The host expects to keep adding to his Moderna position, arguing the market misprices its platform: at a typical 10% industry approval rate the stock would be overvalued, but the platform should lift success rates in each new disease area, with autoimmune value not yet in the share price.

Since we only have 3 hours, I'll start asking questions right away. Okay, let's start by explaining Moderna's basic technology in a way that a tenth-grade student who hates science can understand.

Oh, come on, man. You can't hate science in high school. Well, very simply, as many of you have learned during the pandemic, messenger RNA (mRNA) is an information molecule. It consists of four letters, just as all software consists of zeros and ones.

Messenger RNA (mRNA) is made up of four letters that can code for any protein in your body. It is not something we invented. Rather, it's the way our lives work. It is found in plants.

Found in animals. It exists in humans. You have thousands of molecules of messenger RNA in each of your cells.

What we achieved at Moderna, which took us ten years before the pandemic, is how to make a safe mRNA molecule in a reactor to serve as instructions for any protein we want your body to produce on demand.

And for that student, another question. At this stage, Stefan, how much do we understand about how the human body works? Oh, maybe 5, 10, or 15 percent. I don't know because we don't know what we don't know, right?

But it's a very small amount. That's why I'm so excited about what medicine will offer people in the next five or ten years; it will be amazing.

Hmm. So, the mRNA tells the body: "This is what your cancer looks like." "Go and look for anything that bears these marks." It's like a "wanted for justice" poster, and then the drug Keytruda gives the immune system the freedom to attack the criminal when he is found.

Is this an accurate description of how mRNA and the drug Keytruda work together?

The way we describe it is that the drug Keytruda essentially gives T cells extra energy. This is part of your immune system that is responsible for fighting cancer. When you develop cancer, over time, as the tumor grows, your immune system becomes fatigued.

Keytruda essentially increases the energy of existing T cells. What Moderna’s mRNA drug does is teach your immune system how to look for new signatures and new mutations in your cancer.

So, they are essentially entirely new T cells that you produce after we give you our product. It takes two to three doses of the vaccine to stimulate your immune system. And so, as you know, the results are quite impressive.

Based on Phase II data, after 5 years, 80% of people who are disease-free within the skin cancer category are considered cured.

I want to go back perhaps to when you arrived at Moderna, I think in 2011. I want to hear your explanation because I think this is the most misunderstood thing about Moderna. It is your description of how the company created a platform and how it differentiated itself from single-origin biotech companies.

So, umm, what makes Moderna's solutions a platform? Yes, this is because messenger RNA (mRNA) is an information molecule. If you think about the past 150 years in which medicines have been available globally, we started with small chemical molecules such as aspirin and Aleve, you know, antibiotics, Lipitor, and other products.

However, those are individual products. Each time there is a different chemical structure, you have to reinvent everything, test the effectiveness, and test the safety. Most things fail because you literally have to relearn everything from scratch.

When the biotechnology industry emerged in the 1970s and 1980s with recombinant DNA technology, insulin, and growth hormone, we talk about Keytruda. Keytruda is a biotechnology product from a chemical point of view.

But again, those are products you have to relearn how to make each time. Because messenger RNA (mRNA) is an information molecule, and because mRNA uses the same four letters and you just put them in a different order to code for a different protein.

We knew from the beginning that we would end up either with zero medication or with a lot of medication. There was no scientific logic in a company being only about one or two drugs.

Therefore, we built the company from the beginning, and I am an engineer by training, to be a platform company. In other words, how has the scope of information technology expanded? How has the scope of robotics expanded?

This means that when something works once, you can repeat it, which is why we now have five vaccines already approved. Cancer vaccine is a new application. By the end of the year, we should have data on rare genetic liver diseases, which is another application.

In each of these applications, getting the first product done is really difficult because you have to come up with a way to make the technology work in that organ. But then the second, third and fourth are like copy and paste.

So, it's fair to say that with each approval, each new drug makes the next one in that sector easier to develop with a higher approval rate. That's what you expect, or that's the dream of the system you've built.

correct. Looking at the data, we have so far obtained five certified products. We have other positive stage 3 cancer data. Then we had cytomegalovirus (CMV), which was in a third-stage negative.

So, this means seven phase three trials completed. If you look at the industry average, from the first stage to the third positive stage, it is about 10%.

If you look at those numbers at Moderna, we're around 85%. This is not because we are smarter, I don't think so. Rather, it's because we have a platform that reduces risks and increases the likelihood of drugs reaching final approval.

How likely is it that Moderna will transfer this success to other therapeutic sectors, and which ones are on your list? Initially, in the field of cancer, we will expand significantly.

We already have nine clinical studies underway in lung cancer, kidney cancer, bladder cancer, and more on the way.

