Moderna Inc

NASDAQ:MRNA

Earnings Call Transcript 2019-Q2

[Operator]

Good morning, and welcome to Moderna Second Quarter 2019 Conference Call. At this time, all participants are in 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.

[Lavina Talukdar, Head, IR]

Thank you, operator. Good morning, and welcome to Moderna's second quarter 2019 conference call to discuss 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 Web site at www.modernatx.com.

Today, on this call, we have Stéphane Bancel, our Chief Executive Officer; Stephen Hoge, our President; Tal Zaks, our Chief Medical Officer; 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.

[Stéphane Bancel, CEO]

Thank you, Lavina, and good morning, everyone. We believe mRNA has the potential to be a new class of medicines. We believe mRNA medicines have the potential to address large unmet medical needs and to treat diseases that are not addressable by recombinant proteins or small molecules.

Due to the platform nature of mRNA, we believe our mRNA medicines provide a higher probability of technical success and faster timelines to clinical trials and to the market relative to traditional medicines. We also believe that the manufacturing capital intensity of mRNA is materially lower than recombinant proteins and that the manufacturing costs at commercial scale will be similar to small molecule injectable.

Because of this large potential, we continue to focus on managing the risk across our portfolio, especially technology risk and biology risk. We believe that programs will be in the same modality of similar technology risk, meaning that once we derisk a sentinel program, they are important read-throughs.

As a key example in the near future, we believe our chikungunya antibody program will be an important clinical readout as it uses the same formulation technology as our MMA program, our most advanced rare disease candidate.

Our corporate focus is on three priorities. First, to execute on the development pipeline; two, to move new development candidates in existing modalities from the lab into the clinic; and three, to invest new development candidates in new modalities.

I will review now our most important progress since our last quarterly update in early May. Starting with PCV, personalized cancer vaccine. We presented positive interim Phase 1 data at the ASCO meeting in June and we are happy to report today that since ASCO, we started a Phase 2 head-to-head trial in the adjuvant melanoma setting.

We look forward to the readout of this important immuno-oncology program to assess if PCV plus Merck’s KEYTRUDA can increase recurrence-free survival versus KEYTRUDA monotherapy.

We’re happy to report today that our Phase 1 for CMV has completed enrolling healthy subjects at doses up to 300 micrograms. We believe CMV is a large unmet medical need and we look forward to reviewing and sharing the Phase 1 trial data in the near term.

The team continued to execute at a rapid pace in the last 90 days. We advanced four new programs into Phase 1 since our May call. Two programs in immuno-oncology started dosing in cancer patients. Our KRAS vaccine which is partnered with Merck and the IL12 intratumoral program which is partnered with AstraZeneca dosed their first patients.

Two programs in infectious vaccines started dosing as well, our RSV vaccine mRNA-1172 partnered with Merck and our Zika vaccine mRNA-1893 which is funded by the U.S. agency BARDA.

Finally, I’m happy to report that clinical sites are now open and actively recruiting patients in our first rare disease program MMA. We have three open sites in the U.S. and in the UK, the clinical trial application, or CTA, was just opened by local authorities.

I am very pleased with the company’s progress and I am very thankful for Kim’s dedication to this execution. We have five immuno-oncology programs in the clinic including PCV in Phase 2 and OX40 soon entering Phase 2.

We have five important rare disease programs and are still working out to dose the first MMA patients and to submit INDs for all our rare disease programs. We have four vaccines in the clinic for major unmet medical needs; CMV, RSV, hMPV PIV3 combo and Zika. I want to remind you that there are no approved vaccines for any of these harmful pathogens that severely affect thousands each year.

We are very pleased to have completed enrollment in our CMV trial and we’ll look forward to sharing the data with you soon. The company has never been as strong and we’re more focused on continuing to execute and share our progress in the months to come.

With this, let me turn to Tal to give you some more color on the development pipeline.

[Tal Zaks, CMO]

Thank you, Stéphane. As you know, we’re advancing our pipeline of medicines in six different modalities. In the next few slides I will highlight the progress we have made this quarter in each of these.

So starting with prophylactic vaccines on Slide 13, you will see we have eight programs in this modality and we’ve made significant progress in the last quarter. In total to date, we have safety data from over a 100 healthy volunteers who have participated in our Phase 1 study and we remain pleased with the emerging safety and tolerability profile of our vaccines.

I’m happy to report that our CMV program with mRNA-1647 is now fully enrolled in the Phase 1 trial and I’ll go over this opportunity in greater detail in just a moment. The RSV Phase 1 study testing mRNA-1172 dosed its first subjects in this quarter and recall that at the last quarterly update we reported that our partner Merck had just filed the IND.

Our Zika program with mRNA-1893 also had the IND filed and open in the second quarter and I’m happy to report that the first subjects in the Zika Phase 1 trial was also dosed.

In terms of emerging data, in hMPV and PIV3 or mRNA-1653, we continue to see neutralization titers above baseline at the second interim look seven months after the last vaccination. For context, in January we reported the two-month immunogenicity data. We plan to present the full data from this Phase 1 study at IDWeek in the fall.

