WEBVTT - Moderna's CFO on How to Allocate Capital in Big Pharma 0:00:02.600 --> 0:00:15.919 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.000 --> 0:00:21.240 Hello and welcome to another episode of the Odd Lots podcast. 0:00:21.320 --> 0:00:22.880 I'm Tracy Alloway and I'm Joe. 0:00:22.920 --> 0:00:24.000 Why isn't thal Joe? 0:00:24.040 --> 0:00:25.320 Do you know much about MODERNA? 0:00:26.480 --> 0:00:27.360 Well, I had. 0:00:27.280 --> 0:00:29.920 Heard the name for maybe a few years, and then 0:00:29.960 --> 0:00:33.680 they became household name some point in twenty twenty when 0:00:33.840 --> 0:00:36.919 they were ahead of the race to develop a COVID vaccine. 0:00:37.400 --> 0:00:40.720 Then it became massive, and then I don't know much 0:00:40.760 --> 0:00:41.159 beyond that. 0:00:41.600 --> 0:00:43.519 Yeah, for me, this is a company that kind of 0:00:43.600 --> 0:00:46.599 came out of nowhere during the pandemic, and as you're right, 0:00:46.640 --> 0:00:50.720 it kind of shot into household name territory. Here's my 0:00:50.760 --> 0:00:53.320 other question. Do you know what a CFO does? 0:00:54.760 --> 0:00:54.840 What? 0:00:55.040 --> 0:00:58.680 That is a great question, actually, because I mean, I 0:00:58.680 --> 0:01:02.720 guess I would say yes in this sense that I 0:01:02.800 --> 0:01:06.840 think they're the ones who are sort of watching the financing, 0:01:07.480 --> 0:01:11.679 helping to make capital allocation decisions, although I imagine that 0:01:11.760 --> 0:01:15.280 the CEO also has that. I think the CFO is 0:01:15.319 --> 0:01:19.800 the one primarily involved in putting together the earnings and 0:01:20.120 --> 0:01:23.560 you know, communicating the finance side, specifically the analyst. But 0:01:24.040 --> 0:01:26.399 I guess I only partly know what a CFO does 0:01:26.640 --> 0:01:26.880 to me. 0:01:27.080 --> 0:01:29.399 The thing I always think when I hear CFO I 0:01:29.400 --> 0:01:32.640 always think they're the hard ones. Sorry, They're the ones 0:01:32.760 --> 0:01:36.600 that answer the hard questions on the on the earnings calls. 0:01:36.800 --> 0:01:37.600 That's what they do. 0:01:38.120 --> 0:01:40.400 I love that. I think that, yes, that's right. 0:01:40.440 --> 0:01:42.440 The CEO is like, oh, we get to these great 0:01:42.480 --> 0:01:44.920 products and blah blah. And then like someone asked a 0:01:44.959 --> 0:01:48.080 really technical question about like well if your borrow will 0:01:48.120 --> 0:01:50.160 get this above so far and margins and they're like, 0:01:50.200 --> 0:01:51.760 I'm going to bring the CFO in the answer this. 0:01:51.880 --> 0:01:55.840 Then yeah, exactly. Well, I'm pleased to say today we do, 0:01:55.960 --> 0:01:58.960 in fact have the perfect guest to answer the question 0:01:59.120 --> 0:02:01.640 of what is modern and also what does a CFO 0:02:01.840 --> 0:02:04.440 actually do. We are going to be speaking to the 0:02:04.440 --> 0:02:08.040 CFO of MODERNA, Jamie Mack. Jamie, thank you so much 0:02:08.040 --> 0:02:09.240 for coming on on thoughts. 0:02:09.480 --> 0:02:12.240 Hi, Tracy and Joe, thank you for having me. It's 0:02:12.240 --> 0:02:13.320 a pleasure to be here with you. 0:02:13.919 --> 0:02:16.200 So maybe just to begin, can you give us the 0:02:16.480 --> 0:02:19.840 sort of elevator pitch summary of what it is that 0:02:19.960 --> 0:02:23.640 MODERNA does and full disclosure, I was in Hong Kong 0:02:23.760 --> 0:02:27.080 for a few years of the pandemic, so I missed 0:02:27.200 --> 0:02:30.720 a lot of the vaccine conversation here in the US. 0:02:30.800 --> 0:02:33.720 There was a very different vaccine conversation that was happening 0:02:33.720 --> 0:02:36.200 in Hong Kong and in mainland China at the time. 0:02:36.639 --> 0:02:39.360 But what is it that you actually do and how 0:02:39.480 --> 0:02:42.280 is it that you have become a household name in 0:02:42.320 --> 0:02:44.200 a relatively few short years. 