Q1 2022 Moderna Inc Earnings Call

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Good morning, My name is Kevin and welcome to <unk> first quarter 2022 earnings call. At this time all participants are in a listen only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at this time I'd like to turn the call over to Loopnet to look dark head of anybody should separate.

Good morning.

My name is Kevin, and welcome to Moderna's first quarter 2022 earnings call.

At this time, all participants are in a listen-only mode.

Thanks very much.

Following the formal remarks, we will open the call up for your questions.

Please be advised that this call is being recorded.

At this time, I'd like to turn the call over to Lavina Talukdar, head of innovations at Moderna.

Please proceed.

Thank you, Kevin and good morning, everyone and thank you for joining us on today's call to discuss much are nice first quarter of 2022, the national results and business update you can access the press release issued this morning as well as the slides that we'll be reviewing by going to the investors section of our website.

Please proceed.

Our next question comes from Gina Wang with Barclays.

On today's call are Stefan <unk>, our Chief Executive Officer, David <unk>, Our Chief Financial Officer, Stephen Hoge, Our President and Paul Burton, Our Chief Medical Officer.

Thank you for taking my questions.

Before we begin please note that this conference call will include forward looking statements made pursuant to the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995. Please.

Please see slide two of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward looking statements.

Thank you, Kevin.

I will now turn the call over to Stefan Thank.

Good morning, everyone, and thank you for joining us on today's call to discuss Moderna's first quarter 2022 financial results and business updates.

Congrats on a strong quarter.

Thank you lavina and good morning al Good afternoon, everyone.

Welcome to our Q1.

Conference call.

You can access the press release issued this morning, as well as the slides that we'll be reviewing by going to the investor section of our website.

Today I will start by quickly has review or a quarter before Paul walks you through an update on <unk> real world evidence.

And then Stephen we've used our clinical programs.

On today's call are Stephane Bancel, our chief executive officer, David Malin, our chief financial officer, Stephen Hogue, our president, and Paul Burton, our chief medical officer.

And David, we will miss, you.

David will then present the key financials and then we then come back to conclude before we take up restaurants.

Before we begin, please note that this conference call will include forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

I have a few questions regarding the revenues.

I am happy to share that the team delivered strong financial results this quarter.

Revenues of $6 1 billion.

GAAP net income of $3 7 billion at the.

And GAAP diluted EPS of <unk>.

<unk> got up.

We ended Q1 with a cash balance of $19 3 billion.

Please see slide two of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements.

David, you mentioned that second half this year will be higher than the first half.

Since first quarter, we already delivered 5.9 billion revenues.

For our share buyback program, we continued to retire shale in Q1.

I will now turn the call over to Stephane.

Should we expect less than 4.5 billion for the second quarter this, year?

Already in Q4.

Thank you, Lavina.

And my second question is regarding the ex-US 5 billion revenue.

David will share some numbers on share count in a few minutes.

First of all if you wanted to we are reiterating the $1 billion in science advanced purchase agreements.

Good morning, or good afternoon, everyone.

What is the breakdown between you and the rest of the world?

We have previously shared market share increases seen in the OECD countries. We expect box when supply was no longer limited and when real world applications highlighted differentiating data amongst the market vaccine.

And the third question is regarding the prices for US, EU, and the rest of the world.

Welcome to our Q1 2022 conference call.

And where do you see these prices change for the remaining of 2022 and also 2023?

I'm happy to share that our market share decreased offtake or she spent across the OECD countries.

What is the percent of our team is focused on delivering on the $21 billion signed Aps for fiscal years 2022.

Okay, good.

There are a subset of our team is focused on preparing the next wave of product launches.

We have a flu vaccine candidates and mommy. Since then plans to start a phase III study in Q2 in the southern Hemisphere.

So I'll try to cover them all.

Well, then I will have very soon four vaccine candidates in phase III.

And if I miss one, come back to it.

And let me chronic containing five islands COVID-19 booster.

<unk> <unk> and.