We’re also pleased with the feedback from FDA regarding the development plans for mRNA-1653 where we discussed the potential fast forward to evaluate protection against both hMPV and PIV3 in a single Phase 3 study.

Consistent with these plans, we plan to enroll seropositive toddlers in our next trial. Finally, the Phase 1 data for our influenza vaccines against H7 and H10 were published in the journal Vaccine.

Let me now spend a few minutes on CMV. As noted before the Phase 1 trial for CMV is fully enrolled, CMV is a common pathogen that is a leading cause of birth defects. The burden of disease is significant where approximately 25,000 newborns are infected each year in the U.S. alone.

Currently there aren’t any vaccines against the CMV virus on the market. That’s because CMV has proven to be a challenging vaccine to manufacture using traditional technologies given the structure of one of the antigens, the pentamer, which we think is required to elicit a protective immune response.

We believe these challenges can be overcome with our mRNA base vaccine as our technology lends itself to producing the pentameric viral antigen by encoding further simultaneous translation of its five components.

As a reminder and as shown on Slide 15, mRNA-1647 actually contains six mRNA sequences, five of which encode for this pentamer and one that encodes for the gB protein. We believe the combination of these two antigens encoded by mRNA-1647 will produce potent and durable antibody titers against CMV that have the potential to protect against infection. We look forward to the Phase 1 results soon.

Let me now turn to cancer vaccines. You will see the programs in the modality on Slide 17 and I’ll focus on mRNA-4157, our personalized cancer vaccine, and on the KRAS vaccine, mRNA-5671.

Recall that we and our partner Merck announced the Phase 2 trial earlier this year. The Phase 2 design is randomized trial testing the combination of mRNA-4157 in combination with pembrolizumab against a pembrolizumab monotherapy control arm in high risk melanoma patients in the adjuvant setting. I’m happy to report today that the Phase 2 is up and running and that the first patients have consented to the trial.

Interim safety, tolerability and immunogenicity data from our Phase 1 were the basis for the decision to move to Phase 2. We presented these interim data with mRNA-4157 either as monotherapy in a respected adjuvant population or in combination with pembrolizumab in the metastatic setting. These two arms represent arms A and arms B, respectively, of the Phase 1 study. We have a Part C and Part D that continue to enroll.

Our T histologies include microsatellite stable or MSS, colorectal cancer and head and neck squamous cell carcinoma. We and our partner Merck have also added an additional cohort in Part B where we will be testing the combination of mRNA-4157 with pembrolizumab in patients who are refractory to PD1 inhibitors.

Turning now to the interim results we presented at ASCO of this year, we showed that mRNA-4157 was safe and well tolerated but no reported DLTs and no grade 3 or grade 4 adverse events. We also showed that mRNA-4157 elicited neoantigen specific T-cell activation in 10 of the 18 class I neoantigens in the one patient treated at the top dose where apheresis was performed.

While these data were obtained with the first version of our vaccine that included up to 20 neoantigens, we’re now selecting for up to 34 neoantigens using our proprietary algorithm. For the data presented at ASCO, the patients were dosed with the PCV that had the 20 neoantigens and all patients who have enrolled since April in both the Phase 1 and Phase 2 studies have been receiving the 34 neoantigen version.

At ASCO, while the clinical data are early in preliminary, we did report six responses in Part B of the study in the metastatic setting. One of these was the complete responder to pembrolizumab at monotherapy prior to receiving the personalized cancer vaccine and five other dosed with the combination of mRNA-4157 and pembrolizumab had a partial response.

Two of these five PRs were patients who were previously treated with checkpoint inhibitors. While these early signals are trending in the right direction, we believe that our Phase 2 trial will help us and Merck to definitively ascertain the incremental benefit of mRNA-4157.

Moving now to the KRAS vaccine, I’m also pleased to announce that the first patient in our Phase 1 trial testing KRAS vaccine, mRNA-5671, was dosed. As a reminder, KRAS is a key regulator of cell proliferation and survival. Mutation in the KRAS gene caused dysregulated cell proliferation and its one of the best studied oncogenes.

It is the most commonly mutated oncogene and it drives over 20% of human cancers predominately in the pancreatic, lung and colorectal cancers. Indeed, the team at the NCI led by Steve Rosenberg had shown at the end of 2016 that the recognition of a mutated KRAS epitopes by T-cells can lead to cancer regression.

A quick overview of mRNA-5671 is shown on Slide 21. It encodes for the four most prevalent mutations of KRAS which together represent 80% to 90% of KRAS mutations. The generic sequences that span the mutations are combined into a single mRNA that encodes for all four neoantigens.

When translated within the cell into a neoantigen protein chain, the cellular protozoan [ph] machinery is expected to clear the chain and present these neoantigens to the immune system to stimulate what we think will be an active anticancer T-cell response.

The Phase 1 trial for this vaccine which is being run by our partner Merck has enrolled its first patient and this study will evaluate safety and tolerability of mRNA-5671 both as monotherapy and in combination with KEYTRUDA in patients with metastatic non-small cell lung, colorectal and pancreatic cancers that harbor the KRAS mutations. Of note, in this trial we are selecting for specific HLA subtypes that based on the signs are most likely to respond.

