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Moderna’s CEO shares what it was like to leap from pre-revenue startup to Fortune 500 company



On this week’s episode of Fortune‘s Leadership Next podcast, co-hosts Alan Murray and Michal Lev-Ram talk with Moderna CEO Stephane Bancel about drugs the company is developing to combat cancer, heart failure, and ultra-rare diseases in children; the upcoming price increase of the COVID-19 vaccine; and what it was like to leap from pre-revenue mode to the Fortune 500.

Listen to the episode or read the full transcript below. 


Alan Murray: Leadership Next is powered by the folks at Deloitte, who, like me, are exploring the changing rules of business leadership and how CEOs are navigating this change.

Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray.

Michal Lev-Ram: And I’m Michal Lev-Ram. Okay, Alan, let’s start today with a quiz for our listeners and for you, although you definitely know the answer to this. Can you name the company that in 2019 reported revenues of $60 million, and by 2022 was number 195 on the Fortune 500 with over $18 billion in revenue?

Murray: Yeah, that’s an amazing jump from $60 million to $18 billion, with a B. The company is Moderna, and that revenue is a direct result of the company developing a vaccine for COVID-19.

Lev-Ram: Yeah, and I think it’s even more impressive, given that a lot of people had probably never even heard of Moderna before 2020. But the company has actually been around since 2010.

Murray: Moderna was founded as a portfolio company by the CEO of Flagship Pioneering, Noubar Afeyan, and who, by the way, has been a guest on this podcast, you can go back and check it out. It was in May of 2020. Noubar had learned about mRNA, messenger RNA, and started Moderna with the goal of finding new uses for it. They spent 10 years exploring that and then suddenly, bam, COVID-19 provided the answer. Our guest today, Stephane Bancel, came on board as Moderna CEO in 2011, and the company went public in 2018.

Lev-Ram: Okay, and thankfully, now, the height of the pandemic has passed, and the need for these vaccines is a little bit less urgent. There’s something to be said about your marquee product being less useful because people are healthier. All in all, that’s a good thing, right? But I’m really curious, where does Moderna go from here? And how is Stephane going to help it get there?

Murray: We’re going to talk about that, I think the promise of this mRNA technology is, it can kind of attack a whole host of diseases. It’s really almost like an information system more like dealing with computer science than typical bioscience.

Lev-Ram: Yeah, and I think I mean, to that point, this is really the tip of the iceberg. As big as COVID was, as huge as this particular vaccine was for the company and for the industry, of course, overall, they’re really just beginning to scratch the surface on what they can do with this technology and this platform. And they’re really in the news for a number of reasons today. I should add, it’s particularly relevant right now, because the US government is set to end the pandemic public health emergency on May 11, and at that point, the federal government will stop purchasing vaccines from companies like Moderna. But here’s another thing that’s in the news, and that’s very controversial. Moderna has said it plans to hike the price of its vaccine to almost $130 a dose to compensate for the loss of government subsidies. So we were able to talk to Stephane about the reasoning behind that plan in today’s episode.

Murray: That and a lot more. Let’s just dive in. Here’s our conversation with the CEO of Moderna, Stephane Bancel.

Lev-Ram: Welcome to Leadership Next, Stephane.

Stephane Bancel: Thank you. Thanks for having me.

Lev-Ram: I’m going to start off with something kind of simple, which I’m sure you’ve had to retell many, many times. I know you have a very extensive portfolio of IP and vaccines. But obviously, I think most listeners still know the company primarily for the COVID-19 vaccine. So take us back to that time early on in the pandemic. And retell for us, really, the steps that the company had to go through to get this out into the market.

Bancel: Well, how long do you have? So basically, we heard about the virus between Christmas 2019 and New Year. Started to get ready for it when the Chinese put the sequence online. We designed the vaccine in over a weekend, in two days on the computer in silica. We never had access to a physical virus. And when we started to run get into clinic in March, phase three started in July, you know data in November and launch in December, which as you know, was a world record of fastest vaccine. Before was four years, [hard to hear] vaccine is 10 years. The challenge was amazing. I mean, we had made across all of our products in 2019, around 100,000 doses. And at the end of January 2020 when I walked into the office of my head of manufacturing, I’m like, how do we make a billion dollars next year? And he paused and he looked at me like, What are you talking about? We made $100,000 last year. I’m like, You’re wasting time, Juan. How do we make a billion dollars? He got into the game. [Hard to hear.] He and I started picking up the phone and calling people. So it was kind of an incredible time. That’s what he got us moving, like every hour, every day mattered.

