Moderna's View of the Global Pharma Industry | WSJ

Sure. It's a great question. So good morning again and thank you for the invitation. So when we started Moderna, the idea was that if we could find a way to make safe mRNA make protein in humans over a long time frame, and I'm thinking 20, 50 years, that should be a new class of medicine. And the mental model I always had was the biotech industry. If you remember Genentech and Amgen in the 70s and look today, 50 plus years after, most of the medicines, the top 10, 20 medicines are all biologics, right? So that's the mental model we had. And so we said, because mRNA is information, it's an information molecule, it makes no sense this would be a two or three drug company. It will be either zero because we will run out of money before we can make it work safely, that's what you have to do in our industry, or it will be a lot of medicine because if you make one work, then it's going to be a platform. And so we are obsessed about managing risk for patients first because we have always been very patient-centric mission. That's what you do when you do medicine, right? And we don't want to be the company that made the world believe mRNA will not work because we messed it up. And so we always obsess about risk and we are very humble about the fact that because mRNA has never been done before as a medicine, the unknown unknowns. And so we say, a bit like people do when they build a portfolio of stocks, if you know asset managers will know one stock will go 100x in the next five years, you buy only one stock in the portfolio, right? But people build portfolios to manage risk. So we did the same thing. We say, okay, how are we going to manage risk of this technology? And so we thought about two big risks: the technology risk on mRNA, of course, we don't know what we don't know on the technology and its safety, its efficacy, and then the biology risk, meaning some diseases are well understood, like rare genetic diseases, they are genetic diseases, whereas think about Alzheimer's or think about cancer. And so we said, let's try different technologies at the same time because we don't know what we don't know. So we tried vaccines in infectious disease and genetic disease, and then let's try to work a portfolio of biology. It's actually when we hired Stephen Hoge, who is the president of the company, when we had maybe 20 people, he came to me and he's like, I think we can use the technology in cancer because initially we picked a rare disease to start to lower the biology risk so that we could know in the clinic if it was not working, it was because the technology was not ready. So we try to take apart those two risks, if that makes sense, because if you run a clinical study and it fails with a new technology, is it the technology that was not working, or is it the scientific hypothesis or what you coded in the mRNA that was wrong?

And if you cannot learn why something fails, you cannot improve it. That makes sense. So that's why we started on genetic disease because it was lowest biology risk, and then whether infectious disease vaccine, and then Stephen showed up and he's like, we can do a lot of cool things with cancer.

So it's interesting because as you most probably know, we shared the phase 2 data over the last three years, and at ASCO in June, we shared the five-year data of a phase 2 study which was randomized against Keytruda, exactly like the phase 3 study. So of course it was not 1,100 people, it was 150 patients. So it was not powered for registration, but it was against Keytruda. It was randomized, and as you might know, the hazard ratio was 0.5, meaning, you know, a 50% improvement versus Keytruda, which is an amazing molecule and has saved so many lives. And you saw duration, if you look at the survival curve, incredible duration of effect of mRNA-4157, the Moderna drug. And so I was quite surprised, and I'm not a financial market expert, that there was, I think, 15% of the stock short. So like, you can believe that it might not be as good as a phase 2. That's a very fair scientific belief because nobody knows the phase 3 data until you run the phase 3 experiments, right? But to believe that you'll go from a 0.5 hazard ratio, which is exceptional in oncology, to a failure was weird to me. But again, my job is to focus on the business and patients and the science. The capital market does, I think.

So I think it was true maybe two years ago. I think two years ago, if you think the COVID sales were coming down a lot because the number of vaccinations was coming down a lot, as we expected since the beginning. It's important to know, because I love the history. I mean, if you look at business history, you had with Tamiflu when there was a flu outbreak like in Mexico in 2009, Roche had great Tamiflu sales, and of course they went away as they should. If you look at what Gilead has done with Sovaldi, same, great uptake of a drug, and then when people are being cured, well, you don't need the drug, right? And so as in 2020, we're obsessed about the clinical study, scaling up manufacturing. I regularly reminded the team, you know, guys, we're going to have to come down this mountain because people are not going to need three shots a year. In 2021, I got three shots, my first two shots and then the full booster. I know that in a normal cycle it would be only one shot for people who are on the vaccine. So you don't have to be a genius in math to know from the get-go the sales are going to come down a lot. And so two years ago it was hard because we still had a lot of cost because we wanted to finish our big phase 3 study in flu, which is now approved, and other products. And as you know, when you start a clinical study, from a business standpoint, stopping it halfway is a bit crazy because you lose all the money. But from an ethical standpoint, you can't. In our industry, when you start a study, you have to commit to patients, to the clinical trial site. So when you decide to go, you go. And so we were basically in the middle of a Rubicon, you know, kind of crossing. And some people thought we were going to run out of money. So we did a lot of work on managing our costs, as you are aware. So that was true two years ago, but last year you could do the math, but we were going to be fine.