For the intratumoral immuno-oncology programs, we’re progressing with all three of our development candidates; OX40 Ligand, the Triplet and interleukin-12. Starting with mRNA-2416 which encodes for OX40 Ligand, which you will recall is a potent co-stimulator that promotes T-cell proliferation.

The Phase 1 is completing the dose confirmation cohort at 8 milligram and in parallel we’re progressing to start the Phase 2 cohort in patients with advanced ovarian cancer. Slide 26 shows the schematic of the Phase 1 trial and the Phase 2 cohort.

Turning to mRNA-2752 or the Triplet, which encodes for OX40 Ligand and two pro-inflammatory cytokines interleukin- 23 and interleukin 36-gamma. The rationale here is to stimulate T-cells through the presence of OX40 Ligand while attracting the T-cells to the tumor site with the local expression of these cytokines.

By injecting the tumors directly we expect the cytokines to act locally within the tumor microenvironment. The Phase 1 is ongoing and it has both the monotherapy arm and a combination arm with durvalumab. I’m pleased to report that the first patient in the combination arm with durvalumab has been dosed.

We’ve also made progress with MEDI1191 in our interleukin-12 intratumor injection program partnered with AstraZeneca, as the first patient in this trial was dosed. Recall that interleukin-12 is a potent immune modulator associated with type 1 interferon response and production of interferon gamma.

Its activity against cancer has been described in the literature but safety has been a problem when interleukin-12 has been administered systemically. We believe that the intratumoral mRNA approach should allow for interleukin-12 to act locally in the tumor microenvironment while avoiding the toxicities seen with systemic administration.

Let me touch for a moment on the localized regenerative therapeutics and AZD8601. The Phase 2a in coronary artery bypass graft population is ongoing. Our partner AstraZeneca continues to open additional sites in Europe with a clinical trial application now also open in Germany.

Let me move ahead to our systemic secreted therapeutics and I will focus on mRNA-1944, our antibody against the chikungunya virus. As of today, we’ve enrolled six of the eight subjects in the third dose cohort.

Before I get to the trial design and the strategy on this program, I want to take a few minutes to highlight the program which is DARPA funded. mRNA-1944 encodes for an antibody against chikungunya.

Now antibodies are a complex protein that require both heavy and light chain to come together to form an active protein. So mRNA-1944 actually includes two mRNAs and one that encodes for the heavy chain and one that encodes for the light chain.

Once formed, we expect the antibody to be secreted into the bloodstream where we will be watching to see if it has some immunity against the chikungunya virus as expected.

On Slide 36, you will see the trial design. The key objectives of the trial are to evaluate the safety and tolerability of four single ascending doses of mRNA-1944 and to evaluate the pharmacokinetics of the drug and the pharmacodynamics of the anti-chikungunya virus antibody levels which together will describe the dose response growth.

We are collecting assay data to see if the antibody levels neutralize the virus which we believe will ultimately speak as to whether or not this antibody we encode for is indeed functional.

Now the utility of this program is really twofold. First, as a product that could potentially protect against chikungunya infection by conferring passive immunity; and second, as this program uses the same lipid nanoparticle formulation that is shared with our other programs in the rare disease indications that we are pursuing, it could conform the risk profile of those other programs as well.

Lastly on systemic intracellular therapeutics where we have four developing candidates, I’ll highlight our rare disease programs methylmalonic acidemia, or MMA, and the closely associated disease propionic academia, or PA. Both MMA and PA are inborn errors of protein metabolism that are caused by MUT enzyme deficiency and PCC deficiency, respectively.

As you can see, these two acidemias are really on the same metabolic pathway. The prevalence of both is approximately 325 to 2,000 patients in the U.S. Patients are identified during newborn screening and current regimens are palliatives. They consist of strict diet restrictions and oral and IV medications. Really the best treatment that we currently have available for suitable patients today is a liver transplant.

Both mRNA-3704 and mRNA-3927 encode for intracellular proteins that act within the liver cell and act on the mitochondria. Both programs also have FDA orphan drug designation, EMA orphan drug status and FDA rare pediatric disease designation which upon approval will qualify the two programs for rare pediatric disease vouchers.

The Phase 1 study of our sentinel rare disease program in MMA with mRNA-3704 currently has three sites open and we are actively recruiting patients. In parallel, the Natural History Study continues to enroll well with the total of 71 patients across the MMA and PA enrolled.

Let me close with Slide 42, which shows you the breadth of our pipeline. In one place you’ll see all the new updates we’ve announced since December 2018 when we became a public company.

And with that, let me turn the call over to Lorence.

[Lorence Kim, CFO]

Thanks, Tal. In today’s press release, we reported our second quarter 2019 financial results. Please note these results are unaudited. We ended Q2 2019 with cash, cash equivalents and investments of $1.44 billion. This compares to $1.69 billion at the end of 2018.

We are reiterating today our expectation for cash, cash equivalents and investments at December 31, 2019 to be in the range of $1.15 billion to $1.20 billion consistent with the guidance given on our call in March. We remain focused on allocation of our shareholder capital towards value-driving investments in our portfolio and platform.