0:02:44.400 --> 0:02:48.160 Well sure, so, first I found your introduction quite entertaining. 0:02:49.440 --> 0:02:53.560 The CFO actually in our business because we are very 0:02:53.639 --> 0:02:55.720 much a science business, which I'll get into. 0:02:55.960 --> 0:02:58.000 It's actually our president and CEO. 0:02:57.760 --> 0:03:00.160 That get the really tough questions. But I get to 0:03:00.760 --> 0:03:02.560 my own share as well, which we can get into. 0:03:02.639 --> 0:03:06.560 But the CEO has to answer the tough biology questions. 0:03:07.639 --> 0:03:10.560 Well, he's quite good at it. He's he was part 0:03:10.600 --> 0:03:12.720 you employee number one and. 0:03:13.000 --> 0:03:15.120 Has been here and built this business for thirteen years 0:03:15.160 --> 0:03:19.080 so and he's got a science background, so he's quite 0:03:19.080 --> 0:03:21.440 good at it. And then our president, Stephen Hoague is 0:03:21.520 --> 0:03:24.919 a doctor by trade, so obviously they answered most of 0:03:24.960 --> 0:03:25.960 the scientific questions. 0:03:25.960 --> 0:03:28.800 But so Maderna is obviously known. 0:03:28.720 --> 0:03:31.760 Due to how we help the global community with COVID, 0:03:32.320 --> 0:03:34.320 but it's really much more than that. It is a 0:03:34.360 --> 0:03:38.840 platform company revolving around MR and a which really makes 0:03:38.880 --> 0:03:42.160 the proteins in a body, and those proteins can help 0:03:42.240 --> 0:03:46.040 either fight infectious diseases and prevent against any kind of 0:03:46.360 --> 0:03:49.680 infectious disease, or be a therapy, and we can get 0:03:49.680 --> 0:03:51.440 into the segments that we're in, but it can be 0:03:51.440 --> 0:03:53.920 in oncology, it can be a rare disease. And we 0:03:54.000 --> 0:03:56.440 actually believed, and that was the principal belief in the 0:03:56.440 --> 0:03:59.680 company is if this platform can work, it's going to 0:03:59.720 --> 0:04:02.720 be able. Since it's part of your natural body, it's 0:04:02.760 --> 0:04:05.680 going to be able to help solve many different therapeutic 0:04:05.760 --> 0:04:07.200 areas in the body. 0:04:07.720 --> 0:04:09.240 And so that's a little bit about Maderna. 0:04:09.480 --> 0:04:12.800 In over the last thirteen years, we've built a pipeline 0:04:12.840 --> 0:04:16.760 of forty five drug candidates. Obviously we're known for covid, 0:04:16.880 --> 0:04:19.359 but also in other respiratory diseases. We hope to launch 0:04:19.360 --> 0:04:22.800 our second drug this year, RSV, which became pretty well 0:04:22.839 --> 0:04:26.239 known last year as it had a pretty significant spike, 0:04:26.640 --> 0:04:30.040 but also in flu and other respiratory diseases. And then 0:04:30.120 --> 0:04:33.520 in oncology we've got an exciting cancer therapy that we 0:04:33.560 --> 0:04:36.800 are excited about rare diseases and other latent diseases. So 0:04:36.800 --> 0:04:38.680 that's a little bit about Maderna. We've been around since 0:04:38.680 --> 0:04:43.160 twenty eleven. We've got almost six thousand employees. We're based 0:04:43.160 --> 0:04:45.240 out of Cambridge, Massachusetts, but have. 0:04:45.400 --> 0:04:48.599 Some facilities all across the globe, and we've got quite 0:04:48.640 --> 0:04:51.400 an exciting pipeline ahead of us. That was excellent. 0:04:51.400 --> 0:04:55.320 All right, Now, what does the CFO or you specifically? 0:04:55.360 --> 0:04:57.919 What is your job within the company? 0:04:58.200 --> 0:05:01.720 So my CFO role is really not that different than 0:05:01.839 --> 0:05:04.640 many other CFOs. It's just you know, in a different space. 0:05:04.680 --> 0:05:08.720 And I think there's principally four different areas. One is 0:05:09.400 --> 0:05:13.360 the foundation, which is controllership, so that's accurate books and records. 0:05:13.400 --> 0:05:16.800 That's safeguarding our assets, and that's got to be foundational and. 0:05:16.760 --> 0:05:17.679 An absolute given. 