Essentially, in cancer, we want to try different types of tumors using the same technology, because T cells don't care if the tumor is in your lung or skin. It's a tumor. T cells circulate in your body through the blood all the time.

It's like a small police force looking for security incidents.

The next big area is rare diseases, and we should know something about them before the end of the year. We currently have a phase three study underway. Then the next thing will be autoimmune diseases.

If you think about Moderna in relation to what we've done with vaccines for infectious diseases and now with cancer, we're beginning to understand the immune system very well.

So, this is an effort to confirm and clarify for all of us. When an investor looks at approval rates, say, as I mentioned, a Phase 1 drug with a 10% approval rate, and compares that to Moderna and the solutions it has devised so far, one would conclude that Moderna's stock is significantly overvalued if it had the same approval rate as any average drug through the FDA process.

But because you have built a system, I see a number of people misunderstanding the platform system that Moderna has built here. You can expect to see much higher rates within each sector once the first drug in that category proves effective.

correct. If you think about the field of pharmaceuticals or biotechnology businesses, there are three things that really matter. What is the peak sales time for the property, and the time it takes to launch it, multiplied by the probability of success?

These three things determine most of the value of any asset. Therefore, by increasing the likelihood of success, the platform also accelerates development.

Another advantage of the platform is that we do not need to reinvent the way the property is manufactured every time. It's the same for every property. You are simply changing the order of the letters in the template used to make the messenger RNA (mRNA) molecule.

Also, we haven't talked about speed yet. I mean, you all know that we got a COVID vaccine in 11 months, while we were conducting phase one, two and three, which is a process that usually takes at least four years, and that was a record.

Of course, the 11 months were amazing because the FDA helped us a lot by assigning reviewers who worked around the clock, seven days a week on our files without delay, which is what happens in the normal course of work.

The government helped us a lot by funding six companies, and those companies took on significant business risks by carrying out things in parallel, not to risk safety, but to speed up completion.

Therefore, that was something unique and exceptional.

But what remains true is the pace of work we can achieve because we do not need to innovate technology. We don't need to build a new factory. But in our case, because we use the same technology for everything, we do not face that financial risk.

We do not face any kind of risk of making a prediction error.

Rachel Warren and our Hidden Gems team want to learn more about your ability to scale up physical manufacturing. We talked a little about that in a pre-interview call, but there are many questions about your ability to scale up a vaccine to meet the needs of many patients around the world.

So, perhaps you could talk about some of the investments in manufacturing facilities that you have made.

certainly. So, we built a factory dedicated to producing individual treatments, which is very different from manufacturing the same product for everyone, of course. However, this was done by the same team that worked on the COVID vaccine.

The team that worked on Covid was fantastic, because in 2020, when the pandemic started, we had no manufacturing capacity. We hadn't even conducted a phase three trial. However, the team managed to produce one billion doses in 2020.

So, we tasked the same team with working on the individual cancer vaccine. We had to downsize everything. Therefore, we have a very small reactor size. What we did was invest a lot in technology so that we could miniaturize everything.

But because messenger RNA (mRNA) is made in water, and just like your cells, if you think about it, your cells are tiny reactors for mRNA. It takes information from your DNA, makes an mRNA molecule, transmits it to insulin in the pancreas, and then produces the insulin protein.

All of this happens in water in the presence of enzymes. Therefore, we have no scientific limitations on how things are compressed. This is why we are able to expand the scope of individualized treatment.

It is completely different from other technologies such as CAR-T that use human cells. Since you have to deal with human cells, you must be very careful not to damage them. We do not face this problem.

Is it possible that you could find many common characteristics in cancer among patients, so that standards could be standardized instead of the individualized treatment level you currently assume?

Initially, we thought so, but based on the data we have so far in the Phase II study, I still have very little Phase III data. Out of 150 people, 99% had different genes. 99% of the mutations were different.

But what we are trying to do with this technology, because we know it works now, is how can we use it in other applications? There is a disease that some people may have heard about, because someone in your family or among your friends may have it.

It's called Lynch's disease. One in every 300 people has Lynch disease. Therefore, it affects approximately one million Americans. You can diagnose it with a simple gene sequencing test.

There is no treatment available today. But what we are essentially doing is developing a vaccine that covers all people with Lynch syndrome.

Compare Moderna and BioNTech and explain the difference between them. We said from the beginning that we would be a company specializing in messenger RNA across various disease domains.

Therefore, the strategy is very different. Of course, there is overlap in the field of messenger RNA for cancer treatment. Both companies are working on it.

But it is impossible to link these two products because we do not modify uridine. It is one of the four letters of the genetic code. They do. We use fats. They don't do that. They use Lipoplex.

