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Moderna CEO Stéphane Bancel sat down with Yahoo Finance’s Anjalee Khemlani to discuss what’s been happening with their covid booster, meeting global vaccine demand, and what other medical areas the company has been focusing on.
ANJALEE KHEMLANI: Joining me now is Moderna CEO Stephane Bancel. Stephan, pleasure to have you on with us again. Tell us about this quarter. It seems like we're getting into fall booster, second half of the year. What do you what are you expecting?
STEPHANE BANCEL: Correct. Well, good morning and thank you for having me. So indeed today we reported a strong quarter, very happy about where the year is trending, $4.7 billion of sales, 2.2 of net income. And we're reaffirming that for the year we anticipate to be able to have around $21 billion of ship vaccines.
ANJALEE KHEMLANI: Absolutely. Part of that, of course, is what we're seeing in terms of fall boosters and the focus on that. I know you're reformulating for the US, the BA 4/5. And I recall that Europe was looking at the Omicron specific one. So are you currently doing two different tracks of vaccines or have you dedicated to just one formula for fall?
STEPHANE BANCEL: So actually doing two. And I think that's one of the beauty of the Moderna capability that we are manufacturing-wise, is we can do what the customers want. And we want to be here to help public health officials. I think the difference between the countries that we are seeing is how people view timing, which is 214, we have a lot of data. And we already made product in the spring.
So countries that want 214 right now can have it as long as a regulatory approval product. Countries that want the BA 4/5 will now have to wait to early fall. And I see countries that are going to do both. They're going to want to be able to start in the August time frame to vaccinate people at higher risk. Because as we know, the B1 booster of a 214 product has already very high protection compared to the BA 4/5 virus.
And so if you want to protect somebody at high risk, like an elderly, I believe you are better of giving them the BA 1 vaccine now instead of waiting two or three months for them to get the BA 4/5. Because you might get them sick now, given as you know, there's a lot of cases everywhere. And as we've shown, the BA 1 vaccine has very good protection against the BA 4/5,
ANJALEE KHEMLANI: Yeah tell me about that because with that difference you also have different timelines that you're facing to your point about the August. But we also now in the US, the Biden Administration set the deadline for September. But if I recall correctly, you said manufacturing for BA 4/5 won't really come until October. So are you going to be able to meet that deadline?
STEPHANE BANCEL: We're working very closely with the US government. We're working really hard to get these to early fall. And we are already making the BA 4/5 vaccine as we speak in our Massachusetts plant. And so we'll give more data as we get closer to it, but we know how important it is. And we're know it everyday matters.
STEPHANE BANCEL: What about the rest of the world? What are you anticipating in terms of demand there? I know you said COVAX demand has slowed down. But generally with other advanced purchase agreements or other countries, what are you seeing for maybe a fall booster or just generally doses?
STEPHANE BANCEL: I mean, what I'm seeing is that governments have a lot of confidence in the Moderna technology and vaccine. They are very happy with what the first generation of vaccine has done. They have seen the clinical data on the new generation of vaccine for this product is also very strong.
And so we are seeing very strong demand across the world. And several customers have actually upped their purchase orders in the last few weeks. Anticipate a few more coming as well. So I think a strong momentum as we go into the fall.
And I expect Q4 to be even stronger than Q3. Because as you can imagine, in July, August, people are waiting for the new version. So I think it's going to be really kind of late August, September, and then massive ramp up to Q4.
ANJALEE KHEMLANI: Yeah, you said previously that you thought the second half of the year was going to be stronger, I think, anticipating those boosters. But we also heard you say earlier this year that you thought we might get to an endemic stage by this half of the year. Do you still think that or do you think we're in for another ride?
STEPHANE BANCEL: So I still think that the best case scenario, which we give it around 70% probability, is the move into endemic, where as people get infected because of a [INAUDIBLE] vaccination and infection, they basically have mild disease, like a cold. We still be worried about people that are at high risk, like the elderly, and people of course, that have very high comorbidity factors.
The need to boost them is really critical to keep them out of hospital and to keep the economies open and all of us having a normal life like we had in 2019. And that's why what I think is important. But I think we have all the tools now. People at the high risk can mask when they are indoor. There's a lot of testing available, very good vaccine boosters like Moderna available, and also treatments including antibodies. So I think we all will choose to live in a normal way. It's just that if you are at high risk, you need to be more careful and manage accordingly.
ANJALEE KHEMLANI: So you don't think that the worst case scenario is still that we could get a more virulent variant.
STEPHANE BANCEL: So this is the 30% scenario in all probability. It is possible. I don't think it's a best case scenario. It is possible. But it's impossible to know from a science standpoint, is it in a week, is it in three months, or is it in two years, that's with a more virulent strain.
As you know in the flu world, you have from time to time a really bad winter.
ANJALEE KHEMLANI: Sure.
STEPHANE BANCEL: You're going to see that with COVID. But of course it's unfortunately impossible to know when this might happen because it's biology.
ANJALEE KHEMLANI: What about the formulation of the vaccines. You're looking at different formulas that are varying specific. But I know Moderna participated in the White House Summit focused on second generation vaccines that are going to target the virus differently. So have you started to think about that and what the competition in the market is going to look like as a result?
STEPHANE BANCEL: Oh, yes. We are investing in a lot of new technologies, going at looking at different biology, so different things that the vaccine will target. We're looking at how do we extend the shelf life of a product, that we make it storable in fridge, freezer. We're looking at technology early in the labs on how do you potentially go outside of using a needle, using other ways to get into the human body.