0:05:17.880 --> 0:05:20.640 The second is allocating capital, and we can talk about 0:05:20.640 --> 0:05:22.760 that some more, but what is the envelope where we 0:05:22.839 --> 0:05:25.840 going to spend it? How much goes into our investment 0:05:25.920 --> 0:05:28.400 in our R and D pipeline, how much goes into capital. 0:05:28.080 --> 0:05:29.520 Expenditure and S G and A. 0:05:30.440 --> 0:05:33.200 The third is to support decision making across the company 0:05:33.480 --> 0:05:36.960 and train our teams to understand how to measure return 0:05:37.000 --> 0:05:40.600 on investment and how to think through decisions that are 0:05:40.600 --> 0:05:43.320 made every single day, thousands of decisions across the company 0:05:43.360 --> 0:05:46.120 every single day. And then the last is stakeholder management 0:05:46.320 --> 0:05:52.800 and with whether it's investors, employees, the board of directors, customers, partners, suppliers. 0:05:53.279 --> 0:05:53.440 You know. 0:05:53.440 --> 0:05:55.240 That's how I think about it, which really isn't too 0:05:55.279 --> 0:05:57.599 different from my prior role. Is it's a CFO of 0:05:57.600 --> 0:06:00.919 a different company or in my opinion, and many of 0:06:00.920 --> 0:06:03.400 the CFOs that are out there, how they operate every day. 0:06:04.080 --> 0:06:06.960 So you mentioned that the CFO role is kind of 0:06:07.240 --> 0:06:10.240 uniform across companies, but I have to imagine there are 0:06:10.320 --> 0:06:13.640 some aspects of the pharma industry that make it a 0:06:13.640 --> 0:06:15.839 little bit different, and one of them has to be 0:06:16.320 --> 0:06:20.040 I guess the lead times in developing new treatments and 0:06:20.080 --> 0:06:23.919 new medicines, and perhaps the risk as well. So you 0:06:24.000 --> 0:06:27.320 might spend ten years developing this one thing and then 0:06:27.360 --> 0:06:29.400 you find out at the very end that it has 0:06:29.440 --> 0:06:32.760 an awful side effect or that the regulators aren't going 0:06:32.839 --> 0:06:36.280 to approve it. How does that aspect of the business, 0:06:36.440 --> 0:06:39.400 that uniqueness, feed into the CFO role. 0:06:39.720 --> 0:06:41.920 Yeah, you're absolutely right, And maybe just to talk about 0:06:41.960 --> 0:06:44.520 that process we call it, you know, we take a 0:06:44.560 --> 0:06:48.279 drug from pure research to kind of pre clinical which 0:06:48.440 --> 0:06:50.440 doesn't go into a human body, and you're kind of 0:06:50.480 --> 0:06:52.960 testing how it works in the animals, and then it 0:06:53.080 --> 0:06:56.560 gets into an IMD process or a new drug candidate, 0:06:56.839 --> 0:06:59.520 and there are phase one, phase two, phase three, and 0:06:59.640 --> 0:07:02.520 you're right, I mean, the probability is success from basic 0:07:02.600 --> 0:07:05.560 research all the way through not only getting it launched 0:07:05.800 --> 0:07:08.120 with the FDA in the United States as an example, 0:07:08.160 --> 0:07:11.560 but there's healthcare regulators all across the globe, and. 0:07:11.480 --> 0:07:12.800 Then commercial success as well. 0:07:12.880 --> 0:07:14.960 So there's a ton of risk that goes into it, 0:07:15.200 --> 0:07:18.240 and that's what we spend our time doing. And we 0:07:18.280 --> 0:07:21.000 as a platform company believe that. You know, we've been 0:07:21.040 --> 0:07:24.840 studying the science of mr anda in different verticals. A 0:07:24.960 --> 0:07:29.360 vertical might be respiratory vaccines, as I mentioned, and if 0:07:29.400 --> 0:07:32.160 we know that our mr and a platform can work 0:07:32.360 --> 0:07:35.080 with COVID, then we have a high conviction that it 0:07:35.120 --> 0:07:37.200 can work with RSP and a high conviction that it 0:07:37.240 --> 0:07:38.320 can work with through another. 0:07:38.080 --> 0:07:40.680 Respiratory and so we derisk that throughout the process. 