In the CMV from series vaccine.

So in, terms of, first of all, maybe I'll start at the end on pricing.

So I think we were omicron containing background and COVID-19 boost them on as well as 73 to one four we could see up to free risk breath or your vaccine launches from the fall of 2022 over the next two to three years.

We believe each of these four vaccine candidates in phase III would that multibillion dollar annual peak sales.

And because they all use the exact same technology as our approved vaccines buybacks. We believe these four vaccine candidates and less fish clinical trials have a high probability of success.

In addition to our four late stage vaccine, we continue to expand the applications of <unk> technology beyond vaccines.

We should have important proof of concept data in patients.

Well for a particular model. It is later this year.

Propionic assay damia and mid team R&D academia rare genetic disease portfolio and.

The personalized cancer vaccine.

We'd previously disclosed the ranges of pricing that we had in the contracts last year. And what you see is that pricing has continued as we contracted for 2021. So really no change on the price across the various customers.

Slide seven shows the continued growth of Madonna, we now have 46 development programs in the pipeline.

The organization has continued to grow to 3002.

100 team members.

Today, I will start by a quick business review of a quarter before Paul walks you through an update on SPACBAC's real-world evidence, and then Stephen reviews our clinical programs.

With that let me hand, it over to Paul to review real World evidence that these are all core.

With booster.

David will then present the key financials, and I will then come back to conclude before we take your questions.

It's really net prices being impacted, as I mentioned, by the mix of customers where we have our COVAX sales at the very lowest price offer, whereas the other countries, the developed countries, we have varying higher prices.

I am happy to share that the team delivered strong financial results this quarter, revenues of $6.1 billion, GAAP net income of $3.7 billion, and GAAP diluted EPS of $8.58. We ended Q1 with a cash balance of $19.3 billion.

Thank you Stefan and Hello, everyone.

For our share buyback program, we continue to retire shares in Q1 like we already did in Q4. David will share some numbers on share count in a few minutes.

For 2022, we are reiterating $21 billion in signed advance purchase agreements.

So those continue.

While there continues to be many study is posted and published on our mrna vaccine I would like to highlight some data today on vaccine boosting.

We have previously shared market share increases seen in the OECD countries with SPACBACs when supply was no longer limited and when real-world publications highlighted differentiating data amongst the market vaccine.

We haven't commented on pricing for beyond 2022.

I am happy to share that our market share has increased or stayed consistent across OECD countries. While a subset of our team is focused on delivering on the $21 billion signed APS for fiscal year 2022, another subset of our team is focused on preparing the next wave of product launches.

But certainly, I think it's fair to, assume that to the extent that the market moves to a private market, typically you see higher prices in private markets based on the needs of the market as opposed to when you're addressing the government-acquired product for, you know, in this pandemic context.

So that's one.

But first it's important to understand why booster vaccines are so critical as we transition through the COVID-19 pandemic and the.

Secondly, in terms of the 2022 outlook, I think you got it right.

So basically, first of all, I think it would be a mistake for us to move into a quarter-by-quarter accounting of where we see the demand given the, you know, variability of this pandemic.

But what we see with the $21 billion of signed APAs we mentioned last quarter, and it's the same this quarter, that $21 billion, we think, will be somewhat higher second-half sales than first-half.

And as you correctly pointed out, the math would then point to the second quarter being likely the lowest that we'll see throughout this year.

Understanding that we need to have about the evolution of the Sars Covid two virus.

So I think you're thinking on that as right.

On slide nine we can see the change.

I'm sorry, the third point was?

COVID-19 cases over time with a massive rise we observed due to <unk> in the last weeks of 2021 and the early parts of 2022.

Third point.

The omicron wave was caused by <unk> one.

Thank you very much.

Well that was certainly the dominant version of Sars Covid two at that time remarkably VA. One is now almost extinct here in the United States and around the world, having being replaced by new sub variance.

That's very helpful.

The third question is, X U.S. $5, billion revenue.

What is the breakdown between Europe and the rest of the world?