So we're looking at a lot of technologies. As you know, we are [INAUDIBLE] pure player. We have a very strong scientific team. We have a very strong cash balance. Just look at the R&D investment. They increase 70%, 7 0, Q2 this year versus Q2 last year. And so you see that this company is very science driven. And there's a lot of appetite to build a better version of its own products.
ANJALEE KHEMLANI: Now currently your pipeline definitely strongly focused on COVID of course, the call of the hour. But talk to me about non-COVID, and even beyond flu. What are you looking at in terms of longer timelines there?
STEPHANE BANCEL: Sure, so as you say I mean we have a very strong vaccine portfolio. Of course, COVID is a big part, flu and many of our vaccines, like RSV, CMV, and so on for which there is no vaccine on the market. So many opportunities with those products already in phase three now to create multibillion dollar sales per year for each of those vaccines. But on the non-vaccine world, I'm very excited about the second half of our year.
As we've said, we're going to present data in cancer for the first time. And that's a personalized cancer product that is made differently for every human being based on the genetic signature of a cancer. And it's a big study. It's head to head with Keytruda, Merck's product, which as is the gold standard in terms of oncology.
And so we're going to share that data. And the other one is on rare disease. As you know Moderna has been very involved since its early days in rare genetic disease, disease where kids have the wrong genetic information from their parents DNA. With the idea, could you get an mRNA in their cells to bring them the right instruction that you and I have that those kids do not have.
We think can have very profound impact on the quality of life of those kids and their families, save a lot of money to health care system. And in the second half, we're going to share rare disease data on the awful disease called propionic acidemia, PA. And we're very excited to see that data and to share it.
ANJALEE KHEMLANI: What about in general focus on other outbreaks that we're seeing right now? We know that monkeypox is an issue, polio as well. With mRNA being so quick to formula, on one hand really high efficacy as we saw with COVID. But on the other hand, a concern has been waning immunity pretty quickly. So have you thought about that and how you might either change or adapt as needed to make sure that that's not an issue in the future?
STEPHANE BANCEL: So using seeing technology to make it better as I described earlier. But also we should not forget that those viruses evolve very quickly [INAUDIBLE]. And look at flu. We have flu shot every year and that's a very old technology that's recombinant. It's a 50-year-old technology. That is not linked to the recombinant technology. It's linked to a virus.
So I think it's the same thing with COVID. I do not believe it is linked to Virmani. I really think it is linked to the virus evolving and basically you have a new bug getting in your body as you get a new infection. So we are working indeed on a lot of those diseases. On monkeypox, we are working on it.
We don't have the urgency that we had when COVID happened. Because, as you know, there's already a vaccine on the market. And this is not an airborne virus. So with COVID, like with flu, you always have that risk of [INAUDIBLE] a pandemic. I'm not aware of any scientist we believe who can get kind of pandemic like COVID with monkeypox.
And so we are working on it in preclinical settings to make sure we have a very strong and broad vaccine before we take it into the clinic.
ANJALEE KHEMLANI: Talk to me also about the ex US stuff, looking at the commitment that you made for LMICs and also Kenya. There has been a lot of concern about the timeline of that and it too far out to really have any impact. What can you say to that? And are you looking at ways to get more product in quicker and distribute quicker, especially in the case of if we see another really bad surge.
STEPHANE BANCEL: Put apart the building of a plant, which we are very committed to, and i will comment in a minute, and the vaccine right now. There's a lot of vaccine supply. And as you know COVAX actually has decreased the orders, which is what we had prepared for and what we have in reserve in terms of raw material and filling capacity at our suppliers for COVAX that they do not want anymore.
Same with the African Union. The African Union had 60 million doses reserved for them that they declined all of them. So I don't think it's a demand issue. You need to build the plant, ensuring there is high quality. Those are pharmaceutical products that are sterile that you inject in people. They need to make sure they are sterile or you're going to get people really sick, potentially kill them.
And so building a plant takes a couple years. There is no way you can cut that time frame. You need to build the building and get the machines. And they need to test the machine extensively before you're allowed by, not even by the regulator, to allow you to ship the first product.
So these timelines, nobody wants us to shrink it because it is fundamental to ensure the quality of a product. And so I think we need to relook at that plant in Kenya as a long term investment Moderna is making, not only for COVID. We will of course, make COVID boosters updated there. But we make flu products. We make products for emerging countries like, as you know, we have Zika, which is in phase two. We have a lot of vaccine for diseases that get people in the tropical countries sick that want to use that plant for it. It i s not for COVID only.
ANJALEE KHEMLANI: Absolutely. Definitely some momentum there on the ground. I'm sure you're seeing it as well when it comes to investment there. And then final question for you, external factors always play a role of course, on any business. Right now we're seeing inflation really press on the market. Do you find that to be impactful in any way on the costs of materials, et cetera?
STEPHANE BANCEL: Yes. We're seeing inflation everywhere, like every [INAUDIBLE] I'm sure in terms of raw materials, of course, energy, of course, salaries, labor, costs are increasing. But we're very confident about the future. I think it's an incredible time for Moderna.
We have this platform that can generate a lot of medicine, $18 billion of cash, a strong team of 3,000 people. And so we are investing very aggressively, which is why R&D investments are growing. But also today, because of a confidence in the future, we announced a new buyback plan, a new $3 billion buyback plan.
There's a billion remaining from the current plan. So it's $4 billion of drug product to go and buy back our stock. And so we want to create value for the long term in addition to creating products by retiring shares from the market.
ANJALEE KHEMLANI: OK. Well, Stephane, thank you so much again for joining us today. Moderna CEO Stephane Bancel, pleasure speaking with you as always and looking forward to the next time.
STEPHANE BANCEL: Thank you.