0:07:41.120 --> 0:07:42.920 We do it in basic research, we do it in 0:07:42.960 --> 0:07:45.360 pre clinical, we do it in phase one trials, phase 0:07:45.360 --> 0:07:48.360 two trials, and all those trials are just more patients. 0:07:48.360 --> 0:07:52.000 So you might start with literally ten to fifteen patients 0:07:52.040 --> 0:07:53.680 in phase one and then. 0:07:53.600 --> 0:07:54.720 A respiratory trial. 0:07:54.920 --> 0:07:58.800 Our RSP trial for phase three was thirty seven thousand patients. 0:07:59.160 --> 0:08:01.360 And you just continue to assess what is the risk 0:08:01.400 --> 0:08:03.280 and what is the capabilities, And so that's what we 0:08:03.320 --> 0:08:05.120 spend a ton of time doing when we think about 0:08:05.160 --> 0:08:08.920 allocating capital to our pipeline and our next drug candidates. 0:08:09.800 --> 0:08:12.880 Talk to us a little bit more about that. I 0:08:12.880 --> 0:08:16.640 think you said you had forty or forty something various 0:08:16.640 --> 0:08:20.840 candidates in the pipeline. Obviously it'd be nice to have 0:08:21.200 --> 0:08:24.360 unlimited money and work on all of them. You know, 0:08:24.400 --> 0:08:28.960 when you are thinking about capital allocation, R and D allocation, 0:08:29.440 --> 0:08:33.640 et cetera, Like, what are the factors that go into 0:08:33.679 --> 0:08:34.800 making these decisions? 0:08:35.200 --> 0:08:39.239 Sure, yeah, there's a lot, but I'll kind of summarize 0:08:39.240 --> 0:08:41.840 it into a few, which is getting back to that 0:08:42.000 --> 0:08:46.400 sense of risk and comparing it to our capabilities. So 0:08:46.960 --> 0:08:49.800 I mentioned we have higher conviction and respiratory vaccines, so 0:08:49.840 --> 0:08:53.760 therefore it's much easier to place bets and further dollars 0:08:53.800 --> 0:08:58.280 behind respiratory vaccines. We are currently hoping to de risk 0:08:58.280 --> 0:09:03.360 our latent vaccine therapeutic area. We've recently de risked our 0:09:04.040 --> 0:09:07.800 oncology area, which we call individualized antigen therapy, which is 0:09:07.800 --> 0:09:11.520 a mouthful, but in essence it helps stimulate key. 0:09:11.280 --> 0:09:12.480 Sales to attack cancer. 0:09:13.320 --> 0:09:15.600 And so when we look through it, we say, okay, 0:09:15.600 --> 0:09:19.760 what is the mRNA capabilities? Have we derisked this area? 0:09:20.080 --> 0:09:22.840 And therefore, you know, every step of the way, allocate 0:09:22.880 --> 0:09:23.280 more dollars. 0:09:23.280 --> 0:09:25.360 So that's number one. Number two is we look at 0:09:25.360 --> 0:09:26.280 the size of the opportunity. 0:09:26.360 --> 0:09:28.280 So this really isn't any different than any business case 0:09:28.320 --> 0:09:29.760 for any company in any industry. 0:09:30.240 --> 0:09:32.559 You know, respiratory vaccines is a very large market. 0:09:32.600 --> 0:09:36.000 We think it's a thirty billion dollar market between flue, covid, 0:09:36.120 --> 0:09:38.760 rsv SO, and there's only a few players, and there's 0:09:38.760 --> 0:09:41.320 a very high barrier to entry because you have to 0:09:41.400 --> 0:09:44.160 test so many patients and those trials are quite expensive. 0:09:44.960 --> 0:09:49.280 Third is what's the competition and what's our commercial capabilities? 0:09:49.800 --> 0:09:52.520 Will we be successful? Will we have something that differentiates 0:09:52.559 --> 0:09:55.560 our product versus another product? And then the fourth is timing, 0:09:55.600 --> 0:09:59.600 particularly when you're we're still a relatively young biotech company. 0:09:59.600 --> 0:10:02.480 Thirteen years old is not that old in the grand 0:10:02.480 --> 0:10:02.920 scheme of. 0:10:02.840 --> 0:10:06.800 Things, and so therefore we have to understand Okay, what's 0:10:06.800 --> 0:10:09.160 our cash balance? You know, how much revenue and profit 0:10:09.200 --> 0:10:11.240 are we going to be generating in the next few years. 