In Good Company with Nicolai Tangen - Stephane Bancel CEO of Moderna

Episode Date: May 18, 2022

In this episode Nicolai Tangen talks to Stephane Bancel, CEO of Moderna. They discuss vaccine rollouts, China’s zero-Covid policy, ethical dilemmas in the pharma industry and much more.The production team on this episode were Plan B’s Tor-Erik Humlen and Olav Haraldsen Roen. Background research were done by Sigurd Brekke and Bård Ove Molberg with additional input from our portfolio manager Mark Dainty.Links:Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

First of all, Stefan, thank you so much for taking the time. You come highly recommended from the whole world, and we are super excited to share your story with the Norwegian population. Well, thank you so much for the invitation. Stéphane, how did you first hear about the pandemic? So I first heard about a new virus in China between Christmas 2019 and New Year, actually through reading the newspaper, you know, I've been in infectious disease for 25 years and I've been part of a couple of outbreaks like, you know, Ebola, of course, H1N1 flu out of Mexico, if you recall. And so I always keep a close eye on new outbreaks.

And there was a Wall Street Journal article that I read when I was actually in the south of France on vacation just a few days after Christmas 2019 that said there were new cases of pneumonia-like disease in Wuhan, China, but from a new pathogen agent. And so I emailed the NIH, the team of Dr. Fauci, to ask them, do you know about this new

pathogen agent? And they said, no, we're tracking it, but we don't know what it is. A few weeks after, we know it was coronavirus, but it was not SARS or MERS. It was a new one. So we waited for January 10 when the Chinese put this genetic sequence online. So what did you think then? So we thought it was an outbreak. At that time, I thought it was going to be an outbreak like SARS or MERS. So we want to develop a vaccine and we're working on one right away.

But to help the outbreak, it's only when I'm in Davos the week of January 20 that I realized that this was going to be a pandemic like 1918. And so I totally moved Moderna from believing it's an outbreak to convince it's a pandemic and make the COVID-19 our number one priority. So when you see a situation like that, do you think, geez, this is bad for the world? Or do you think, wow, this is great for Moderna?

No, I think it's awful for the world. I was raised by the Jesuits, so kind of a serving mindset. I've been in life science all my life, and I've been in life science because I want to help people. And so when this happened, I'm like, oh, shit, it's going to be awful. People are going to die by the millions. And at the same time, we have this technology that we've been working on for 10 years. We've done nine vaccines in human testing when COVID-19 appears.

And so the first thing is, geez, we might be able to help. And so we need to get moving because people are going to die by the thousands or millions. And the other piece, too, is I get very worried because it's January 2020. I know we cannot get a vaccine in the next few months, but I get very worried for a winter that's coming. Because like in 1918, again, for all of us that have been

in infectious disease, a respiratory virus, and. Because like in 1918, again, for all of us that have been infectious disease, a respiratory virus, and coronavirus is a respiratory virus, is going to be awful in the fall and winter when people are all indoors. And so while I know a lot of people are going to be dying in the spring, I'm dreading the fall and the winter. Now, you went from the first sequence of a virus in January 2020 to a vaccine in phase one clinical trial two months later. I mean, how is that at all possible?

So because of the technology that we have, mRNA, as everybody knows now, is an information molecule. We all have thousands of mRNA in every one of our cells in our body. And we knew the technology could go fast. And we've also invested a lot over the years in IT and robotics to enable the technology to go very fast. And so, you know, in traditional pharmaceuticals,

you will need first to have a virus in your lab to work on a vaccine. Well, in our case, we didn't need a virus. We still, to this day, do not have a virus in our lab. We use genetic information, so just data, to design the vaccine on the computer. And then the instructions go to robots, and the robots

start making the vaccine. Why is it possible? Because it's always the same manufacturing process, regardless of what we make with the technology. Because the only difference with flu vaccine and COVID vaccine and Zika vaccine is only the orders of the letters on the message. It's like zero and one for software.

Life is made with four letters and all protein in the world, whether it's a plant, a fish, a human, a virus, is using the same four letters to code life information. So how was your life during those two months? And what happened in the office? So my life was a bit crazy. We started around February of 2020 to actually work seven days a week, which was dreadful because it was not a few weekends.

