COVID-19 vaccine global oversupply ‘was preventable,’ Moderna CEO says

Moderna CEO Stéphane Bancel joins Yahoo Finance Live to discuss fourth quarter earnings for the company, global COVID-19 vaccine equity, and the outlook for production amid Russia-Ukraine tensions.

Video transcript

[ELECTRONIC CHIRPING]

BRIAN CHEUNG: Shares of Moderna on the move up over 13% after reporting fourth quarter earnings that topped expectations, $7.2 billion on the top line for diluted earnings per share of $11.29. The drug-maker said it expects to sell at least $19 billion of its COVID-19 vaccine in 2022.

And for more on this, let's bring in the CEO of Moderna, Stephane Bancel, alongside Yahoo Finance's Anjalee Khemlani, who joins us for the discussion. Stephane, it's great to have you on the show this morning.

Just kind of want to kick things off. The FDA still considering whether or not we may need another booster shot in 2022. Just wondering how that factors into the projections that you have for your vaccines this year. Is the expectation that we will have a fourth shot this year?

STEPHANE BANCEL: So good morning. And thank you for the invitation.

So as we made pretty clear on the call this morning with a lot of scientific data, we believe the waning immunity of the antibody provided by the vaccines or natural infection will drive the need for a fourth dose in the fall. We have been saying that for a while. We showed the data that we think makes the point today on the call.

And the $19 billion of signed advance purchase agreement, or APAs, are basically signed contracts with governments around the world with upfront payment. Now you talk about the US. We have, at this stage, as we confirmed this morning, in the $19 billion of AP assigned and the $3 billion on top of options that governments have placed but have not exercised yet, in those two numbers, the $19 and the $3 billion, there is not a penny going at this stage to the US market because there is no signed contract with the US government as we speak.

We're, of course, having discussions with the US government. But to your question specifically about the FDA and the US, at this stage, it's not in the numbers.

ANJALEE KHEMLANI: Right. But Stephane, we'll definitely be looking at that. But I want to pivot now to globally, looking at where things stand. I know this morning on the call, you mentioned that wealthier countries are sort of a de facto market for mRNAs, easier for them to distribute, of course.

We know you are also looking to expand. You penned a deal in Latin America to help expand manufacturing there. And we also know what's going on on the African continent, where there is some criticism of how Moderna has specifically handled transfer of technology. So I want to talk about the global, really, view right now for mRNA and for Moderna specifically. Do you see getting into those other markets and working closely with some of these other entities?

STEPHANE BANCEL: Yeah. So I think there's a lot of things we are doing. So first, we have increased the manufacturing output. You remember, I explained on your show last year that we're investing several billion dollars to increase the manufacturing output very significantly towards doubling it outside the US, 50% increase in the US for export.

And so if you look at where we are, we're still on track to be able to provide 2 to 3 billion doses this year. Last year, we shipped 807 million doses. And then what we talked about in the fall, if you recall, is I said that the world was going to become in oversupply of vaccines, when you look at the vaccines available in the US, but also AstraZeneca, which is not available in this country, as well as the Russian vaccine and the Chinese vaccine and the vaccine made by Serum Institute in India and so on, you're actually pivoting in the November-December time frame.

For a while there was a supply constraint to a world where there's too many vaccines today. I don't if you saw yesterday, the Africa CDC announced that they were taking no more donations in Q1 or Q2 this year, maybe in Q3 and Q4, because we have too many vaccines. The challenge we have is getting them in arms.

And so the world has really changed drastically, as was predicted, because the industry has done a remarkable job increasing, every month, supply of vaccines so everybody could get one.

ANJALEE KHEMLANI: That's right. And the Africa CDC actually did pivot this morning, saying actually that they haven't stopped asking for donations, but they just want better coordination. And I know that's more on the government level than directly from you. But I'd love to hear your comment on that. But then also, looking at where everything is-- of course, the news today with Russia and Ukraine. I just wonder if you're expecting any impact from that.

So on those two points, just coordinating better for Moderna dose delivery. And then also, do you expect any impact on shipments throughout Europe from this news today?