0:10:11.440 --> 0:10:13.800 And therefore we want to turn over the portfolio to 0:10:13.840 --> 0:10:15.440 not just be a COVID company, but to be a 0:10:15.520 --> 0:10:19.320 multi drug company in various different areas. And so therefore 0:10:19.360 --> 0:10:21.079 we look at, well, is this going to start generating 0:10:21.080 --> 0:10:23.600 revenue in twenty twenty five, twenty twenty six, or some 0:10:23.679 --> 0:10:26.280 of these won't be till twenty thirty five. So we 0:10:26.400 --> 0:10:28.319 have to kind of balance all those things to make 0:10:28.320 --> 0:10:30.960 sure that we have a sustainable company and bring the 0:10:31.000 --> 0:10:34.160 most drugs to market with the highest probability of success. 0:10:34.600 --> 0:10:37.240 So one thing that always interests me in these types 0:10:37.280 --> 0:10:41.680 of conversations is the decision on allocating resources. And we're 0:10:41.679 --> 0:10:45.600 talking about okay, thirteen years old, still relatively small in 0:10:45.880 --> 0:10:49.960 the grand scheme of large pharma companies. But you have 0:10:50.000 --> 0:10:52.439 a lot of people, you have a decent amount of money, 0:10:52.440 --> 0:10:55.679 it seems, how do you decide where to put that 0:10:55.840 --> 0:10:59.240 money to work? And I guess how granular do those 0:10:59.280 --> 0:11:02.520 decisions actually get. Is there like a line item for 0:11:02.679 --> 0:11:05.800 R and D expenses every year and it's just like 0:11:05.880 --> 0:11:08.800 a big bundle and then there are people who are 0:11:08.840 --> 0:11:12.760 specifically dedicated to dividing that up or would you, as CFO, 0:11:12.960 --> 0:11:16.160 be like, I'm going to give X amount to this 0:11:16.280 --> 0:11:21.400 project and why amount to this other developmental treatment. 0:11:22.080 --> 0:11:25.800 Yeah, So at the high level, we work with the 0:11:25.840 --> 0:11:29.800 executive team and the board to understand what is the 0:11:29.920 --> 0:11:32.640 envelope of capital will give to R and D in 0:11:32.679 --> 0:11:36.600 that example, because we also have to give capital to SGNA, 0:11:37.080 --> 0:11:40.559 We have to give capital to capital expenditures, and historically 0:11:40.559 --> 0:11:42.160 over the last couple of years, we had bought back shares, 0:11:42.200 --> 0:11:44.800 although we've stopped buying backshares at this point because we 0:11:44.920 --> 0:11:45.800 primarily want to. 0:11:45.760 --> 0:11:46.960 Invest in this pipeline. 0:11:47.400 --> 0:11:49.599 So after that, so once you size the envelope in 0:11:49.679 --> 0:11:51.520 terms of, Okay, here's how much I'm willing to spend. 0:11:51.920 --> 0:11:53.800 As an example, in twenty twenty four, we think we'll 0:11:53.840 --> 0:11:56.120 spend approximately four and a half billion dollars. So then 0:11:56.160 --> 0:11:59.400 the next step is, Okay, you have forty five drug candidates, 0:11:59.800 --> 0:12:02.000 which ones why? Which is what I just kind of 0:12:02.000 --> 0:12:04.400 talked through in terms of capabilities and the size of opportunities. 0:12:04.400 --> 0:12:06.120 But just to maybe give a little bit more flavor, 0:12:07.040 --> 0:12:11.120 a drug is not so simple, even COVID as an example, 0:12:11.520 --> 0:12:15.880 you know, there's different patient populations. So there's the immunal compromised, 0:12:16.160 --> 0:12:20.440 there's age sixty plus, there's age fifty to fifty nine, 0:12:21.040 --> 0:12:24.600 there's age eighteen to forty nine, there's you know, I 0:12:24.640 --> 0:12:28.160 think six to eighteen. And then there's pediatrics as well, 0:12:28.200 --> 0:12:31.880 which all take a different level of testing and regulatory 0:12:32.000 --> 0:12:35.680 oversight because there are different types of patients and the 0:12:35.720 --> 0:12:38.079 bodies react in different ways, and the regulators want you 0:12:38.160 --> 0:12:41.640 to study different things. So a lot of the actual 0:12:41.840 --> 0:12:44.839 details is under Okay, yes, we've said we're going to 0:12:44.880 --> 0:12:47.640 