Yeah, so we had, it was a pretty broad spread.

I don't have top of mind the specific quantities, by country or region, but it was a pretty broad spread of demand if you look across the world in the first quarter.

Yeah, and maybe just to add, Gena and Stphane, on the pricing, as David said, you know, as, we move into endemic, as we've been saying, you know, we will have to discuss with payers as part of a kind of health economics and value of product as it's done for every pharmaceutical product, especially in the US.

And as you might be aware, CMS has already communicated that for fiscal year 2023, which starts in October 2022, the reimbursement for COVID-19 vaccine is going to be $60.

This continues to demonstrate the remarkable evolutionary capacity of this virus.

Thank you very much.

Thank you.

<unk> is now the dominant strain in the United States with another sub variant of that VA to dock 12, one increasing rapidly showing enhance transmissibility.

Our next question comes from Michael Yee with Jefferies.

Well <unk> is dominant today.

Hi, good morning.

That increased Transmissibility and infectivity of B E.

<unk> dropped to 12 top one.

He is likely going to ensure it will be the dominant circulating straining very soon.

We are seeing in New York and in the northeast of the United States.

Other new sub variants.

We'll be a five seen in South Africa have also been detected in the United States.

And we will need to carefully monitor the growth trajectories and pathogenicity.

The slowing of boost to uptake now means there will be individuals who are under vaccinated and under protected as we move into late spring and summer when.

When we thought we would have declining case counts of balance, which could now be impacted by a $2 12 to one.

Four or five.

The speed and breadth of evolution of this virus, but we see so clearly again today.

Underpins our prediction for the global need for a variant adapted booster campaign this coming fall.

The good news is that the booster vaccine protects against both <unk> one and two this is think clearly when we look at data from the United Kingdom Health Security Agency.

This graph looks at vaccine effectiveness against symptomatic disease for people, who received the <unk> Pfizer Astrazeneca vaccine for their primary vaccination on the left.

You can see it against.

One mccrone NBA two.

Vaccine effectiveness wanes overtime.

Booster dose of either the size of <unk> mrna vaccines increases vaccine effectiveness and protection as you can see on the right.

These two vaccines are combined together in this analysis, but again even in this setting there was gradual waning of vaccine effectiveness over time following boosting.

It's waning of vaccine effectiveness begs the question will a second booster dose provide clinical utility and help to restore vaccine effectiveness and provide protection against COVID-19.

Well there are several examples of studies showing the high clinical effectiveness of additional boosting with <unk> vaccine.

And slide 11, I want to highlight the results of a recent study from Ontario.

It looked at exactly this question.

And measure the effectiveness between our first and second booster vaccine dose.

High risk population those people living in long term care facilities.

A key finding from this study which was conducted in over 55000 individuals.

Is that indeed, the second booster vaccination showed increased vaccine effectiveness against omicron infections.

Domestic disease, and importantly against severe outcomes in this high risk setting.

In fact, an increase in vaccine effectiveness, we've seen seven days.

From the second booster vaccination and continue to increase and effectiveness over time.

Turning now to slide 12, I would like to provide a perspective on who might gained particular benefit.

Annual vaccine boosting.

There are many health H.

<unk> related and environmental.

Patient or risk factors that lead to populations being at high risk for COVID-19.

First age greater than 50 years, we know the hospitalization and mortality rates.

Begin to increased steeply.

Those with COVID-19 over the age of 50.

And then turning to people over the age of 18 year olds that hub of the health risk factors.

Such as people with kidney disease cancer.

Immune disease and HIV patients.

Of that health factors that either result in immuno compromise.

<unk> people.

A physiological risk for severe disease.

If indeed, they are infected with Sars cov two.

Finally, environmental occupational risk factors, such as health care workers first responders.

As in high density housing living conditions, such as college students military personnel, while being concentrated.

We believe it is people in these broad categories.

Would benefit most from annual boosting for COVID-19.

And so in summary, we've seen as we continue to anticipate.