Net cash used in operating activity was 256 million for the first six months of 2019 compared to 160 million in 2018. These numbers include 22 million and 25 million of in-licensing payments in the first quarters of 2019 and 2018, respectively, as stated in the footnote.

After the first quarter of 2019, we have no further in-licensing payment obligations to Cellscript and its affiliate. Cash used for purchases of property and equipment was 18 million in the first six months of 2019 compared to 66 million in 2018.

And then on revenue, recall that on January 1, 2019, we adopted the mandated revenue recognition standard ASC 606, using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2019. The decrease in total revenue for Q2 and the first six months of 2019 as compared to 2018 was mainly attributable to this adoption of the new revenue standard.

Revenue or Q2 2019 was $13 million as compared to $29 million for Q2 2018 and for the first six months of 2019 revenue was $29 million compared to $58 million in 2018. Total revenue under the previous revenue recognition standard would have been 17 million for Q2 2019 and 55 million for the first six months of 2019.

R&D expenses for Q2 2019 were approximately $128 million compared to $104 million for Q2 2018 and for the first six months of 2019, R&D expenses were $259 million compared to $195 million in 2018.

The increases in Q2 and the first six months of 2019 as compared to 2018 were primarily due to an increase in personnel-related costs including stock-based compensation, an increase in clinical trial and manufacturing costs, an increase in lab supplies and materials, and an increase in consulting and outside services.

G&A expenses for Q2 2019 were approximately $29 million compared to $21 million in Q2 of 2018. And for the first six months of 2019, G&A expenses were $56 million compared to $38 million in 2018.

The increases in Q2 and the first six months of 2019 as compared to 2018 were mainly due to the additional costs of operating as a publicly traded company, including an increase in personnel-related costs and stock-based compensation, consulting and outside services and insurance costs.

And with that, I'll hand the call back over to Stéphane.

[Stéphane Bancel, CEO]

Thank you, Lorence. To close our remarks, I would like to reiterate that our team is focused on executing on our three priorities; advancing the development pipeline, investing in new development candidates in the existing six modalities and investing in new modalities. The team at Moderna executed across the board during the quarter.

To summarize quickly the highlights of the quarter, we initiated the PCV Phase 2 trial with first patient consenting to participate in the trial. Our CMV vaccine study is fully enrolled. We started four new clinical trials; two in immuno-oncology and two in infectious diseases.

Vertex’s cystic fibrosis research collaboration. As you might recall, in July 2016, Moderna and Vertex announced an exclusive research collaboration and licensing agreement aimed at the discovery and development of mRNA therapeutics for the treatment of CF.

Based on the clinical work to date, Vertex has extended this collaboration for the first quarter of 2020 with options to extend further based on future progress. Preliminary mRNA delivery will present a potential new route administration for Moderna.

I am pleased with the progress we made today and look forward to the rest of 2019 and 2020 as we approach clinical data results. I will particularly look for the CMV Phase 1 data and the chikungunya antibody Phase 1 data in the near term.

As a reminder, the chikungunya antibody is the first monoclonal antibody encoded by mRNA technology to be dosed in a human. Because RSV and Zika are dosing healthy subjects, this trial should complete soon. And if positive, we intend to transition to Phase 2.

We now have five immuno-oncology programs in the clinic, two of which are already dosing in combination with a proved checkpoint inhibitor, Merck’s KEYTRUDA for PCV and AstraZeneca IMFINZI for Triplet. All teams working on clinical trial sites are focused on the milestone of dosing of first patients with MMA.

We believe that mRNA has the potential to be a new class of medicine. We see a large product opportunity ahead of us and we are energized that the potential to bring these important medicines to patients.

Four vaccines for large unmet medical needs where there are no vaccines approved today. That is a unique opportunity towards millions and as such we have large commercial products.

Five immuno-oncology programs which all have the potential to improve the response of PD1 or PD1 checkpoint inhibitors. Five rare disease programs for conditions like MMA and PA where children born with a missing or defective protein urgently need a treatment that targets the underlying cause of their disease.

The cardiology program, VEGF, which could transform the care of patients who have [indiscernible] and MI. And it is the only first wave of innovative products. Stephen Hoge and his team are working hard to move new innovative development candidates from the labs into the clinic.

The productivity of our mRNA platform is significant. We dosed our first clinical trial in December 2015. In just three and a half years, we started 16 programs in the clinic and we’ve had a high success rate.

The team did get 19 IND of CTAs opened by local authorities. We know we have a special opportunity and we are committed to delivering on the promise of our science, and bringing forward a new class of medicines to patients.

I would like to end our remarks by thanking the many people who participate in our clinical studies, including patients, healthy volunteers and physicians. I would also like to thank the great team of Moderna employees working hard every day to make our vision a reality.

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

[Operator]

[Operator Instructions]. Our first question comes from Salveen Richter of Goldman Sachs. Your line is open.

[Andrea Tan, Goldman Sachs]

Great. Thanks for taking our questions. This is Andrea on for Salveen. My first one is, how are you thinking about positioning for your KRAS vaccine in the context of growing competition in disease? And then I have a follow up.

