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Moderna CEO details the company's momentous vaccine production

Anjalee Khemlani
·Senior Reporter
·3 min read
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"Moderna (MRNA) has been changed, forever," CEO Stéphane Bancel said on an earnings call Thursday, noting the company plans to be more than just a COVID-19 vaccine company.

The company expects $18.4 billion in sales of the vaccine this year, after a significant 12-month expansion in 2020 that was fraught with growing pains. The growth pitted the revenue-less company against large cash-full companies in the vaccine race, such as competitor Pfizer (PFE) for U.S. dose production.

In 2019, the company had only ever produced about 100,000 medicines for clinical use. In 2020, that ballooned to an output of 17 million doses with the help of Switzerland-based Lonza, which has a plant in New Hampshire.

"We bought machines, we scaled up the process, meaning bigger and bigger reactors, so we can make more and more product per unit of time," Bancel said.

But filling that large volume of vaccine doses into vials and finishing off the process for delivery was also outside of the company's existing capacity. That's where NJ-based Catalent (CTLT) came into play.

Bancel told Yahoo Finance that without a capital raise of $1.3 billion in May 2020, the company would have been unable to meet its dose commitments and support its partners.

"The proceeds of that raise were to buy machines, buy raw materials and hire people to make the COVID-19 vaccine, that was at the time a candidate," Bancel said.

In addition, grants from the federal government and support from the Trump administration through the Defense Production Act — which Pfizer was only able to access later in the process — helped secure necessary supplies and equipment.

"One way we also helped our lipid suppliers is we purchased, by paying upfront cash, a lot of product because they, in turn, had to buy machines and hire people," Bancel said.

In fact, the partners were worried that if the vaccine failed in testing that Moderna would go bankrupt and not be able to pay them, Bancel said.

Initially, Moderna set a best-case goal of 1 billion doses for 2022, assuming demand would wane with the pandemic. But that hasn't been the case. The European Commission just ordered millions of doses for the second half of 2021 that includes an option for 150 million doses in 2022.

The high efficacy (94.1%) of its vaccine resulted in Moderna seeing "much more demand that we could have anticipated even in an optimistic scenario last year," Bancel told Yahoo Finance.

Moderna is planning for $350 million to $400 million in capital investments for 2021, officials said Thursday.

And while the fast scale-up is cost-intensive, the company has the option to scale down, if need be, Bancel said.

This is because the company has been using disposable bioreactor bags, which cut down the cost of investing in a larger footprint of stainless steel bioreactors, and it removes the burden of the cleaning process that can slow down production between batches.

This is why the company has "a lot of flexibility to take capacity down" as needed at Lonza's New Hampshire or Switzerland locations, Bancel said.

But, he added, the company's pipeline, which has at least 20 candidates for various diseases in the works, could justify the scale up and be useful in the future.

Three vials of the 'Moderna COVID-19 Vaccine' are pictured in a new coronavirus, COVID-19, vaccination center at the 'Velodrom' (velodrome-stadium) in Berlin, Germany, Wednesday, Feb. 17, 2021. (AP Photo/Michael Sohn, pool)
Three vials of the 'Moderna COVID-19 Vaccine' are pictured in a new coronavirus, COVID-19, vaccination center at the 'Velodrom' (velodrome-stadium) in Berlin, Germany, Wednesday, Feb. 17, 2021. (AP Photo/Michael Sohn, pool)

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