STEPHANE BANCEL: Yeah, so on the low-income country, what I think is sad is the virus has been with us since the end of 2019. The pandemic has been declared by the WHO in early 2020. This is almost two years ago.

We had two years to get prepared for the last mile delivery, getting enough health care workers trained, fridges, and so on so vaccine could be available in low-income countries when they would be available. And now we are seeing this big oversupply of vaccines, including, for example, in the case of Moderna. But then it's the same for other companies.

I talk to some of those CEOs. They have the same situation where I have vaccine waiting in a warehouse to go to a low-income country because they cannot distribute them. And that was a problem that was preventable because there was two years to plan for it.

In terms of your question around the Ukraine, at this stage, this awful act of war is not having any anticipated impact on us in the sense we have no manufacturing site in Ukraine. We have no distribution center in Ukraine. The one in Europe is based in Belgium for distribution. Manufacturing is done in Switzerland and Spain and France. So we should anticipate at this stage with what we know today. But this is, of course, evolving very rapidly. But it should have no impact at this stage.

AKIKO FUJITA: Yeah, Stephane, let me follow up on that. No impact right now in terms of your manufacturing, deliveries as well. But I just wonder how you're looking at it as a CEO of a major company here. I mean, we are looking at a global selloff, granted, the invasion, the attacks escalated just last night. From a CEO perspective, how do you look at what is playing out right now and the potential for things to maybe cause a bit of a chill on the investment side down the line?

STEPHANE BANCEL: Yeah, so I think like everybody, I've been watching carefully what was happening at the geopolitical level over the last few weeks and woke up in shock this morning, as I saw the news first thing before my daily run. It's of course, an awful act of war that has happened by invading Ukraine and Ukraine's sovereignty.

What I worry about is where is this ending. Is this ending in Ukraine? What is the West going to be doing? What are the potential consequences on Asia? Everybody that is a geopolitical expert is talking about China and Taiwan. So there's a lot of moving pieces now that could have a big impact, I think, on what happens in the coming days, weeks, and months.

It's of course, not my expertise. So I'm just commenting on things that I've been thinking about and I've been hearing from experts. And so we might see a very volatile environment.

The good news for us as a company is we are well-capitalized with $70 billion of cash. We're investing an incredible amount of capital in research, in clinical trials. We're expanding the size of a pipeline. We now have 44 programs. We've announced new subsidiaries creation last week. We've announced a new partnership with Thermo Fisher in the US for filling and in Europe with Rovi.

And so Moderna is in full expansion. And we're going to be keep investing because our view has always been to invest for the next five, 10, 20 years, not for the next week.

ANJALEE KHEMLANI: Stephane, really quickly, I know that you do have all that expansion going. And it seems like you're viewing this pandemic turning into an endemic pretty soon. Even with those boosters for the fall, do you have any sense right now of which of the three pursuits will end up stronger in terms of changing the formula, possibly, for the boosters?

STEPHANE BANCEL: Yeah, so the three things we are testing, if you look at the data that we presented this morning, based on what we saw with our beta plus the current vaccine combined. So that data we presented this morning.

If you look at that data and look at the level of antibodies in the different scenarios over time, what was very clear is that day 29, so a month after a booster, you don't see a big difference between the existing vaccine and the combination, the bivalent vaccine. But at six months, it's a big difference.

And molecular biology is not black magic. And so if you think about it, this was a testing of a beta virus for the beta-specific vaccine. So we think the same thing will happen with omicron, which is most probably in the short term, say a month after the fourth dose, you might not see a big difference, because it takes time for the immune system to mature. But we believe that at six-month time frame, which is will be important to protect people if you assume August, September, October vaccinations to protect them against across the fall and winter, I believe this is a vaccine that's going to give us the best data.

As always, we'll have to wait a bit to see the clinical data. But if I had to bet today based on what I know of our platform, that will be the one.

AKIKO FUJITA: Stephane Bancel, Moderna CEO, we always enjoy having you on the show. Really appreciate the time today. And our Thanks to Anjalee Khemlani for joining in on the conversation.