[Tal Zaks, CMO]

Hi. This is Tal. Thanks for the question. First of all, I’m really happy that we finally have therapies that are emerging as effective against KRAS mutations. I think that progress for the field is tremendous. I think it’s still early days, so let me make two points. First, the exact nature of the activity and against which mutations and in our case which mutations and which HLA still needs to be defined. So I don’t see them even on – if you look at the patient distribution necessarily as competing. Second and I think more importantly on the fundamentals, I think what our vaccine is trying to do and what the emerging inhibitors are trying to do are very different things in terms of patient benefit. I think the history of small molecule targeted therapy has been terrific in the sense that it’s translated into real benefit for these patients. But we struggle to turn them into curative-intent treatments. I think on the other hand, the immuno-oncology approaches were successful, have translated into a much more durable effect. And so my expectation is down the road if both of these approaches are successful, you would expect them to have complementary benefits for the patients. And I’m really excited in the coming years to see how that story plays out.

[Stéphane Bancel, CEO]

And maybe, it’s Stéphane, just to add one thing, because Tal described in his remarks the mRNA that we designed is actually coding for mutation; G12D, G12V, G13d, and G12C.

[Andrea Tan, Goldman Sachs]

Great. And then just on your MMA program, how many patients right now are enrolling in your clinical study that have been rolled over from the Natural History study?

[Tal Zaks, CMO]

So in the clinical study we have not yet enrolled. We’re actively recruiting. In the Natural History study there have been 71 patients enrolled to-date.

[Andrea Tan, Goldman Sachs]

Sorry. So do you anticipate I guess rolling any patients over from that Natural History study or no?

[Tal Zaks, CMO]

It is a possibility. We’re looking at it.

[Andrea Tan, Goldman Sachs]

Got it. Thank you so much.

[Operator]

Our next question comes from Matthew Harrison of Morgan Stanley. Your line is open.

[Matthew Harrison, Morgan Stanley]

Good morning. Thanks for taking the question. Two for me. So the first one is, can you just comment broadly how we should think about safety so far in the chikungunya study given that you’re through almost a third cohort? I don’t know if you can comment on what the stop and gos are from a safety standpoint. And then second question just on OX40 Ligand. Can you talk about what you need to do in this space to probably be able to take that to the FDA? I guess what I’m asking is how should we think about potential regulatory tests forward with that molecule? Thanks.

[Tal Zaks, CMO]

Sure. Let me start with the chikungunya. This study is ongoing so I can’t really comment on the data until we see the totality of the picture there and then we’ll describe it for you. It’s a healthy volunteer study, so stopping rules are what you would expect in these typical studies. In terms of OX40 Ligand, the regulatory path, if you look at where we’re expanding into the Phase 2 cohort, we’re going after ovarian cancer. I think in that setting checkpoint inhibitors are not yet approved and it’s because they really have marginal activity as monotherapy. If we could demonstrate that the combination has a clear benefit to patients, I think the path to approval will be relatively straightforward. So that’s how we’re looking at it. Did that answer your question, Matthew?

[Matthew Harrison, Morgan Stanley]

It did. Thanks, Tal.

[Operator]

Our next question comes from Ted Tenthoff of Piper Jaffray. Your line is open.

[Edward Tenthoff, Piper Jaffray]

Great. Thank you very much and thank you for the updates; lots of good progress. So my question is and I apologize if this was asked, but with respect to the Triple my concern here is certainly not activity especially with durvalumab, but are you doing any special immune safety analysis or any special additional safety analysis just because of the potential potency of the Triple therapy? Thanks.

[Tal Zaks, CMO]

Thanks. That’s a really good question and I wish I had a wider answer for you. The reality is that we’re looking at the safety I think in the traditional way that people do in clinical trials maybe colored by a better understanding over the years of what the safety profile of the checkpoint inhibitors alone is. And so we’re looking at whatever autoimmune phenomena, et cetera, and all the other adverse events that one would expect from checkpoint inhibitor monotherapy and assessing very carefully to see whether we exceeded. If there’s any other safety signal that is attributable to the Triplet, then I think we’ve got two ways of finding it. First, recall we’re dosing as monotherapy so that will give us a clear view on the safety profile just of the Triplet. And second, in the combination arm we’re looking carefully at all the clinical characteristics. And unfortunately I think in the field it’s very hard to predict the adverse reactions that one sees and they’re not very frequent. So all we can do at this point is maintain a careful visual for what to expect and make sure you’re not missing anything unexpected. I don’t know if that answers the question. I’m not sure I’ve got a better one.

[Edward Tenthoff, Piper Jaffray]

That’s all right. That makes a lot of sense. I appreciate that. Then just a really quick high-level question. With respect to the CF collaboration, are there any novel delivery modalities that are being incorporated for that disease or is this really not just treating lung but really systemic disease? Thank you.

[Stephen Hoge, President]

Ted, it’s Stephen Hoge.

[Edward Tenthoff, Piper Jaffray]

Hi, Steve.