It was for nine months where the team worked seven days a week. Because again, we were just so aware that every day mattered to save life. You know, we were like everybody seeing the trauma happening everywhere with people hospitalized and dying, obviously. But also the lockdowns. The lockdown had a very profound impact on us in terms of what it will do to society,

to mental health, to disease. Because as you know, a lot of people with cancer, cardiovascular disease and so on could not get to hospital because everybody at the hospital was working night and day, saving people dying from COVID. And also education. One of the things I worried a lot about was all those kids, especially low-income kids that didn't have a chance to have a computer at home to do remote learning and so on, is what was going to be the impact on their lives if they were going to

be many quarters losing education. Now, I read somewhere that you slowed down the trials to make them wider and more encompassing. Do you want to explain your thinking behind that? So we started a phase three study in July 26 of 2020. The first few weeks were fantastic, getting a lot of Americans who volunteered in the study to help us get the data to see if a vaccine was working and was safe. But after a few weeks of great number of people getting the study, we realized that we have a lot of white people, but we are way behind in Latino and we are way, way behind in African-American. And so we do some actions to try to change the curve and bend the curve. But while we make good progress in Latino, we made not enough progress in African-American. And so we get to a point

around mid to the third week of August where it is clear on the current trend, we will have very low African-American representation in the study. And we start to worry a lot about what will it do if a vaccine works? Will we be in a place where African-Americans do not want the vaccine because they don't know if it's safe or not for them and if it's working or not for them? because they don't know if it's safe or not for them and if it's working or not for them. And so after a couple of days of discussion and trying to make things better and so on, we decided with the team to slow down the phase three. We actually shut down a few of the clinical trial sites

where they were enrolling only white people and focusing energy and opening a new site to do more recruiting of African-Americans. How important was this? It was really important to us because in the U.S., maybe you guys might not be aware in Norway, but there were some horrible stories of what happened, you know, 56 years ago with clinical studies with African-Americans

that made that that community in the U.S. does not trust the government with their health. They were used literally as human guinea pigs. It was very awful. And so, you know, we said, look, we work so hard, literally seven days a week for months and months. If we end up with African-Americans who don't want to take the vaccine because they don't trust it, we will have failed.

And so we said, look, we're trying to make this vaccine so that everybody can use it, everybody can feel safe about it. And so we slowed down. So Stefan, how were you able to scale up your business so quickly? I believe you went from 800 employees in September 19 to more than 3,200 people now. Yes. So that was a very hard part of what we had to do. Plus, we were recruiting people during COVID with lockdowns and people working from home and so on. So what we did is we very quickly

identified the problem. As soon as we realized it was going to be a pandemic in January 2020, we said, okay, how do we scale the company? And so we started to increase the size of our HR team to do recruitment. And we basically industrialized how to hire people. Like in manufacturing, we hired a lot of people to make the vaccine and we had to hire them and train them. And so we had literally an entire section of a building

dedicated for interviews where people would come with masks and testing. We set up our own lab, which we were one of the first companies in Massachusetts to set up our own lab back in the spring of 2020. So people could be tested, be interviewed with a mask, and they would spend the whole day interviewing. Instead of doing interviews on several weeks, we would just get people on site and have all the Moderna people

to interview the candidates in little rooms. And candidates will go room by room. And by the end of the day, we'll decide we hire that person or not. So it was kind of an industrial effort of how do you hire so many people? Is that how you still do it? Yeah, I mean, we now are back more into a normal way to run the business, but it was just an imperative of how to do it to get the job done. And how do you make sure that you get the right people on board with such speed?

Yeah, so we've developed a lot of tools over the years. Montana has a pretty distinct culture versus traditional big pharma that are much slower in how we think about things, and much more conservative. This is a place where we try to take calculated risk. Of course, we're not talking about breaking the law or doing things unethical. Those are no-go, non-negotiable. But we try to find people who know what they are doing in terms of their skill, very, very strong, and also want to have an impact. And you can find such people in big companies. Sometimes they are frustrated and buried in big companies. But if you look carefully, you can find those people.