Koby too to keep evolving rapidly with multiple new variants and recombinant variants circulating globally.

Real World evidence demonstrates the effectiveness of a booster shot so that dose of mrna 12 months 73 against evolving variance of concern.

And an additional boost a fourth dose of mrna trough 73 shows incremental vaccine effectiveness when.

When compared to a third dose against infection.

Symptomatic infection and severe disease in a high risk population.

We believe people are at high risk due to health age and environmental occupational risk factors.

And we believe that when taken together with the viral epidemiology and waning of protection there.

There is an important need for variant adapted booster vaccine and for boosting as populations this coming fall.

You have to, I guess, ask the last question to David before he gets, to go back and then a question for Stephen on the pipeline.

With that I'll now turn it over to Steven to take you through the progress in our clinical development pipeline.

Steven.

With our flu vaccine candidate, mRNA-1010, planned to start a phase 3 study in Q2 in the southern hemisphere, Moderna will have very soon four vaccine candidates in phase 3.

I'm going back to the question around the guidance.

Thanks, Paul Good morning, and good afternoon, everyone to Paul just shared with you the effectiveness of our booster mrna $12 73 against are required in a real world setting.

An Omicron-containing viral COVID booster, a flu booster, an RSV booster, and a CMV impromptu vaccine.

Can you maybe help us quantify the exposure to COVAX?

We believe that each of these four vaccine candidates in phase 3 could have multi-billion, dollar annual peak sales.

There was an article, I guess, talking about some of that recently in the press.

But on slide 15, I'd like to pivot to our strategic rationale for why we think a seasonal booster will be necessary.

And because they all use the exact same mRNA technology as our approved vaccine SPAQ-VAX, we believe these four vaccine candidates in late-stage clinical trials have a high probability of success.

And I think that's part of what your APA commentary out today is.

In addition to our four late-stage vaccine, we continue to expand the applications of, mRNA technology beyond vaccines.

I'm sorry, are you saying that that's partly in the 21 billion, but then offset by potential USA orders that could come later this year?

So maybe you could just talk about that dynamic a bit.

And then a question for Stephen is, again, definitely excited about propionic acidemia.

So first we think neutralizing titers will wane similar to the endemic human Corona viruses and.

Can you just right size, your expectations because it's five patients, but at the lowest dose.

So is that a therapeutic dose you would expect to see biomarker changes?

And that decline in neutralizing titers will increase the risk of breakthrough infection and hospitalization for those at higher risk, particularly as Paul just described older adults are those with medical immune compromised.

The emergence of new variance of concern like the VA that four five sub variance could accelerate the impact of that waning and broadened the risk it breakthrough across the population.

Maybe just talk a little bit about that.

So with that we do believe a booster will be needed to fall and we're working hard to make improvements to our available boosters desired features for our northern Hemisphere fall winter booster, we think will be that it improves the durability of protective neutralizing antibodies against <unk> and it's up variance beyond six months.

Thank you.

Sure.

So, yeah, so I, you know, I'm not sure I have too much to add in terms of the color, as to the outlook for the balance of the year.

Certainly, again, the 21 billion, we don't right now have included any contracts as a result of additional US business, which we think is quite likely.

We certainly believe there's a recognition of the need for boosters in the US and the dialogue is quite active.

That's also true around the world with our customers in other countries and regions.

And then, you know, we wanted to be clear that in the case of Kovacs, which is, you know, as we've said before, the lowest priced business in the portfolio.

But we have confirmed contracts there in place. And we wanted to flag that they are, as I said, a consolidator of underlying demand.

And they're continue to work through in those developing markets, what is exactly that demand picture and what is the timing of it, and the ability of those countries to absorb the product that they're receiving.

I E. The full northern hemisphere fall or winter confection season weed.

He'd like to retain high and durable protection against Delta ancestral strains and we'd like to broaden cross protective immunity to increase the potential for protection against new emerging variants or sub variance that might happen over the coming months.

So we want to flag that.