[Stephen Hoge, President]

So first of all, it’s a research collaboration with Vertex and we’re excited to continue it based on the preclinical progress to date. As a part of our general research activities, we do look broadly at a range of different delivery modalities. We have obviously made progress in one direction here but we haven’t yet defined a development candidate at which point we’d probably provide specifics about that. Generally, our approach with Vertex and CF has been to address the unmet need in CF, particularly for those patients who are [indiscernible] for CFTR and focusing intensively on the pulmonary disease. But obviously without commenting specifically in the CF example, pulmonary delivery is a route of administration that could be valid for other systemic diseases or other applications as well.

[Edward Tenthoff, Piper Jaffray]

Thanks a lot. I’m looking forward to the – yes, sorry. Go ahead.

[Stephen Hoge, President]

No. That’s it.

[Edward Tenthoff, Piper Jaffray]

Great. Awesome. I’m looking forward to the CMV data and see you guys in September. Thanks.

[Tal Zaks, CMO]

Thank you.

[Operator]

Our next question comes from Cory Kasimov of JPMorgan. Your line is open.

[Cory Kasimov, JPMorgan]

Hi. Good morning, guys. Thanks for taking my questions. I have two as well. So I guess first is can you just walk us through the cadence of what you see is the key validating clinical updates we should expect in the next 12 months or so? Beyond the CMV and chikungunya updates, what else has a change of recurring in that time period and would we see new clinical data at your R&D Day in September? And then I have one follow up.

[Stéphane Bancel, CEO]

Hi, Cory. Good morning. It’s Stéphane. So I will not comment on the R&D Day. I hope you come to the R&D Day, but we’ll make sure that we give good updates on everything we know then. On the next 12 months, as you can see on Slide 46 on the presentation, as I discussed in my comments, CMV is really important. As you know, it really is a very large opportunity. We own 100% of the economic of this product. We believe it’s a very large medical need out there. And so the CMV data are going to be very important we believe for company. RSV and Zika, because they’re in Phase 1 in healthy subjects and they are dosing as we speak, should read pretty quickly. And as I shared, the plan is to move the dose to Phase 2 assuming we have good data into the clinic. I remind you that we have already in the past shown in a good translation from primates into humans, into our vaccines that have positive data. And so we look forward to this data in human. PCV, of course, will take a little bit of time because we started a Phase 2. That’s a very important study. We need to recruit for that Phase 2, in all 150 patients across the board. And then it’s basically of course looking at survival in four months. KRAS is going to be interesting. We all believe there’s a big medical need [indiscernible] tumor types. So we are dosing two patients in Phase 1, so we’ll be sharing observation at the planned clinical meetings of what we see in the clinic. In the intratumoral because it’s oncology and we’ve dosing, the Triplet is in combination with PD1. OX40 will be in Phase 2 soon and also will be in combination with a checkpoint. [Indiscernible] IL-12 forward, same thing we will update the different medical meetings and clinical observation except [indiscernible]. And then as we discussed, the chik antibody is very important for us and then getting the first body in the clinic. The [indiscernible] are going to go straight into patients. As we have commented before, we are starting MMA as a dose that has been showing in animal models having some benefit. And so I think the next few months and the next few quarters are going to be quite rich, data wise. We have [indiscernible] drugs for potential [ph] in the clinic. That’s a lot of potential data.

[Cory Kasimov, JPMorgan]

Okay, great. And then the follow up is regarding your personalized cancer vaccine, 4157 program. Any near-term plans for exploring indications beyond resected melanoma patient that are at high risk of relapse, or PD1 refractory? What do you see is the potential of this program and indications that may have considerably less neoepitopes?

[Tal Zaks, CMO]

Thanks for that, Cory. It’s Tal. It’s a question that we’ve asked ourselves since the beginning of this program. I think strategically and philosophically, what we want to do with this program is first to go where the likelihood of success is the highest before we look for areas that are more challenging. And so that’s why we’ve focused in the histologies that we have in the Phase 1 and that’s why we went into an adjuvant setting even within melanoma for a definitive study into Phase 2. I think once we have a clear proof of concept, clearly we will begin to explore some of those additional indications. But there’s not any current plans to do that.

[Stéphane Bancel, CEO]

And Cory, it’s Stéphane, to add to Tal’s remark. If you think about it, going back to Lorence’s comments, we are very disciplined in our capital allocation. So, of course, there could be a lot of different things one could think of trying with personalized cancer vaccine as you think about all of our patients that aren’t treated today. But unfortunately we cannot know – before we have an important derisking, we cannot expand too much because we have so many opportunities of products across the portfolio, we could be increasing the [indiscernible] that will not be unreasonable. And so we want to be very disciplined. That’s just one example. There’s a lot of things, trust me, that the clinical team – as you know Tal is oncologist by training who love to be trying in the clinic to help those patients. But we just have to be very disciplined in capital allocation and how much we spend and where we spend it, and when we spend it based on the risking.

[Cory Kasimov, JPMorgan]

Okay, makes a lot of sense. Thanks for taking the questions.

[Stéphane Bancel, CEO]

Thank you.

[Operator]

Our next question comes from Alan Carr of Needham. Your line is open.

[Jennifer Shen, Needham & Company]

Hi. This is Jennifer speaking for Alan. I have a couple of questions. First question is, I was wondering if the team can give us some color on the commercial strategy and possibly specific patient groups that you may be planning to target for the CMV assets. Thank you.