What was also, of course, helping us during the pandemic is the pandemic. What do I mean by that? Well, Moderna was on national news every day because there was, as you know, every newspaper and TV wanted to know what the vaccine were doing. And as you know, we were early in the race and progressing at a very quick pace. And so that helped us a lot because as we would advertise that we were hiring a lot of people, I would be sometimes on TV or on radio saying, hey, we need to hire 500 people in Cambridge or in Norwood where our plant was. And so we're trying to get a lot of people wanting to come and help,

which also made our job easier. I think you were very early on digitizing the whole process. Could you tell us about that? Yes. So having worked at large companies, I have been kind of frustrated over the years about how sometimes if you think about a business process that cut across departments, how sometimes it goes, you it goes digital and then analog on paper and analog and analog and then digital again and analog again, that makes no sense. Because if you have a digital information,

you want and you must keep it digital. And so since the beginning of the company, we embarked on building a fully digital company where all data will be in computers. If you look at our plant in Massachusetts that has made 600 million dollars last year in 2021, there is no paper in that plant. It's 100% digital. All the machines are connected to SAP directly into the cloud. And so we try to remove human errors. We try to remove work that is not interesting for employees.

As you know, as a species, humans, homo sapiens, we are very bad at doing repetitive tasks. Why? Because we lose interest. We get bored. Humans like doing new things. And so think about all those people that we are in a regulated industry. The way we need to make drugs is very, very clearly defined by the law because we have to protect patient safety,

which is, of course, a very, very high priority for us. But how do you reconcile patient safety and a very regulated way of making drugs and people getting energized by making the drugs if every day they do the same task? And so we try to use machines and computers as much as we can so that our people are doing interesting tasks that motivate them and they want to improve things versus doing the same task every day. What were the biggest mistakes you made in this period?

So the biggest mistake I made, a few of them. So one was around people. You know, we hired a lot of people, as you described earlier. I made a few mistakes of people that I was part of the interview process and I supported that ended up not really being a good culture fit with us. So that was unfortunate. The other mistake I made was around the initial dose. You know, we had to pick the dose for phase three without the full

dose for the phase two data. We know the phase two was safe. If not, we would not have gone to phase three and the regulators, FDA, would not have let us go to phase three. But we don't have time to wait for the data of a blood sample of antibody in the blood of a phase two people. So we're hesitating, do we go with 50 micrograms or 100 micrograms? And so this was a very hard decision because nobody knew how much antibody was needed for protecting people. So we ended up picking 100 micrograms, which ended up giving the Mona vaccine a much longer duration of protection than the other vaccines. But it was a very hard decision because 50 micrograms most probably would have worked, but not as worked as long.

Changing tack a bit and just spending some time on you as a person. You mentioned you were raised by Jesuits. Yes. How was that formative for you? So it was really the culture of serving, which has a very profound impact on me. You know, as I was a teenager, as part of my schooling, not only did they give you a good education and so on, but they make you volunteer. And so we spent a lot of time working with homeless people,

people who have no job and are unemployed, trying to find jobs again. And so this, spending time, I think, as a young person, realizing that there's a lot of people suffering around and that you can help with your head and with your hands, was very formative in who I became as an adult. As I told you, all my life I've been in life science because I find it very energizing to work to help over a human being. And so I really believe that time with Jay Z was very, very formative in who I became as an adult. Do you think that has changed your view on money as well?

Yes, as well. I've never worked for money. I always worked for my family as enough money to live comfortably, like I think all of us. But money has never been a goal in itself. I'm actually quite fortunate that I have a wonderful wife who now is spending all her time awake to give away the money we made at the company. We have now actually two foundations that we've started

that my wife is running. I'm helping a little bit on the strategy side of it. I don't have a lot of time, as you can imagine, with Moderna. Usually that's how we spend our weekend. Usually the Sunday is really around discussing foundation projects. But it's good

when you can use your time to help other people that are suffering. Your life has a lot of meaning. Absolutely. And staying on the topic of ethics, what are the most challenging ethical dilemmas

that you face as a company? I think there was one that was hard last year, which country you supply. Yeah. We had a lot of issues with being forbidden to export. I spent a lot of time trying to convince government to allow us to export. It was extremely frustrating that politics was in the way of getting people protected. That was really, really frustrating. And we pushed as hard as being threatened by some government.

So that was really hard. The one that is hard today, that now the world is in oversupply of vaccine, which is a great thing. We would rather have more vaccines and having to throw out some vaccines than not enough for the planet, obviously, is as we look forward to all the drugs Moderna is working on, which is you always have a limitation. Today, thankfully, it is not money. It is talent. And so when you have a limitation, it's what do you do and what do you not do? And so what is really hard for us today is there's a lot of exciting drugs in cancer

or in rare genetic disease that my team is working on. We have now 46 drugs in development, which is a lot. I think soon we're going to have 80 or 90 drugs in development. But that's really the dilemmas we have today is we have a lot of good drug ideas and we cannot take them to a clinic as fast as we wish and that's really really heavy burden to carry and in your industry you always have to balance making money and at the same time making sure that people and countries can afford you know what you produce just how how does such a debate look like?