go with an RSV vaccine, where are we going to 0:12:47.720 --> 0:12:48.840 start and how much will that cost? 0:12:48.960 --> 0:12:51.520 And right now we've said age is sixty and over. 0:12:52.160 --> 0:12:54.599 But then we might look at pediatrics because RSPA is 0:12:54.640 --> 0:13:00.600 often hitting quite materially or significantly younger population. And so 0:13:00.679 --> 0:13:03.040 that's kind of the next level of allocation, which is 0:13:03.080 --> 0:13:06.319 you size the envelope, You then pick a program the 0:13:06.160 --> 0:13:09.000 You then say which patient populations or indications are you 0:13:09.040 --> 0:13:11.840 going to go after. Another example is oncology. So I 0:13:11.880 --> 0:13:13.920 talked about this product that we have and we are 0:13:13.960 --> 0:13:18.360 starting with adjuvant melanoma, and because adjuvant melanoma really in 0:13:18.400 --> 0:13:22.000 immunooncology really seems to work quite well, and we are 0:13:22.040 --> 0:13:25.000 kind of bundled with immunooncology and stimulating it even more. 0:13:25.440 --> 0:13:28.160 And so we started there and it's you know, right now. 0:13:28.000 --> 0:13:31.760 The data that we've released is quite positive over three 0:13:31.840 --> 0:13:34.640 years and improves the life of a patient's success in 0:13:34.720 --> 0:13:37.680 terms of recurrence or death by fifty percent, which is 0:13:37.760 --> 0:13:40.800 outstanding in terms of cancer. And then you've got to 0:13:40.800 --> 0:13:43.800 figure out, well, there's you know, loads of different cancer types, 0:13:43.960 --> 0:13:46.600 where will this product work best? And that's what we 0:13:47.080 --> 0:13:49.160 try to determine every single day as we get more 0:13:49.160 --> 0:13:51.680 and more specific underneath that envelope the capital. 0:14:07.360 --> 0:14:09.880 What is the process by which I mean I have 0:14:09.920 --> 0:14:15.080 to imagine that with e within each internal candidate, the 0:14:15.160 --> 0:14:18.520 various scientists, the various teams, like they probably want more 0:14:18.960 --> 0:14:22.440 for their the specific thing that they're working on. What 0:14:22.720 --> 0:14:26.480 is this sort of internal process? Is it a sort 0:14:26.520 --> 0:14:30.960 of is it an internal lobbying process? That's sort of 0:14:31.000 --> 0:14:32.480 what I imagine my head where they come to you 0:14:32.520 --> 0:14:34.440 and they're like, look, we believe that we can do this, 0:14:34.960 --> 0:14:37.560 and if we could increase the R and D on 0:14:37.680 --> 0:14:40.040 this thing, then we believe that we can maybe get 0:14:40.080 --> 0:14:42.200 it to market or get to the next stage of 0:14:42.200 --> 0:14:44.720 trials faster than X. Like, what is sort of your 0:14:44.880 --> 0:14:49.000 internal process for working with the various champions of different 0:14:49.120 --> 0:14:52.600 potential products where they make the case that they could 0:14:52.720 --> 0:14:54.280 use money in a productive way. 0:14:54.680 --> 0:14:54.960 Yeah. 0:14:55.000 --> 0:14:59.200 So, first and I tell every industry, we could certainly 0:14:59.200 --> 0:15:01.080 spend a lot more than four and a half billion dollars, 0:15:01.160 --> 0:15:03.320 and that is a wonderful thing, because the minute we 0:15:03.400 --> 0:15:06.760 run out of ideas and pipelines, we're in trouble and 0:15:06.800 --> 0:15:07.600 we'll stop growing. 0:15:07.640 --> 0:15:12.560 So it is definitely a hot debate, I would say, 0:15:12.600 --> 0:15:14.400 in terms of where we're going to allocate our capital. 0:15:14.400 --> 0:15:17.520 But let me just give you maybe I'd say three 0:15:17.920 --> 0:15:19.720 processes that we run. Great. 0:15:20.000 --> 0:15:23.200 So, first off, we have twice a year a look 0:15:23.240 --> 0:15:27.280 at our entire portfolio and we call it a strategy 0:15:27.280 --> 0:15:31.520 review to understand, Okay, let's make these decisions, given the envelope, 0:15:31.560 --> 0:15:34.120 the capital we have, let's prioritize these things and we 0:15:34.200 --> 0:15:34.760 pull together. 