[Stéphane Bancel, CEO]

So thank you, Jennifer, for the question. I think it would be great if you can join us at the R&D Day because we will spend quite some time on CMV commercial opportunity. As we discussed in the past, there are many populations from women in the age of bearing a child, adolescent women who might want to protect. There was also discussion about partners of those pregnant women. There’s also discussion because humans are very [indiscernible] CMV, do you put down an age to try to eradicate CMV. So there’s a lot of different segments that we’ll discuss quite at length on the R&D Day. But this is why I think we believe CMV, if you take a 10, 20-year timeframe and if you look at all the old vaccines, like the HPV vaccine and the [indiscernible] vaccine, those very important vaccines, the lifecycle management of those products can be very important and we have our eyes very much on how do we go about this. Again, we cannot do all the indications at the same time. It’s going back to very simply on capital allocation and investments. But we are very much in mind of how do we maximize with them this opportunity to get the largest label that we can for CMV, so it can be given to the largest population we can around the world and not only in the U.S.

[Jennifer Shen, Needham & Company]

Thank you so much. The other question is for the hMPV/PIV3 vaccine, could you possibly give us some comments or color, any new understanding of the titer level needed to progress this effort? Thank you.

[Tal Zaks, CMO]

This is Tal. I think that our understanding of the titers there is going to be based mostly on the preclinical modeling and what we’ve seen to date that is protective. Unfortunately, there is no vaccine on the market, so we don’t really have a correlative protection like we have from influenza. But it is a respiratory virus, so one draws similar parallels from the experience with flu and you get a sense from the totality of our understanding in the science on the respiratory viruses what are the titers like. I think what we’ve seen in the Phase 1 is supportive of our ability to immunize. Recall though that the target population here is in seronegative infants, right. So ultimately we’re going to have to define our ability to reach significant titers and boost to the maximum the immune response capability to respond in that population down the road. So I think it may not be a very black and white answer, because I think it will take inference from multiple lines of reasoning, from science and from clinical studies and from other vaccines I think to come to that. Does that help you?

[Jennifer Shen, Needham & Company]

Yes. Thank you so much for taking my questions.

[Tal Zaks, CMO]

Thanks, Jennifer.

[Operator]

Our next question comes from Hartaj Singh of Oppenheimer & Company. Your line is open.

[Hartaj Singh, Oppenheimer]

Great. Thank you for the questions. I just have two. One is; I know that you mentioned that the chik antibody is very important. Can you just talk maybe a little bit about that if you see the proof of concept manufacturing the antibody using an mRNA and then see efficacy on the vaccine side, antibodies are over 100 billion in sales per year. What other areas could you go into? Would you see yourself being in vaccines? Are there other types of antibodies, other types of diseases that would be amenable to your approach in that regards, or is that just looking too far into the future? And then I got a quick follow up.

[Stéphane Bancel, CEO]

Good morning. It’s Stéphane. So as you know we have disclosed all 21 development candidates and we don’t comment on future plans in research. Obviously, as I said in my remarks, we think it’s a very important milestone. It’s the first time using a modern technology and antibody is being produced in a human. And so that’s an important technology that as you commented has a lot of different applications. What we try to do always as the portfolio of the assets that we develop with our shareholders’ capital is to be thoughtful about managing biology risk, technology risk and to create important innovative products for patients. That’s always a big driver for us. If you look back to one of my closing slides, if you look at the portfolio today, for most of the products in the pipeline, there is no product on the market with big enough medical need and there’s no solution on the market. And so we are always thoughtful about all those things. But it would of course become a very important tool in our Moderna toolbox. As you know, partnering is certainly an important part of our strategy. If you look back over time, we’ve done four partnerships with Merck, a few with AZ. We’re very, of course, happy with the decision by Vertex to expand the collaboration. And so that’s why technology can be made available to a partner. So this is an important piece of the Moderna toolbox.

[Hartaj Singh, Oppenheimer]

Great. That helps a lot. And then I just had a question on your manufacturing strategy. I visited the Norwood facility; really, really kind of cool stuff going on there. It is clinical grade sort of material and research material. Can you just talk a little bit about how you’re thinking about your commercial-grade material? You’re getting to the point now where you might have one or two other rare diseases where you might be able to get to the clinic fairly rapidly and the regulators want to see a sort of clinical to commercial sort of strategy. Can you just talk a little bit about that? And then which of your modality actually requires more intensity from a commercial manufacturing perspective than others? Thank you.