Murray: It really is remarkable. Stephane, I wonder, you know, you had been working on this technology for a decade this, I think, this mRNA technology. And then you had a sudden proof point that turned you into a billion dollar business, but what else can we expect? What are other ways that mRNA technology can be used to save lives?

Bancel: mRNA is an information molecule. And I think a lot of people do not fully appreciate what it means for the world and for humanity. And it’s basically, you know, for 150 years, the pharma industry has been a lot of great products, though, changing our lives but they all have been analog products, where every molecule is different, or you have to reinvent its toxicity, its efficacy, how to make it and build a plant just for one. Has really been an analog business but because mRNA is an information molecule, we’re moving to a world where [hard to hear], you become the factory, I become the factory when I get an mRNA injection. 

So we just framing we believe over time, this technology can be applied to most disease states. So having said that, where are we today? So we have a lot of vaccines, around 30 vaccines, because what most people don’t realize is there are around 200 viruses that hurts humans, but vaccines against only 20. So give you a sense of this still a lot of work to do to protect humans from more respiratory viruses. And you know, where the great phase three data in RSV just at the beginning of the year, and that product should be going to FDA, very, very soon. Latent virus that are viruses like HIV, that once in your body, never leave your body and create a lot of damage in your body. Because there are around 10 of them and we want to go after all of them. And then cancer, just before Christmas, we shared some very exciting data in the field of cancer for melanoma, for skin cancer, where we show that our technology compared to the best drug available today, which is Keytruda from Merck, presented a 40% reduction in the risk of recurrence of disease. 

Murray: Wow. 

Bancel: So that’s, that’s cancer. We think this is applicable to all solid tumor organs. So lung cancer is the next thing we’re going after. We’re working in cardiology. We have a very exciting heart failure drug. We are using mRNA to code for protein that is used by women’s body when they become pregnant. Because they become pregnant, their heart and evolution as an amazing thing has to prep much more blood because of the increase of a baby weight, and the placenta and the liquid in a very short amount of time. And so it’s this hormone called relaxin that women secrete during pregnancy that then goes away, that we’ve been able to [hard to hear] mRNA. And this is in the clinic right now with patients having heart failure. We should have data this year. And then there’s genetic disease, where no kid has the wrong instruction from mom and dad in their DNA, they cannot make the right protein that you and I can make. You have cystic fibrosis and many of your diseases. We are doing two applications right now and we think over time, we can do more. 

Murray: Wow, so you’re working on hundreds of viruses, cancer, heart disease, genetic disease. I mean, if you are successful, the COVID vaccine experience, as amazing as it was, will be a footnote in the history of medicine.

Bancel: Yes, it’s interesting, because I’ve been saying that to all teams in the last couple months since we got the cancer data, which I’m so excited about. I’ve been telling people look for the first 10 years of Moderna, pre-COVID, is that people I believe mRNA will change medicine in a very profound way. Very few people believe me. Then in January, February, March 2020, I told people, including you know, on TV, we should have a vaccine that will be working by the end of the year. I even had CEOs of some pharma companies getting on CNBC and saying it is irresponsible to say things like that because it’s not possible. And we know when we launched the vaccine and so what I believe today is Moderna is going to transform cancer care in a very profound way. Most probably five years from now, maybe three or four years from now, people will have forgotten that the COVID-19 vaccine was our first product. People will know us as one of the most impactful, if not the most impactful, cancer companies. That’s what I believe. And so those revolution after revolution is what’s coming at a pace that has never happened in pharma. Because this platform ability to do medicine coding, the instruction, on the computer, and of you being the factory, this is sort of game changing.

Murray: Amazing. Well, well keep going very fast. I’m getting old. So I need you to move quickly.

Lev-Ram: Oh, you’re doing just fine, Alan. You know, there’s so much promise and opportunity here. Not only life changing, but obviously, big business building here. At the same time, there is still demand for the COVID vaccine, as much as we’re entering a new era here and getting out of the pandemic emergency era. And I know one thing that’s been in the news a lot is the vaccine pricing. We know you just talked in front of, talked, testified I guess, a friendly chat with the Senate. And the pricing is going up pretty significantly. So help us understand, from your perspective, multiple perspectives here, obviously, but from your perspective, why is this happening?