On slide 16, I'd like to summarize our work in developing that improve booster.

Quite frankly, if you ask me, should this be a, you know, issue of big concern in terms of the total outlook, I would tell you, I would, Nour, and Lisa Shatner.

We're trying to give some sense as to the range of outcomes in terms of this information.

Our primary focus as you know has been on developing a bivalent vaccine and we have taken three by Valens in the clinical trials.

Perfect.

Thanks, Stephen.

The first 12 to 70 3211 includes nine of the common mutations and was based on a combination of our prototype wild type vaccine and data.

Sure.

More than a $12 73 to one three bivalent included 11 mutations based on what has emerged from beta Delta.

And our mrna <unk> 73 to one four.

Booster includes 30 tumor mutations also now based on the wild type prototype vaccine and in combination with the omicron original.

Original Varian and concern.

Our latest five year and one 8%.

73% to one four that includes those 32 mutations that emerge remains our lead candidate for the fall Northern Hemisphere campaign the ABA.

<unk> of that booster will be to demonstrate superior immunogenicity against various a concern when it compared to our approved current prototypes booster or mrna closer to $3 50, microns and of course, we want to maintain non inferiority against ancestral traits in case they re emerge.

Thank you, Michael.

Now on slide 17 summarizes the ongoing clinical development work across that portfolio a bivalent boosters.

I'll remind you that more than 12 months 73 has been authorized.

Route in many markets as a third or an EBIT fourth booster.

The data for the first five mrna 211 has already demonstrated superiority against all variance of concerns tested including room crowd of Delta and I'll cover that data in just a moment.

So, look, you point to the most important things I'll say, which is this remains a small, number of patients to rare disease.

But our lead candidate remains as I said, a moment ago, our mrna $12 73 to one four which were being which is being evaluated in two separate studies a phase II III.

And as you said, we're looking now in cohort one and cohort two at our lowest dose levels.

States and a phase III <unk> hundred five study in the United Kingdom.

And we're continuing to enroll.

Again, both of those are being conducted at a district Osha safety my congrats.

And I would expect, as is appropriate for a phase one study where we are doing dose, finding, phase one, two, that we will continue to enroll and explore a range of doses, including potentially higher doses in a cohort three.

Now on slide 18, just quickly to update you on the data we have from the 211 first by them.

Now, that said, we will have a body of data building.

Not surprisingly the safety and react to Genesee profile of the bivalent boosters is consistent with what we saw with mrna 12 73.

And as we said, we've got five participants who've moved into the open-label extension.

As Youll see on the chart both solicited.

Anniversary local reactions and systemic reactions are broadly consistent in both frequency and severity.

The frequency and types of unsolicited adverse events were also comparable between the groups with no serious adverse events and the bivalent vaccine group after 28 days after the booster dose.

Moving to slide 19.

We have some of the neutralizing antibody data from that study evaluating again, our mrna 12, 70, 32115, and comparing that with the approved or authorized <unk> to $12 73 booster.

Looking at neutralizing titers Gmt's, both immediately pre booster at one month or $2 29 at six months out day, one any one across the three variants are concerned we tested higher neutralizing titers, we're seeing for <unk> 29, and day 181 across all the various a concern with the bivalent booster.

On slide 20, we represent that as a ratio and comparing the performance of the bivalent booster to mrna 12 73 at 1006 months.

Superiority was met for the ancestral and all variance of concern at different time points as you'll note here.

Glen.

For superiority was defined as.

The geometric mean titer ratio or <unk>, where the lower bound excluded the lower.

Lower bound of the 95% confidence interval excluded one and.

And as Youll note at day, 29, and GMO par for the ancestral Sars Cov, two virus, which one to eight beta was one three delta was 175, and importantly, omicron was as high as $2 two.

The 95% confidence interval for omicron lower bound was 174 again, demonstrating strong trend towards superiority in this data.

Excitingly at day 181, or six months that superiority was also met for for the ancestral virus beta and the omicron variant, which is important because the primary goal. We have here is to improve the durability of protection by increasing those titers.

