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Moderna CEO talks huge earnings beat, COVID-19 vaccine sales, new boosters

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Moderna CEO Stephane Bancel joins Yahoo Finance Live to discuss earnings, COVID-19 vaccine sales growth, creating new boosters for the fall, funding for future sales, and the process for approving a vaccine for young kids.

Video Transcript

- A big beat for Moderna in the first quarter. Earnings per share and revenue blew past Wall Street estimates from the beginning of the year. Joining us to dive more into these numbers is Moderna CEO Stephane Bancel. Yahoo Finance's Anjalee Khemlani joins me as well. Sephane, thank you for being here. Let's talk about that beat first of all and where it came from. When we're talking about the earnings per share beat, it's in particular large. I know you guys did some stock buybacks, which may have accounted for some of that beat. What else drove the growth in the quarter?

STEPHANE BANCEL: Well, good morning. And thank you for having me. Well, I think firstly strong sales, if you look at the sales compared to last year, we've increased the sale by 3x. $6.1 billion last year. $1.9 billion for Q1. And when I think of the operational leverage that we have on volume, Moderna is a pretty efficient company. We started as we built it to be very digital across the board, very industrialized.

So as we get more volume, we get a lot of economies of scale. We're able to increase our net income by 3x as well. The share reduction helped a little bit. But we are talking 5 million shares out of 14 million shares. So what is good is in Q4 in Q1 we are starting to reduce the float of a company, which means every investor owns a bigger chunk of our future cash flows, which is great. But it was not driven by the reliever share count.

- And I don't believe you came out with any earnings guidance for the full year. But can you tell me broadly if investors should expect that same sort of growth for the full year?

STEPHANE BANCEL: So we didn't give precise guidance because none of us has managed the transition from a pandemic to an endemic setting for obvious reasons. But what we gave is kind of a framework, which is we confirmed this morning that we have signed advanced purchase agreements with governments around the world for $21 billion. And then David, our CFO, went and kind of described in terms of investment in R&D, which we think would be around $4 billion this year and tax rate and so on, how people should think about modeling the year.

What is interesting is in this $21 billion signed APA's, there is nothing for the US. And the reason is very simple. Those are signed contracts. As you are highly aware, there's currently no funding from Congress to buy more vaccines for the fall. So the US government is not able to buy vaccines now. What we are doing as a company is, of course, getting ready assuming there is no contract. If as a contract, it will be kind of easy. We will sell the product to the US government like in the last two years. And people will have access to a product in the local pharmacies like we have today.

But if this doesn't happen, we are getting the company ready to be fully commercial. This might actually provide some upside, not only on sales because there is zero sales assumed in $21 billion, but on pricing. CMS has basically come up saying that for fiscal year '23, which starts in October, the price for COVID-19 vaccines would be around $60. As it's public information, the price that the US government paid in the last two years was $16.5. So you could see there's some upside there as well.

ANJALEE KHEMLANI: Stephane, on that specific point, because you don't necessarily have the agreement right now, do you have any signal from the US government or the FDA to sort of plan for boosters? And if so, what do you see as the need for the fall?

STEPHANE BANCEL: So in our discussion with the US government from the different agencies, CDC, FDA, HHS, and so on, it is very clear that people believe like we do that because of waning immunity and because of new variants emerging and being more and more infectious, it's going to be critical to protect people in the fall and winter, that the vaccines are not going to help the efficacy wise for people who got boosted last November or December or January.

And so they believe there needs to be a new booster. And they also believe that what we have as an Omicron containing booster, which is a bivalent, so there's two mRNA in the vaccine being tested in a clinic, which we should have the data for in June, hoping for an authorization in the August time frame to be able to stock the channel. That's what they want. It's really a problem of funding, not of desire of getting the product. And so we're just getting ready so that Americans can have access to vaccine in case of the US government not getting funding.

ANJALEE KHEMLANI: So right now, you're operating as if the US government is not going to fund. You anticipate that will come through though?

STEPHANE BANCEL: I think it will come through. But again, given-- I'm not in control of what happened in Congress. I just need to be ready for the alternative, which is we have to go to a typical what every pharmaceutical product does, private market. And we'll be ready for this. We're having a lot of discussion with wholesalers to make sure that we have all the pieces contracting and so on to be able to operate like a normal pharmaceutical company.

- Stephane, let's talk about not just the variant that you're developing to attack Omicron, but also for younger children because we know that you're putting in your application for an EUA for the youngest cohort. We've really become accustomed to the FDA being very speedy when it comes to vaccines for COVID-19. Do you think they're now dragging their feet on these sort of latest versions or the vaccine for children?

STEPHANE BANCEL: So I don't think the FDA is dragging their feet, at least the people we interact with are working really hard to help protect the American people like we have seen happening over the last two years. I think what the FDA is on the record saying is that they want to review the Moderna and the vaccine-- sorry, the Moderna and the Pfizer vaccine at the same time for the pediatric setting.

And to the best of my information, Pfizer has not yet shared publicly the data with a third dose. You might recall they tried with two dose for pediatric. It didn't seem to be enough. And so they are trying with a third dose out of the gate. So that will be a three dose primary series to start protecting young children. We have shared data with two doses, which we believe is a very strong vaccine, although this is higher than Pfizer. You remember this is the case for every product.

The primary series is in early 2021 was higher than Pfizer. The booster is almost two extra Pfizer dose. So those even for children and even if it's lower versus adults is higher than Pfizer. So we believe a two dose vaccine will work. And we believe a lot of parents, if authorized by the FDA, would like the idea of only getting two shots in their children versus three shots.

ANJALEE KHEMLANI: Stephane, for looking at out in the fall the future, you're talking about waning immunity. And of course, there's still a little bit of uncertainty for the US government. Do you anticipate that because of this waning immunity, we could see the surge then be impactful enough that maybe we have to put in more restrictions and go back to limited offices?

STEPHANE BANCEL: That's the risk we all have in the fall, which is if you think about it, this virus is not getting less infectious. The way biology works and evolution works is only one way. It's more infectious. And so as you see more and more infectious variants and you see now with BA.4 and the BA.5 and you're going to keep seeing more. We're not done with this virus mutating. So on the one hand, you can have more and more infectious virus. And then on the other hand you can have waning immunity.

And so as you describe, the biggest risk we have in the fall is that if people don't get boosted, you're going to get a lot of people sick. And if you get a lot of people sick, those at highest risk will get hospitalized. And this is where you get, again, too many people in the hospital and we go at it again. So I think we have a risk in the fall that if we do not have the booster campaign under control and with early enough that we might be in a not great spot in the fall.

- Well, hopefully you're wrong. But you probably know a lot better than I do. Thanks so much, Stephane, for being here. It's good to catch up with you. Moderna CEO Stephane Bancel and our Anjalee Khemlani as well.