, what were your -- what are your long-term plans in terms of your needs for capacity, in terms of adding manufacturing capacity in the long-term? Thanks.

As you go commercial..

Good. Thanks for those three questions. So let me take the first one on exploratory and core. So, yes, if you go back to the strategy, we started with six modalities in the clinic to say we cannot manage the unknown, unknown.

And so because of the exciting opportunity to create a new class of medicine, we are very focused on managing the unknown technology risk. And so we tried those six technology in parallel. So we could learn from a clinic where to invest more, because mRNA is a new formation molecule making it to platform.

And wherever you wanted to fix, if you learn something about the science, fix that science if you can or decide that you’re stop investing in that opportunity, you want to deploy your capital wisely, where you know the technology is working. So that was kind of a premise as we started.

And so what is happening with this pivot in the company history that now we’ve clinical data we gathered for prophylactic vaccine and systemic therapeutics.

We believe those are core, i.e., in our opinion, we believe the technology risk is off the table, meaning we want to deploy our capital to make innovative medicine that goes to the clinic, because its exactly the same technology, same manufacturing process than the ones we already have the positive clinical data.

On the exploratory front, yes, we want to be very cautious and that has been the case for years. We say doing only one program per exploratory modality seems too risky for us, because you have variety risk and there's also variety risk. But we always say that few two, three programs kind of makes sense for us.

As such you see so the reason to invest more shareholder capital on more infrastructure, more -- for example -- an example one over four exploratory right now. The answer is clearly no. we want to see what we get from [indiscernible] IL-12 and the triplet.

But like we’ve done with those two modalities, that’s migrated from exploratory to core in the last few months, if we get signal the team has a lot of ideas of what other things we could do. And, of course, then those program where we get positive note, we will take those as fast as we can to BLA because those medicine will be needed for patients.

Stephen, you want to talk about RSV..

Yes. Just quickly on RSV. So, Alan, as you reference, we have a partnership with Merck in respiratory syncytial virus, just a monotherapy vaccine. There are two candidates in Phase 1 study. V172 is the one that is currently being conducted and those are targeting the elderly target product profile.

And so there is a nearly equal burden of disease in the elderly, 170,000 hospitalizations a year in this country. We're excited to be working with Merck in that elderly population. We have a right in our agreements as we disclose to conduct the development of an RSV vaccines towards a respiratory combination and that has been our intent.

And so we are -- that is separate from Merck's progress in RSV..

Thanks, Stephen. And on the -- last question on manufacturing capacity.

So let me try to [indiscernible] pre-coronavirus world, which we talked about in previous calls, in previous discussion, which is our manufacturing long-term plan is to use Norwood to make development material like we are doing today and to launch our commercial product like CMV, Zika and the others out of Norwood, because of [indiscernible] Norwood design we’ve always said to manage financing risks, we do not want to invest in the big manufacturing capacity, commercial plant until we have, of course, BLA approved, clearly a risk management.

But we’ve always said, our long-term vision is to have Norwood focus on development. So that we have a commercial site and hopefully down the road as we scale the company several around the planet that are just focused on commercial products.

We believe, based on our experience in previous pharmaceutical companies, that there is dedicated focus per site is really important for success. Development requires nimbleness. Commercial requires scale and efficiencies, very different worlds. So that’s kind of a pre-coronavirus world, our previous plans.

And the post coronavirus, while in the last few weeks I go back to buy [indiscernible] a few minutes ago, which is we are looking at the law options, both internally and externally, CMO partners to figure out what's the right path forward and when we have a better picture, we will share it..

Great. Thanks for taking my questions..

Thank you. That ends our Q&A session. I would now like to hand the call back to Stéphane Bancel..

Well, thank you for your question, especially thank you for your trust into our ability to make mRNA an important new class of medicines. We hope to see many of you next week in Norwood for what I believe will be an exciting manufacturing and Digital Day. Thank you..

Thank you. This concludes today's conference call. Thank you all for attending. You may now disconnect..