0:15:34.920 --> 0:15:39.600 It's extremely cross functional. It is even within R and D. 0:15:39.680 --> 0:15:41.720 There are many different functions within R and D, and 0:15:41.760 --> 0:15:43.920 we bring in all of those people that are product 0:15:44.000 --> 0:15:49.800 specialists or epidemiologists or development specialists, et cetera. We bring 0:15:49.840 --> 0:15:52.280 in the finance team to obviously run the financials and 0:15:52.360 --> 0:15:55.040 understand the reward, the commercial team to understand the size 0:15:55.080 --> 0:15:58.840 of the opportunity, and we debate and say, okay, strategically, 0:15:58.840 --> 0:16:01.440 as a company, if we want to be this year, 0:16:01.480 --> 0:16:04.040 we think we'll be four billion in sales. If we 0:16:04.080 --> 0:16:06.720 want to get to I'll just make it up a number, 0:16:06.840 --> 0:16:10.000 say ten billion dollars in sales by twenty twenty seven. 0:16:10.440 --> 0:16:13.040 And if that's a priority, that's not the only priority, 0:16:13.040 --> 0:16:15.200 but that is a priority to say, okay, let's have 0:16:15.240 --> 0:16:16.040 that lens on it. 0:16:16.360 --> 0:16:18.360 Number one. Number two, here's another lens. 0:16:18.440 --> 0:16:20.480 We want to diversify our revenue streams, so we don't 0:16:20.480 --> 0:16:22.680 want to be solely a respiratory business. So we've got 0:16:22.720 --> 0:16:26.080 to make sure we are investing in other latent areas, 0:16:26.160 --> 0:16:29.160 latent disease areas or oncology that we also want to 0:16:29.160 --> 0:16:31.880 bring to market, and we have those strategic and that 0:16:31.960 --> 0:16:33.240 kind of sets the foundation. 0:16:33.800 --> 0:16:35.840 Then. So that's process one that happens twice. 0:16:35.640 --> 0:16:37.320 A year, and we figure out which products we want 0:16:37.360 --> 0:16:39.760 to fund in theory, and that's what we start co 0:16:39.760 --> 0:16:43.560 operating too. But then there's underlying research and clinical trials 0:16:43.560 --> 0:16:46.240 that are going on every single day, and there's report 0:16:46.280 --> 0:16:48.960 outs and you might get different data, different answers that 0:16:49.040 --> 0:16:53.160 actually changes that and that is a very well governed 0:16:53.200 --> 0:16:57.080 process that we call a stage gay process. And as 0:16:57.120 --> 0:17:00.240 an example, you know, I myself have to approve whether 0:17:00.240 --> 0:17:02.240 we go to a phase three trial because those are 0:17:02.360 --> 0:17:05.439 very expensive, as I mentioned earlier, so you know, but 0:17:05.480 --> 0:17:08.520 there are gates into even before it gets into the 0:17:08.560 --> 0:17:11.760 clinical there's gates in the research area, in pre clinical area, 0:17:12.080 --> 0:17:13.920 and then there's gates before you go to phase one, 0:17:13.960 --> 0:17:16.879 phase two, phase three, and those you know, we have 0:17:16.960 --> 0:17:19.600 a theory based on the strategy of what we wanted 0:17:19.600 --> 0:17:21.639 to invest in, but new data. 0:17:21.359 --> 0:17:22.800 Comes out and you have to adjust to it. 0:17:23.080 --> 0:17:25.000 So I'd say that's kind of the second process that 0:17:25.119 --> 0:17:28.199 is highly governed. So you have this top level strategy, 0:17:28.359 --> 0:17:30.720 then you have actual data that's coming through that is 0:17:30.720 --> 0:17:33.280 well governed. And then the last thing is particularly on 0:17:33.640 --> 0:17:35.240 how much we're going to spend and whether we go 0:17:35.480 --> 0:17:37.480 and spend more on these phase three trials. We actually 0:17:37.480 --> 0:17:39.879 take it to a subcommittee of the board, so the 0:17:39.880 --> 0:17:42.720 Board of Directors, which we have some scientists and doctors 0:17:42.720 --> 0:17:44.679 that are on our board and oversee it and have 0:17:44.680 --> 0:17:48.240 a lot of experience also govern Yeah, we think it's worse. 