Bancel: Sure, it’s a great question. If you think about the pandemic, what we did during the pandemic was pandemic-like solutions. You know, we had 10 dose in one vial. But in the endemic setting, in a normal setting. Businesses like pharmacies and hospital, they don’t want to 10 dose in one vial, because what has not been talked about is about over wastage, that the 10 dose per vial drove. They have a piece of volume, during the pandemic, the US government ordered 500 million doses from Moderna. We will be delighted if we sell in the US in the fall of 23 50 million doses, we’ll be delighted. That’s a 90% volume drop as you can do easily the math. 

The other piece, too, is we have to take all the risk for returns. During the pandemic, the government ordered product and threw away at the taxpayer cost, the product that was not used. Whereas in a normal setting, like in a free market, the companies get returns from a pharmacy at the end of the season of a product that they don’t want and that basically you made it and you have to throw it out. And of course you don’t realize the sales because you get a return. And so there’s a lot of things like this that makes the world before and after very, very different. 

And to the question, why can we not get the old price when with big volume, and not 10 product in a vial and so on? It’s a bit like, if you make an analogy to say, why is the price of a Coke at a spot arena, different than if I go buy 24 cans of Coke at Costco? Like it’s not the same product, it’s not the same service. So it’s a bit the same thing, which is the economies of scale, the complexity, the risk of managing the return, distribution. It’s another element in the during the pandemic, we shipped to free CDC warehouses. In the endemic setting, we have to ship and bear the cost of shipping to 10,000 customers across the US.

[Music starts]

Murray: Jason Girzadas is the CEO Elect of Deloitte US, is a sponsor of this podcast and joins me today. Welcome, Jason. 

Jason Girzadas: Thank you, Alan. It’s great to be here. 

Murray: Jason, Leadership Next was created around this idea of stakeholder capitalism but there’s clearly been political pushback to that idea. And there’s also economic pressure as the economy slows down. How do you serve all stakeholders? How do leaders balance the need to deliver profit and return on investment on the one hand, while also prioritizing the needs of these increasingly diverse stakeholders that they have to respond to?

Girzadas: Yeah, decision making in this environment is not easy. That’s for sure. The historic norms of simply looking at ROI from a financial lens is insufficient, quite honestly. What we’ve seen in some of what we’ve tried to do ourselves is open up the aperture to recognize that there are actually multiple lenses that need to be utilized when evaluating significant decisions. How does the decision impact the workforce? How does it impact the societal stakeholders and whatever the decision may be? And so I think that discipline of a multifaceted set of value drivers and value stakeholders will be increasingly a more common part of all decision making at board and executive levels. That discipline, Alan, will make it easier to actually be more cognizant and inclusive of the multiple stakeholders in making significant decisions. Now, that doesn’t mean that the financial returns and expectations become secondary. I just think they’re more balanced with the considerations with other stakeholders. 

Murray: Jason, thanks for your perspective and thanks for sponsoring Leadership Next. 

Girzadas: Thank you.

[Music ends]

Murray: Stephane, there’s a bigger issue here, though, that I’m sure you’re aware of. The industry that you have suddenly exploded into was prior to the pandemic, the most hated industry in the United States. There’s lots of survey research to back that up. And it was because it was perceived as being all about maximizing prices, protecting IP, extending patent protection, so you couldn’t get lower priced alternatives. And people just felt like you weren’t interested in public health, you were interested in maximizing returns to shareholders. The pandemic changed that for a while. Everybody could see you are out to save lives, you know, Pfizer was out to save lives. But you have to be aware of that history and wonder like, how do you prevent us from going back to that era where people think you’re all about stuffing money into your owners’ pockets, and not about saving lives?