It is a different chemical substance. We inject it into the muscle. We know that it leaks into the lymph nodes, that is, into your immune system. They inject it into a vein. I have no idea where he's going.

You should ask them. Our algorithm differs from theirs in the selection of mutations; we select 34 mutations, while they select 20 mutations from among thousands of mutations.

Hmm. Thank you for this explanation. I want you to highlight the patents at Moderna, because a typical biotech company patents a drug in a single molecule, but you patent layers of an entire system.

Can you talk about the difference between the two?

certainly. Since we are a technology platform, think of it as "lasagne". We are building layers and layers of patents around messenger RNA. When we make medicine, we only take a slice of that lasagna.

Let's take the COVID vaccine as an example: COVID for RNA, COVID for lipids, and COVID for the manufacturing process. You take a chip. We continue to add a new layer to lasagna by registering new patents whenever we discover new technology.

We then apply it in various fields of biology to the medicines we manufacture and deliver to clinics.

When we make medicine, we only take a slice of that lasagna. Let's take the COVID vaccine as an example: COVID for RNA , COVID for lipids, and COVID for the manufacturing process.

You take a chip. We continue to add a new layer to lasagna by registering new patents whenever we discover new technology. We then apply it in various fields of biology to the medicines we manufacture and deliver to clinics.

And some medications, by the way, such as T-VEC and the cancer drug we were talking about, which is personalized for each individual, I don't know how anyone can copy that drug.

The reason is simple. How can you go to the FDA and say, "I will not conduct clinical trials because it is the same drug that is in the bottle"? How can you prove that when the algorithm used to select the mutation is unknown to the public?

It is not registered. Even I don't know her. Only a very few of us in the company know what's inside this algorithm. So, how can you go to the FDA and say it's the same drug and ask for an exemption from the cost of clinical trials? I don't think this will happen.

I would like to hear a little about your thoughts on the application of artificial intelligence and artificial general intelligence at Moderna in the future, rather than what you have accomplished so far in your use of current tools.

The most advanced models in the hands of skilled AI programmers produce agents with an IQ equivalent of 165, while the average human IQ is 100. That is 65% higher. So, what are the three or four major breakthroughs you expect Moderna to make in AI applications in the future?

As we began our discussion, biology is extremely complex. Most diseases do not require a single treatment. Rather, you need two, three, or four things. We now have drugs that contain four types of messenger RNA (mRNA) in the body.

You can use artificial intelligence to deal with extremely complex biology and identify all the things that need to be decoded in the product, and you can incorporate mRNA into vials as well as thousands of mRNAs within each of your cells.

Therefore, he can help in developing drugs for large cells. He can help with time by shortening the schedule , especially clinical trials. Because if you think about the first, second, and third stages, that means hundreds of business transactions.

As artificial intelligence and agents begin to be used to streamline those business processes, the time required to submit a product to the Food and Drug Administration will be reduced.

It takes about 6 months on average between a positive Phase III study and filing with the FDA. Six months of data collection and refinement, right? At Moderna, we are starting to get to 3 months more and more, and I want that to become one day .

Because you are simply revising the data, putting everything into the file that the FDA wants to receive when it is sent electronically, it is simply data processing. So, will we get there overnight?

no. The journey to get there may take two or three years, but going from 3 months, which is best in its class compared to the industry average of 6 months , to one day means an additional 3 months of sales.

Consider the impact that launching your product 3 months early will have on your market value. Then you can handle all major business operations from the very beginning of the first phase.

This will create significant value by compressing clinical development time .

You said that when you joined Moderna you believed it would either be a bankrupt company or one overflowing with new drugs. And that you were building a system to go from zero to one as a company .

So, how did you feel between 2021 and 2025 , years after you joined, i.e., 10 years after you joined, to see your stock drop from $497 per share to $23? What was it like being the CEO of a public company that saw its stock price drop by 95 %, and how did you interact with your board of directors, etc.?

Well, it was clearly not fun, but we kind of knew this was going to happen; Because it was clear that as we built up our capacity for the volume of COVID vaccines, that volume would later decrease.

As sales decline, the market reprices the stock. But because we always believed it would be a platform, and remember what I said, either zero drugs or lots of them, and Covid was number one.

COVID got us out of the bottleneck because we knew the technology worked safely. So, we were sticking to science, adopting a long-term perspective, and investing, because when it comes back to growth, it will come back strong as it has begun to do now, and that's why last year...all this is general information, of course.

I had options that expired after 10 years. I always reserve my options until the very end. It was 10 years old. I didn't intend to practice it. So, for $29, I bought them all with cash.