So on slide 21 in conclusion, the safety and react to Genesis the profile of the 50 Microgram Bivalent 201 booster was comparable to the 50 microgram of authorized or approved 12 73 booster.

And we believe that the superiority already demonstrated by the bivalent platform in 201 bodes well for our overall strategy.

We continue to believe the bivalent boosters will ensure the broadest immunity across the face.

Across the evolutionary uncertainty of Sars cov two.

<unk> maintained protection, while expanding the breadth and durability of neutralizing antibodies, including just demonstrating a moment ago into one one out to six months.

We anticipate the one month or day 29 data from our omicron containing <unk> mrna 12, divvied up to one four in June of 2022.

Yes.

Now turning to the rest of our respiratory vaccine pipeline on slide 23.

We announced positive phase II data from our flu vaccine mrna 10, 10 at our vaccines day event.

Mrna 10, 10 is our is part of our speed to market approach.

We plan to start a phase III Immunogenicity study in the second quarter of this year and the phase III efficacy trial later this year with mrna 10 10.

As part of our flu vaccine strategy. We are also advancing in parallel vaccine candidates that contained both antigens and in androgens.

We started a phase one two trial of mrna 10, 20, and $110 30 last month.

Our RSV vaccine and more than $13 45.

<unk> phase III trial in older adults is ongoing and we are enrolling participants worldwide. We also have an ongoing pediatric RSV trial enrolling as well.

And combinations, we plan to start a phase one trial for both our Covid plus flu and our Covid flu RSV vaccines this year.

Our phase one trial for the H M. PV PIV three combination vaccine is also now fully enrolled.

And our RSV and HBV combo and are endemic human coronavirus vaccine combo are infrequent.

Before moving from respiratory vaccines I want to take a step back and reflect on the incredible progress over the past two years.

We have or will have progressed three candidates into pivotal phase III studies within one year of an IND being opened.

This speed is made possible by our mrna platform.

And we believe our Covid vaccine success has derisked, our vaccine pipeline and we can now move quickly into our RSV and flu pivotal studies.

Importantly in RSV and flu, we are looking at seasonal endpoints or immunogenicity endpoints, which we believe can be can allow us to progress faster through phase III towards its readouts and ultimately to commercialization.

Now turning to the rest of our pipeline we have ongoing we have an ongoing phase III study for our CMV vaccine mrna 16, 47, which is enrolling well and is now enrolling participants globally.

Our EBV vaccine to prevent infectious mononucleosis is in phase, one and our EBV vaccine to prevent long term sequela such as multiple sclerosis is in preclinical studies.

Our HIV vaccines are in phase one clinical trials with our partners and the recently announced HSV and VZ vaccines are in preclinical studies.

Within public health vaccines, our Zika vaccine continues to enroll in phase III and we are pleased to update that or NEPA virus vaccine.

It was opened and we look forward to starting that trial suite with our partner.

Now moving to our therapeutic pipeline on slide 26 within oncology, our personalized cancer vaccine is ongoing and a phase one study and a phase II study and we expect the first look at the data from our phase II study, which is evaluating personalized cancer vaccine plus keytruda versus keytruda alone in the fourth.

We should have important proof-of-concept data in patients in two of our therapeutic, modalities later this year, propionic acidemia and methimalonic acidemia in our rare genetic disease portfolio, and the personalized cancer vaccine.

Slide 7 shows the continued growth of Moderna.

We now have 46 development programs in the pipeline.

<unk> of this year.

We have four other candidates in phase, one or preclinical stages across oncology.

The organization has continued to grow to 3,200 team members.

In cardiovascular and autoimmune we have two candidates in each area in clinical trials or in the preclinical stage and within rare diseases are appropriately epidemiology program or <unk> program for sure.

Which I will give more detail on the next slide is ongoing and a phase one two study our M&A program is also ongoing in the phase one two study and our <unk> program has an open IND and we look forward to enrolling the first patient participants in that study we have three other candidates in preclinical in rare disease as well.