Bancel: And I think there’s a lot of things that we are doing as a company, because we’re highly aware of that, you know. One example that comes to mind is what we’re doing right now with ultra-rare disease. Ultra-rare disease is one where you have hundreds of kids. And when we did the math, the math just to recover the cost of R&D and the cost of manufacturing, we’d have to charge us a million plus per year per kid, million dollar, which we like, this is just not, this is not possible. And so we spend, you know, quite some time every year to figure out how do we do it, because we cannot charge a million bucks for a drug. And we actually went 180 degrees the other way. We announced in the fall of 2021 that we gave VIP to a foundation associated with UPenn. So we don’t even own the drug anymore, we gave VIP to that drug, the drug is for a rare disease in the liver. But we gave VIP to UPenn. But we need a bit more, which I think is an interesting new model, we are supplying for free the amount needed to do the clinical work. So not only the preclinical but the clinical work. And we committed by contract that either drugs approved by the FDA will supply to the kids the drug for free forever. We’re just trying to find models that are just quite different than what pharma has not been able to do because pharma doesn’t have a platform. So while we are using the platform to create value for shareholders, we’re starting to use platform to create value for society. 

Another good example is HIV. The world needs an HIV vaccine. We’re 40 years after HIV was discovered and there’s still no vaccine today. There’s very good treatments that are expensive, and you have to take daily for the rest of your life. So we partnered with the Gates Foundation. And unlike what to do with pharma, which is if you want to come use our platform, there’s a fee to use the platform, because we invested shareholder capital to build the platform. So we told the Gates, you have access to platform for free. And we committed to the Gates Foundation, because they are paying all the clinical costs, that if a vaccine works, we will supply to low income countries at cost forever. 

So we are trying to use some of the uniqueness of the platform, the shared manufacturing resources, to invent how to do good for society where there is no possibility for a product from a commercial standpoint. But we don’t decide to do nothing. Another example is yellow fever. Yellow Fever kills a lot of people in tropical countries every year. But in pharma, there’s a vaccine approved, but they have never invested to increase manufacturing capacity. So what do we do every year, they sell to travelers clinic, because you can get a good price there. And whatever is left, they sell to tropical countries. And you have a lot of people who never get a vaccine every year and those people die. And so we can go after this as well. So we’re just trying to figure out how do you invent a new way to to do drugs where you won’t make any money, but it’s just the right thing to do, and it’s not going to cost your shareholder a lot. And that’s just part of the company we’re trying to build here.

Lev-Ram: And going back to COVID for a minute. I mean, one of the things that came up in the Senate hearing was, you know, you reiterating your desire to keep it accessible to people who do still need it. There is some demand still and will be for, you know, the foreseeable future. So What is your role there? What is the government’s role? How do we keep the COVID vaccine accessible?

Bancel: That’s a great question. So let’s just clarify a few things. Because I think it’s important we have the same facts. Anybody who is insured, can go to a pharmacy or doctor and get the vaccine for no copay, zero copay. Anybody who is, for that principle, even insured by Medicare, the government of a V.A., or Medicaid can do the same thing, walk into a pharmacy or doctor, get a vaccine zero copay. So the challenge was uninsured. And so while the uninsured was covered by the taxpayers and a government during COVID, we actually decided to step in because there is no solution today. So what we committed is we are building a program, an access program, where somebody who’s uninsured in the US will be able to get the vaccine for zero out of pocket, during the, during the endemic setup. We’ve been trying to find creative models, like I’ve been talking, for example, to homeless shelters, because sometimes the critique of some access problem by pharma is they are so complicated to apply to that very few people do. And so we’ve been trying to think outside the box to say, Okay, let’s solve a problem backward. What needs to happen so people really have access that’s easy? And one of the things that we’re playing with is, what partnership can we do with community hospitals, with homeless shelters, where we’ll do a partnership with the institution, and the institution will promise to us by a very simple contract that they will only give it to people that they check on insurance, and we give them the vaccine for free. And so think about a homeless shelter, where instead of every homeless having to apply to Moderna to have access for free, the doctors of the institution will certify that they will give it to people that are uninsured, and we just send the vaccine and they use it for free. So just trying to be creative to make it easier for people.

Murray: It’s fascinating. It’s a difficult line to walk clearly. Just before we leave this subject of intellectual property and pricing, I know that there was a lawsuit filed in 2021, against the NIH over the the whole issue of who really created the central component of this vaccine. What’s your view of that battle?