I paid my taxes. I bought everything. I bought half a percent of the shares. In August, I had another grant due. I sold some shares just to pay taxes, but I kept everything else because I wasn't going to sell at $50.

The same applies here ; this is a platform , and as we all know, most of the value of platform companies has been concentrated in the last two years, right? As the company’s founding CEO and long-term planner, the market will reassess the company’s price as people realize we have a platform like no other .

It is always difficult for people to know how to price a unique company .

Hmm. Yes, I know that in the preliminary call we talked about buying shares in Hidden Games, a subsidiary of Motley Fool, at $24 per share. That is, only one or two dollars higher than its lowest price.

We have continued to add more, and I can tell you that after our previous conversation , and after this conversation, I expect to maintain and increase my investment in Moderna .

But I wrote an article recently when the stock was at $140, suggesting that it might be a good time for Merck to acquire Moderna for $215 a share, but today your stock rose another 8% to $213.

So, I assume you think that the article I wrote was completely out of place.

Look, Merck will decide what it sees fit. We know what we have. The great thing about Moderna is that I have a strong team that understands the platform and the science very deeply.

We make five-year plans at least once a year. We update it regularly whenever new data about the platform becomes available to us. This platform will continue to give. Look, with regards to autoimmune diseases, I don't think anyone has factored their value into the stock price.

Check out the market analysts' reports. This would be a tremendous opportunity, and we might be able to treat autoimmune diseases in a way that no one else can, using antibodies.

We are still expanding. At our Science Day last June, we talked about how we are now building an AI-based system to generate synthetic hypotheses, synthesize new messenger RNA (mRNA) and lipids, test them on animals, feed the system back the results, and then move forward.

I congratulate you on everything you are achieving at Moderna. It is one of my favorite companies in the public markets around the world, and I enjoy not only profiting from investing in it, but also learning about the world and your work.

You mentioned that the biggest risk you see from artificial intelligence is the possibility of a cheap, high-risk respiratory virus being created by a malicious actor. Can you talk a little about how serious this risk is from your point of view, and what should be done to prevent it or reduce it significantly?

certainly. As many of you have read, AI-assisted job acquisition research is much cheaper than building a nuclear weapon, much, much cheaper. So, what we do at Moderna to be ready to help in case something really bad happens boils down to a few things.

Firstly, in terms of manufacturing, we have built more factories. Now we have factories not only in the United States, but also in Canada, the United Kingdom and Australia. We are trying to create more of them through long-term government partnerships around the world in the manufacturing sector.

Secondly, on a clinical level, we are trying to get ahead of things. For something to become a pandemic, the virus must be a respiratory virus. As you know, other viruses spread much more slowly .

Therefore, outbreaks like Ebola may occur. But Ebola, by virtue of the nature of the virus, cannot turn into a pandemic. We currently have an Ebola vaccine at the clinic that we believe will work wonderfully, and we hope to be able to test it in Africa very soon .

For almost all ten of our respiratory viruses , we move them to the clinical stage , even for influenza. We already have an approved flu product. Therefore, if there is a biological weapon that relies on acquiring the function of the influenza virus, we should be able to very quickly on a computer, within 10 minutes, of the genetic sequence to make a new vaccine and start very quickly .

Because we have an FDA- approved flu product , we now only need one study. So, if we use the 2020 COVID timelines, we could have an approved vaccine by May or June if we start working early in the year.

It will be very different, and instead of having only 20 million doses to ship, which was the case at the end of 2020 when the vaccine was approved , because we were ramping up manufacturing and had produced only a tiny volume by that time, we should be able to supply one or two billion doses by the middle of the year.

So it will look very, very different in terms of impact. We try to do a lot of things like this just to be prepared in case something bad happens, whether it's from nature or from a bad actor.

Hmm. Stefan, I mean, my last question is rather light and fun. Do you monitor your stock price on a daily or weekly basis, or do you completely ignore it? I follow the stock price because investors talk to me and know about it , and I would sound strange if I asked them not to monitor it , but it is not what guides my decisions.

I always think about the cash return over ten years. This is what I have done since the first day of the company's founding 15 years ago, and it is what my team and I continue to do.

Today at lunch, we will spend two hours reviewing our R&D asset portfolio and discussing how to create value and manage downside risks; this is our job. We are not looking, I am not looking at the earnings per share in the next quarter .

I have never done that, and I probably never will , because what happens in the next quarter is a result of decisions and work we did two or three years ago. And that's how this work proceeds.

Therefore, I keep my eye on the long term. Again, I am a long- term shareholder in the company. I don't sell shares. Rather, I am buying the shares because their price was undervalued, and I want to make a big impact on humanity through the pharmaceutical industry.

As a result, if we do our job well , this platform will produce a lot of medicines and create great value for investors.