With that, let me hand it over to Paul to review real-world evidence studies of our, COVID booster.

Now before I hand, it off to David on Slide 27, I wanted to provide a bit more color on our phase one two study appropriately <unk>.

Paul?

Thank you, Stephane, and hello, everyone.

As a reminder, tas a rare metabolic disorder characterized by a deficiency of appropriate aneel kohei carboxylase, an enzyme that's involved in the breakdown of several of the building blocks of proteins called amino acids.

While there continues to be many studies posted and published on our mRNA vaccine, I would like to highlight some data today on vaccine boosting.

But first, it's important to understand why booster vaccines are so critical as we transition, through the COVID-19 pandemic and the understanding that we need to have about the evolution of the SARS-CoV-2 virus.

On slide 9, we can see the change in COVID-19 cases over time, with the massive rise we, observed due to Omicron in the last weeks of 2021 and the early part of 2022.

The Omicron wave was caused by BA1, and while that was certainly the dominant version of, SARS-CoV-2 at that time, remarkably, BA1 is now almost extinct here in the United States and around the world, having been replaced by new subvariants. This continues to demonstrate the remarkable evolutionary capacity of this virus.

BA2 is now the dominant strain in the United States, with another subvariant of that, BA2.12.1, increasing rapidly, showing enhanced transmissibility.

Other new subvariants, BA4, BA5, seen in South Africa, have also been detected in the United, States, and we will need to carefully monitor their growth trajectories and pathogenicity.

While BA2 is dominant today, that increased transmissibility and infectivity of BA2.12.1, is likely going to ensure it will be the dominant circulating strain very soon, as we are seeing in New York and in the northeast of the United States.

The slowing of booster uptake now means there will be individuals who are under-vaccinated, and under-protected as we move into late spring and summer, when we thought we would have declining case counts, a balance which could now be impacted by BA2.12.1, BA4 or BA5.

The speed and breadth of evolution of this virus that we see so clearly again today underpins, our prediction for the global need for a variant-adapted booster campaign this coming fall.

The good news is that a booster vaccine protects against both BA1 and BA2.

This is seen clearly when we look at data from the United Kingdom Health Security Agency.

This graph looks at vaccine effectiveness against symptomatic disease for people who, receive the Moderna, Pfizer, or AstraZeneca vaccine for their primary vaccination on the left.

You can see that against both BA1, Omicron, and BA2, vaccine effectiveness wanes over time. But a booster dose of either the Pfizer or Moderna mRNA vaccines increases vaccine effectiveness, and protection, as you can see on the right.

These two vaccines are combined together in this analysis, but again, even in this setting, there is gradual waning of vaccine effectiveness over time following boosting.

This waning of vaccine effectiveness begs the question, will a second booster dose provide, clinical utility and help to restore vaccine effectiveness and provide protection against, COVID-19?

While there are several examples of studies showing the high clinical effectiveness of, additional boosting with the Moderna vaccine, in slide 11, I want to highlight the results of a recent study from Ontario that looked at exactly this question and measured the effectiveness between a first and second booster vaccine dose in a high-risk population, those people living in long-term care facilities.

As a result of <unk>.

A key finding from this study, which was conducted in over 55,000 individuals, was that indeed, a second booster vaccination showed increased vaccine effectiveness against Omicron infections, symptomatic disease, and importantly, against severe outcomes in this high-risk setting.

<unk> enzyme harmful intermediate compounds can buildup to toxic levels in the body.

In fact, an increase in vaccine effectiveness was seen at seven days from the second booster, vaccination and continued to increase in effectiveness over time.

Turning now to slide 12, I would like to provide a perspective on who might gain particular, benefit from annual vaccine boosting.

There are many health, age-related, and environmental occupational risk factors that lead to populations, being at higher risk for COVID-19. First, age greater than 50 years. We know that hospitalization and mortality rates, Chowdhury begin to increase steeply for those with COVID-19 who are over the age of 50.