Bancel: Sure. So there’s there was no lawsuit. There was discussions and disagreements on on who owns the IP. We believe we own the IP on the mRNA drug because the mRNA technology we own, the NIH was never involved in developing the mRNA platform with us with technology. And if you think about it, the drug [hard to hear] isn’t mRNA, it isn’t a protein. What has happened is our team when the sequence was online by the Chinese developed the vaccine, they filed the patent and the NIH came back to it because we’re discussing saying, Hey, we think this is a protein that should be, a spike protein that you guys know, well, that should be used to make the vaccine. So we are very happy that they validated what our team had done. But that work had already happened. We could never agree with the NIH on those facts, as I just described. And so what we did late last year is we abandoned the patent. So Moderna decided to stop that discussion that was going nowhere and adding no value to the world, that it was going to be easier if we just, Moderna decided to discontinue the application to the US Patent Office of those patents. We have a lot of patents, but we decide that those are not critical patents for us. So we disregarded them. We informed the NIH, they have been aware for a couple months now and we’re all moving on with our lives because it’s not going to add any value. And even if they had been inventors as per US patent laws and we think it’s very important to follow the rules of how do you put inventorship in a patent, even if they have been co-inventors, which we don’t believe was the fact, we will owe them nothing. Because when you co-own an asset, because you both own it, you don’t owe money to each other. You get money from other parties that you might license a patent to. But as a co-owner, there’s never an exchange of value because you both own the patents.

Murray: It’s interesting listening to you, it’s almost like you skipped adolescence. I mean, you went from being a pre-revenue startup to suddenly being a Fortune 500 company with all the social responsibilities and complexities and, and public persona that that requires. 

Bancel: Correct.

Lev-Ram: That’s not the most common path, for sure. Okay, I’m going to do like hard pivot to non-COVID news here. So you recently made an acquisition. Is it OriCiro? Is that the pronunciation?

Bancel: OriCiro. Japanese. 

Lev-Ram: Tell us about that. My understanding is that this is going to lead to manufacturing capabilities in Kenya, mRNA manufacturing. So what prompted this acquisition? And what does it really mean for you?

Bancel: So if you think with how we want to deploy our capital to create value products, number one, invest in R&D. We have this amazing platform, think about it, like the golden goose at every drug is a neck. So we want to keep investing in the goose to make the goose bigger and bigger and bigger. So that’s priority number one. Priority number two is are there any technology that we can either license or buy to strengthen to increase the size of the operating system, the amount of operating system. The team, look, going to conferences and reading patterns and publications, was made aware of this technology maybe a year ago, and went to Japan a couple times, and came to the conclusion that this was really amazing, disruptive technology that could help us on the early part of making mRNA. Where we make the E. coli, the bacteria that is used as a template to make the mRNA in the factories. And so the team came back to us and said, like, we need to own this, we looked at it, said you guys are right, we need to own this. So we negotiated the acquisition, we bought the company. It’s happened just over the Christmas break. And we’re actually making the team in Japan model antibiotics, because we’re very good at creating enzymes. And so we want to do even more things with them. And so we’re investing in that team. And that’s going to shrink the time it takes between deciding to make a new drug, like when you have a new variant of COVID, or flu, and having the product available. If you look at what we did last year, the FDA told us at the end of June, they wanted to be for five new Omicron variants in the vaccine for the fall. By early September, by Labor Day weekend, it was in pharmacies in the US. So that was two months, I think we can reduce that by at least two weeks, it will be a month-and-a-half. Thanks for that technology is going to reduce our cost is going to increase our speed and increase our quality. So you want to check so many boxes of running a business well, that we ended up buying the company. We’re looking at a lot of things, sort of partnerships and investing in technology. So we just want to again, expand this operating system as much as we can.

Lev-Ram: Grow the goose. That’s the strategy.

Murray: That’s awesome. Well, we’re going to have you back in 10 years to see how the mRNA platform has done in attacking cancer and heart disease and genetic diseases and all the other things that might cut short my life and look forward to your success.

Lev-Ram: Thank you, Stephane. I appreciate you coming here and talking to us in this really interesting, pivotal moment in the world of vaccines. So thank you.

Bancel: Thank you both for your time.

Murray: Leadership Next is edited by Alexis Haut. Our theme is by Jason Snell. Our executive producer is Megan Arnold. Leadership Next is a product of Fortune Media. For even more Fortune content, use the promo code LN25. That’ll get you 25% off our annual subscription at Fortune.com/subscribe.

Leadership Next episodes are produced by Fortune‘s editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.

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