0:17:48.320 --> 0:17:49.880 We get it, we get the strategy. If it's into 0:17:49.920 --> 0:17:51.760 our strategy, we understand the risks, and we think you 0:17:51.800 --> 0:17:54.959 should move forward. So those are kind of three different 0:17:55.000 --> 0:17:57.960 processes in terms of how we govern our product strategies. 0:17:58.240 --> 0:18:01.280 Where does the money actually come from? And I realized 0:18:01.280 --> 0:18:05.239 like maybe maybe there's some obvious answers here. You are 0:18:05.400 --> 0:18:08.160 a publicly traded company, but this is a really capital 0:18:08.359 --> 0:18:12.840 intensive business. And I was looking on the Bloomberg terminal earlier. 0:18:13.200 --> 0:18:16.560 It doesn't seem like you have any bonds, which is 0:18:16.960 --> 0:18:21.919 kind of unusual nowadays. Where does that like funding mix 0:18:22.119 --> 0:18:23.200 actually come from. 0:18:23.480 --> 0:18:26.760 Yeah, so I'll chase the answer that question in the industry, 0:18:26.760 --> 0:18:28.480 but also the specific to us because we're a little 0:18:28.480 --> 0:18:32.359 bit different. Sure, so specific to us, we actually, because 0:18:32.440 --> 0:18:35.960 of COVID and how successful our vaccine was to help 0:18:36.000 --> 0:18:39.480 support the global population, we're actually sitting on thirteen billion 0:18:39.560 --> 0:18:43.240 dollars in cash. That is very unique to a biotech company. 0:18:43.400 --> 0:18:46.440 So we are quite fortunate. And as an example, we 0:18:46.480 --> 0:18:48.480 said this year we're going to actually burn through four 0:18:48.520 --> 0:18:50.600 billion dollars in cash. So we believe in this platform 0:18:50.680 --> 0:18:52.320 so much that we need to advance the next set 0:18:52.320 --> 0:18:53.960 of pipeline of drug candidates. 0:18:54.600 --> 0:18:56.720 And we have a plan all the way for the 0:18:56.720 --> 0:18:57.320 next three. 0:18:57.119 --> 0:18:59.320 To five years that we're actually going to go from 0:18:59.400 --> 0:19:01.840 thirteen billion to nine billion in the year twenty twenty 0:19:01.840 --> 0:19:03.520 four because we think it's the right thing to do. 0:19:03.680 --> 0:19:04.840 And then we said we're going to do it a 0:19:04.840 --> 0:19:06.439 little bit again, that we're going to burn another two 0:19:06.480 --> 0:19:08.800 to three billion in twenty twenty five before breaking even 0:19:08.840 --> 0:19:11.800 in twenty twenty six as we'd launch new drugs. So 0:19:11.920 --> 0:19:14.720 that's a bit unique in the biotech world, I would 0:19:14.720 --> 0:19:18.560 say broadly though for the sector, there are various avenues 0:19:18.560 --> 0:19:22.000 that obviously public investors, capital markets, like you said, there 0:19:22.040 --> 0:19:25.560 are some government projects with Barta Covid as an example, 0:19:25.800 --> 0:19:28.440 the US government helped fund some of the COVID research 0:19:28.480 --> 0:19:31.399 and development of our product, and so there are different 0:19:31.440 --> 0:19:33.760 government agencies across the globe that you can tap into. 0:19:34.359 --> 0:19:35.280 There are other companies. 0:19:35.320 --> 0:19:38.120 So before we were you know, before Covid, we had 0:19:38.160 --> 0:19:40.520 no we had no products that had ever been approved, 0:19:41.240 --> 0:19:44.840 and so we started in twenty eleven and in twenty 0:19:44.960 --> 0:19:47.880 sixteen we actually went to a different company, company called Merk. 0:19:48.280 --> 0:19:51.480 I'm sure you've heard of them, and they actually helped 0:19:51.520 --> 0:19:55.520 fund our oncology product because it is in conjunction with 0:19:55.560 --> 0:19:59.320 their product k Trudea. So that's another outlet for capital 0:19:59.320 --> 0:20:02.320 that you can part with a collaboration where you know, 0:20:02.760 --> 0:20:05.080 a company like Mark gave us I think two hundred 0:20:05.080 --> 0:20:07.760