So first, let's be clear, the grants were not coming from FDA because FDA reviews the product you submit to them, that's their job and their responsibility. The grants were coming from BARDA, which is a part of HHS. So the grant was of course very disappointing because we believe deeply as a company that we collectively have a societal responsibility to get ready for a flu pandemic. When COVID started and I was first made aware of the virus and the cases in China, actually through the journal, I've said that story before, between Christmas and New Year 2019, that there was some case of strange pneumonia-like symptoms in China. I reached out to NIH at the time to know, hey, what's going on. I always thought, and the field thought, we will see a big outbreak from China in flu. And if you look at modern history, we had done an H5 and H9 vaccine for flu. H7, sorry, H7 and H9. And so we thought it was flu. And so because of what happened during the pandemic, and it was so terrible from all the lives we lost around the world and the economic impact and all the impact on mental health and all the things you guys are well aware of, we thought we had the societal responsibility to do an H5 program because if an outbreak was going to happen with flu, it was mostly H5 because as you know, it's in birds all over the world and in many mammal species. There's actually a lot of cases right now in Australia. We check that on a daily basis. I check that on a weekly basis. My team is a daily basis. And so we thought we need to get this because think about how the pandemic would have looked different in 2020 if we already had done some clinical studies to just tweak it to the strain of, let's say, H5, if you've already done a phase 3. You potentially have had a vaccine in the spring of 2020. Think about how the fall would look different. How many people we lost in the fall when we got back indoors in cold weather and so on. And so we kept at it. So HHS canceled the grant, which was very disappointing. We were very fortunate because we built a lot of network with a lot of people around the world over the years to have CEPI, which came out of the World Economic Forum as you might recall, that agreed to fund the phase 3 for H5 flu. It's in the phase 3 study right now. As soon as we have the data, of course, we'll share it. And the good news is, if God forbid there's an H5 outbreak happening anywhere in the world, we can in 10 minutes just change the sequence to H5. We'll have to do a smaller study just to prove to the FDA and to ourselves the equivalence of antibody levels. But from a safety standpoint, given it's exactly the same platform and so on, we should be able to go much faster, meaning vaccine available sooner, which is helping people faster.

I don't want to do it again. So look, OWS was amazing, and I say that because I lived through it. The US government, and I'm talking about the administration, Congress, as a US government. The collaboration between FDA, NIH, CDC, I lived it inside out. It was amazing. I can tell you, I was born in France. We tried to do something with Europe. It was terrible. And I've said it publicly before. It was terrible. What the government did to say, we have a big scientific problem. People are dying. The economy is down. We need to fund a portfolio of vaccines. And they bet across three technologies, as you know, protein, which was the most proven technology but was going to take the longest on paper, the DNA, you know, with AstraZeneca, and the mRNA, which was never done a phase 3 before but could be the fastest to the finish line. And they bet on six different technologies. It was amazing. It was a great use of $10 billion of taxpayer money, right? And America delivered vaccines for the planet. If we think about the humanitarian impact of OWS, it was fantastic. And the other piece about OWS was amazing because I talked to them literally several times a day, is sometimes the time they saved was incredible. Like I would remember sometimes I would text Moncef at 4 in the morning. I say, FDA says go right, but NIH says go left. What do I do on a very technical topic? I say, leave it with me. By two or three hours after, he will text me back or call me, okay, go right. There's no process for a company to have two government agencies talk to each other with me at the same time, but Moderna will make it happen. That was OWS. And then all the logistical general per and so on. What they've done for the country with their teams was incredible.

So yeah, that was a remarkable time.

Yeah. So it's a complex, complicated question. To go at COVID speed for the FDA will require a lot of investment by the government because what BARDA basically did is they dedicated full teams of much larger scale of scientists and doctors to each of the companies' programs. So for Moderna, there was a lot of people who stopped doing everything else and were just helping us. And what they did, which was really incredible and great for the country, is sometimes we'll ask FDA a question, they'll get on the Zoom the next hour. Today the law is I have to write, send a letter, I have a request, and they have 30 days to give me an answer of when we're going to have a meeting. Think about that during the pandemic, it would be awful and so many lives we would have lost. And sometimes we'll have two or three meetings in a day because we'll ask them questions, they say, give us an hour or two with the experts, we'll come back. They get back on a Zoom, they'll text us. So if you wanted this to happen just during the weekday, because we did the same on weekends, we had meetings on Saturday, Sunday, as we should, because every day mattered for saving lives. Just with on weekday, working weekdays, you have to start the FDA with many, many more scientists and people so you have a capacity. It's not a question of capabilities. The capabilities, you have a lot of amazing people working at FDA. It's very a capacity question.