I used to run BioMérieux. It's a French-based diagnostic company. It was built by a family, a family in Mérieux. When I was CEO, Monsieur Mérieux was the chairman. He was third generation. And one of the things I learned with him is that in life science, if you take care of a patient, money will follow. And so I've always kept that

kind of mindset. You know, as we went into the COVID-19 vaccine, we had no idea how much we were going to charge for a vaccine. You know, usually you do marketing team doing studies of price and value and reimbursement and all that stuff. We're in a pandemic. We had no time. You know, I was

asked a lot initially, how much are you going to charge vaccines? I have no idea because I have no time to spend with marketing team to figure out the price for a vaccine. And so I think it was this deep belief, which is if you do the right thing for patients, at the end of the day, you'll make enough profit

that you'll be able to have a sustainable business. And I think when you do things the other way around, you do a lot of things that are wrong and drive actually the wrong culture and you hire the wrong people around you. So I think having the patient first is always a wise thing to do. It's a very easy compass to have.

And the thing we want to do is to try to invent a new way to build a pharmaceutical company. One example we have, to give you a bit of a sense of our values on that topic of price and so on, is we recently, in the fall, we gave away a drug for rare genetic disease to a foundation. And why did we do that? Because it's a disease called Krigler-Najjar, it's a rare disease, but there are only hundreds of kids around the world having

that disease. And it's a disease that M&A Technology hundreds of kids around the world having that disease. And it's a disease that M&A Technology, we believe, is very adapted to go and treat. There's no treatment for those kids available. And most of those kids will die when they are teenagers because the disease burden is so high that they cannot make it to adulthood. And so we did a back-of-the-envelope calculation, and we realized that because the number of kids is so small, if we just want to break even our clinical costs, we will have to charge family around a million dollars per year per kid. And as we do this back-of-the-envelope with my team, we're like, this is not possible.

It's just inhuman to ask a family or government to pay a million dollars per year to keep a kid alive. But we are thinking, okay, how do we do this? Because we cannot not do the drug. The technology should really work very well. And so we decided to go 180 degrees the other side. We said, we're going to give it away. And how do you do that? Well, we partnered with a foundation where we told them, we're giving you all the intellectual property for the drug. Now you are the one owning the drug. But you will get the doctors and the hospital to volunteer with no cost to do a clinical study.

Because they will not do that for a company for profit, but they will do that for a foundation. And we told them, we will give you the drug to give a clinical trial to the kids for free. We'll make it. And we committed by contract that if the drug is approved, we will every year supply to those couple hundred kids in the planet.

We'll supply the drug for free. Do you think you'll do more of this? Yes. So there is around a dozen diseases that are like this, where as we discussed with our board of directors and our team, the math is always the same, which is the price is obscene

that you have to charge just to break even. And so we'd rather do it in this kind of private-public partnership that are creative. Another example of what we are doing now in the same domain is for tropical disease. You know, there's a lot of virus that are hurting people in Africa, Latin America, Asia, that nobody cares about in big pharma, like chikungunya, like dengue, yellow fever. And we are trying to find ways with

governments or foundations to make the modern technology available so that we can do those products because people are dying. If you look at the numbers in Africa, you have more people dying of malaria today than COVID. And so there's a lot of things that we can do, be given our technology as a platform. Because as we discussed initially, mRNA is an information molecule. And because you use the same manufacturing process every time,

you can also use the same factories. So you could see a world where we do rare genetic disease with foundations, like I described. We do tropical disease with foundations or governments to get those products out there because they don't cost us money to do because I use the same factory. It's more of a question of how do we find partnership to help us kind of share the cost and so on.

But we can do a lot of things like this that will help a lot of people that traditional companies cannot do because every drug in the old pharma world, the way you want to think about it is every drug is an analog drug. It is a different way to make than the previous drug.