[Stéphane Bancel, CEO]

Those are great questions. So, on the commercial front, as we’ve shared in the past, Norwood is able to do commercial, but it’s not ready today. We have to do much work around validation and the quality systems and so on. But the infrastructure of the plant itself has been built so that the site can be brought to commercial readiness and be able to do pivotal studies, registration studies out of Norwood. What we also shared and it’s again going back to our focus on managing the risk, we will not have to be the commercial facility before we have our first commercial product approved. That’s a very important part of Moderna’s strategy to derisk the company. So we can launch products out of Norwood. We can do Phase 3 out of Norwood. We will get the site ready on time so that we can do that. We also always have a contract manufacturer strategy. We never want to be single sourced for the company. That would be way too risky. So we have as we speak contract manufacturers that have also commercial capabilities from their site and the quality system already. And if you think about the different products on the portfolio, which is a second question, the thinking path is mostly on the back end, which is on killing the virus. Because if you think about it, mRNA for vaccines, the doors are very, very tiny, so you don’t need a lot of mRNA drug substance to supply actually millions of virus. Because you go back to the data we have published, our vaccines show efficacy at 2,500 micrograms per human. So in half a kilo or kilo you can do a lot of doses that can do enough. And so – and [indiscernible] because the end of patients is low. Don’t go into gigantic quantities. Of course, oncology is a different ballgame. But again, that would be a very happy program to manage when we get there. On the back end, no, it does not have the capability to do millions of vials of fillings, but that’s something that is readily available to contract manufacturing. So that is why we feel very confident that we have – with the current infrastructure that we have, we have the ability to do pivotal, to do commercial. If we’re to manage the back end, we need more vial capacity. We get and contract that out with an existing partner of a new partner, we have time for that. And if we needed more capacity, one thing to remember about Norwood is that we can increase the capacity of Norwood tremendously versus the current capacity. We are only working with two-day shifts. We could put of course a night shift. We don’t have a shift on weekends. So right there you have a lot of capacity available. We can move the warehouse out of the site, the warehouse doesn’t have to be on the site and you have right away more GMP facilities that you can access your utilities. The QC lab can also be moved off of the plant. It can be moved in the parking lot. You just build a new building. And here, again, you go with more GMP capacity. The preclinical – all the robotics are preclinical. Same thing, it’s currently in a GMP suite but doesn’t have to be, because it’s preclinical material. So there again, you can move it to the parking lot or in a new building. So if you think about the manufacturing strategy of Moderna, Norwood was a big investment. We think it’s a strategic investment. We cannot deliver on the mission of the company or the pipeline without Norwood. But we really need Norwood so that this becomes the central node for us that it there for a very long term so that we do not have to invest CapEx in the years to come at a high level. We will not be in the commercial plant until our products are approved. That would be way too risky.

[Hartaj Singh, Oppenheimer]

Great. Thank you, Stéphane. That’s great.

[Operator]

Our next question comes from Alec Stranahan from Bank of America Merrill Lynch. Your line is open.

[Alec Stranahan, Bank of America Merrill Lynch]

Hi, guys. Thanks for taking my questions and congrats on the progress. I just had a couple. So maybe first on the hMPV/PIV3 combination vaccine, do you have a sense of the sort of data we’ll likely see in October? And will we see data outside of antibody titer comparisons? And is the Phase 1b toddler study necessary as per your conversations with the FDA before you begin a Phase 3? And then I have one more.

[Tal Zaks, CMO]

Thanks, Alex. It’s Tal. So in October, we’ll present the totality of the data as we have it, so you’ll see the antibody titers, you’ll see the safety, you’ll see what you typically see when we describe the totality of the study. And I believe that’s been accepted to IDWeek. In terms of the seropositive toddlers, yes, I think that is consistent with the development that one would expect and that the agency concurs in terms of the next step in the development path here. So ultimately remember that the target population here is infants, so there’s a pretty structured and rigorous way by which you work your way down into that population.

[Alec Stranahan, Bank of America Merrill Lynch]

Okay, great.

[Tal Zaks, CMO]

Now given the sensitivity to the pediatric population, we wanted to make sure that we’ve got clarity from the agency in terms of designing that study and that’s why we put it in the press release and we discussed that interaction.

[Alec Stranahan, Bank of America Merrill Lynch]

Right, I understand that’s a sensitive patient population. And then shifting gears to your KRAS vaccine, 5671, we’ve seen data from Amgen and others that are pretty encouraging on G12C, although it seems maybe there’s a subgroup that requires additional combination therapies. So I was just curious on the KRAS vaccine what your thoughts are for it as monotherapy and also in terms of combination with checkpoint inhibitors? Thanks.

[Tal Zaks, CMO]

Yes, so I’ll give you two versions of the answer, one on the science and one as a drug developer. On the science, unquestionably, one would want to combine these as early as possible because we think there’s orthogonal benefit, as I described previously, and one would expect they’d get combined with checkpoint inhibitors in addition. As a drug developer, you want to get confidence first that each individual has merit on its own before you go into the combination. I think for us it’s critical to demonstrate that the cancer vaccine is such in combination with the PD1 inhibitor can actually mediate responses. I think once we get to that stage, we will obviously have a keen interest in pursuing the right combinations with the inhibitors depending on where they are at that point in time. Alec, did that answer your question?

[Alec Stranahan, Bank of America Merrill Lynch]

Yes, that’s great. Thank you.

[Operator]

There are no further questions. I’d like to turn the call back over to Stéphane Bancel for any closing remarks.

[Stéphane Bancel, CEO]

Thank you for joining us today and for your questions. We look forward to seeing you during our upcoming third annual R&D Day in New York City. This meeting will be held during the morning of September 12. Have a wonderful day. Thank you.

[Operator]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a great day.