So you don't have platform benefits like we've seen in the tech world. So the analogy I will make to people is think about Moderna more like a Netflix than a blockbuster. Big Pharma is more like a blockbuster world. No, they make a product, every product is different, but there is no learning between product one

and product two. And so in our case, it's the same technology, it's the same four letters, the same four bricks of life we use for every drug. So what's the biggest challenge now in the vaccine rollout globally? It's really how do we scale the company? I mean, if you think about it today,

respiratory disease still is the number one killer in infectious disease. There's around 10 virus that you and I have had in our lifetime that we believe we had flu. But if you didn't do a PCR test, you and I didn't know what we had. We had a virus that gave us flu-like symptoms, but not flu necessarily. Sometimes flu, of course, we got. But if you think about it,

the mRNA technology is very adapted to combine different mRNA molecules in the same vial. So our vision is to save millions of lives every year by providing a once a year booster that has COVID in it, of course, adapted to a variant of that year, and flu and RSV and other coronaviruses so that we all get an annual shot at the local pharmacy or doctor and you don't become sick or hospitalized or worse, dying of respiratory disease. This we can stop. Will there ever be a vaccine which will protect you for a longer period of time, you think? Yes.

The thing we should not confuse is the duration of a vaccine is because the virus keeps mutating. The vaccine that's available today in Norway or America or around the world is a vaccine that was developed for the Wuhan virus strain, which is two years ago. the world is a vaccine that was developed for a Wuhan virus strain, which is two years ago. And as you know, in the early quarters of this pandemic, the virus has mutated a lot and very quickly. As the virus will evolve, its pace of mutation is going to slow down. A virus cannot mutate in an infinite number of ways because mutation is based on the size of a genetic spike protein. The spike protein has 4,000 letters in it, genetic letters. So there's not an infinite number of possible mutation. It's a finite number. And so because it's a finite number, over time, the number of mutation will

slow down. And as we get new vaccine booster, like we're working right now, to have an Omicron adapted booster for the fall. So as the virus stabilize and as we get updated vaccine, we should get back to having at least, I think, nine months protection. So we can all get the vaccine in the fall, get protected for the fall and the winter. As the immunity like flu wanes in the summer, we get another one the year after. I think dreaming right now of a vaccine for a lifetime

is not in the cards today scientifically. No. Like flu. But I think getting to once a year booster that is adapted, that we can all have a nice fall and winter and kind of forget we live with COVID, like we live with flu and we live with RSV

because we have a good vaccine. I think that world is really ahead of us starting this fall. Well, that sounds like good news. Now, in the meantime, what do you think about China's zero COVID policy? Well, I think it's unfortunate because all the tools exist today. You know, mRNA vaccines are very good protection against infection and more importantly, hospitalization and death.

There's not a lot of appetite today to get foreign vaccine used in China. And that's really unfortunate because the COVID-19 zero policy in China, as you know, is forcing a lot of lockdowns, given Omicron is more and more infectious. You know, the virus evolves to become more and more infectious, not less. That's no evolution. That's only one direction. And so I think it's going to be harder and harder with time for China to control the virus without good vaccines. Last question. We have a lot of students who admire deeply what you have been doing. What kind of advice do you have for students who want to work in the pharma or biotech industry?

I think it's an advice that I think goes to all students is do what you're really passionate about. You know, I had friends when I left college or business school who joined a job for a nice title or for more money. And that is stupid. Life is long and you need to do things that you love to be good at it. As I said before, you know,

Homo sapiens is a curious animal, literally. We like to learn. We like to do things that have impact. We all have different tastes, which is great for our planet. We like different things. We get passionate about different things. But choose a job that is in an industry you get energized about. When you get up in the morning, you need to be happy and excited.

Choose a company where the culture suits you. Not get up in the morning. You need to be happy and excited. Choose a company where the culture suits you. Not every company is the same. As I tell candidates, some people at Joy Moderna are very happy. Some people at Joy Moderna are not happy because they have not a good culture fit. So find a company that has a good culture fit for you. But please do not take

a job for a nice title. Do not take a job because you make a tiny bit more money than the previous job. Think about your life as a career and as a chess game, which is what other things you need to learn. I think my advice to people is at least until you are 35 years old, your only obsession should be learning, learning, and learning. And if you do that in a good company with good culture that suits you, maybe not your brother or your cousins, but suits you, and you always want to do the right thing

for the company and serve the customer, you will do very well. Well, I think that's a tremendous place to finish the conversation. Big thanks for your insights and big thanks for what you've done for the world over the last few years. Well, thank you so much for your kind word.

It has been 10 years of hard work for a large team. And what is exciting is there's a lot of work ahead for us for helping people with many more diseases. And we're making sure not to waste any hour. Fantastic. Thank you so much. Good luck. Thank you so much. Good luck.

Bye-bye.