And then turning to people over the age of 18 year old that have other health risk factors, such as people with kidney disease, cancer, autoimmune disease, and HIV patients. Health factors that either result in immunocompromise or place people at higher, physiological risk for severe disease if indeed they are infected with SARS-CoV-2.

Finally, environmental or occupational risk factors such as healthcare workers, first responders, those in high density housing or living conditions such as college students, military personnel, or the incarcerated. We believe it is people in these broad categories who could benefit most from annual boosting for COVID-19.

And so in summary, we've seen as we continue to anticipate SARS-CoV-2 to keep evolving rapidly with multiple new variants and recombinant variants circulating, globally.

This can lead to serious health problems, including recurrent episodes of life threatening metabolic decompensation events.

Real world evidence demonstrates the effectiveness of a booster shot, a third dose, of mRNA-1273 against evolving variants of concern. And an additional booster, a fourth dose of mRNA-1273 shows incremental vaccine effectiveness when compared to a third dose against infection, symptomatic infection, and severe disease in a high-risk population.

We believe people are at high risk due to health, age, and environmental or occupational risk, factors. And we believe that when taken together with a viral epidemiology and waning of protection, there is an important need for a variant-adapted booster vaccine and for boosting of populations this coming fall.

Our therapy for <unk> and.

Encodes for two of those proteins that form the deficient enzyme PCC and PCB and has won more than a four each in the drug.

The phase one two study is an adaptive trial design enrolling participants greater than one years of age in the United States, The United Kingdom and Canada.

With that, I'll now turn it over to Stephen to take you through the progress in our clinical development pipeline.

Participants received one dose.

<unk> thousand 997 every two or every three weeks for up to 10 doses in that study.

The first cohort is fully enrolled and we are now enrolling patients in the additional cohorts.

Five patients have now completed the initial tenders of course of the study arm and became eligible for kantar.

Continuing dosing in the open label extension and all five of those patients have elected to participate in the OLED.

You know, the one has already, at least one has already been approaching approximately, a year on drug, a total of 75 doses.

A total of 75 doses have now been administered across phase one to at least study.

And so, as you look at that body of data, it will start to provide potentially an early, signal.

And I think in that sense, the things that I will personally be looking at, I think, will be focused on.

You know, first and foremost, it's clinical endpoints.

Now the study is focused on evaluating safety and PK PD. It is also looking at clinical events. Those that are most important including and the metabolic decompensation events I mentioned previously and of course, we're also evaluating potential biomarkers in the study.

It is the clinical endpoints that matter most for these patients, obviously.

We are developing the medicine to try and prevent the sequela of disease. And so, you know, obviously, that includes things like metabolic decompensation events, hospitalization, other interventions, you know, other progression signs of their disease.

And importantly, that's something you really only measure over time, as opposed to a biomarker, which I'll get to in a second.

We look forward to enrolling more patients and sharing the data this year.

With that I'd like to turn this over to our financial review David.

Stephen.

Okay. Thank you Steven.

You really need to see about what that looks like over time.

Thanks, Paul.

Now, the benefit of where we will be this year is that we will have a reasonably large, amount of time for these small number of patients on drug.

And so, that's something that we'll be focused intensely on.

Good morning and good afternoon, everyone.

But again, it's small end that we'll be looking at.

Providing today the analysis of actual 2020 to first quarter results along with a view of key drivers of financial performance going forward.

When it comes to biomarkers, you know, we're looking at a range of biomarkers.

It's important to note there are no validated biomarkers in this disease.

It's not even, you know, guaranteed that we discover a validated biomarker in this disease.

But obviously, it will be helpful as an evidence of pharmacology and the potential for benefit, in clinical endpoints that we do try and measure those.

And so, we are looking at a range of biomarkers. We've described many of the ones that are associated with the disease.

And that will be other data that we will have as we pull together these first couple of, cohorts and we have a cogent story to tell around them.

So Paul just shared with you the, effectiveness of our booster mRNA-1273 against Omicron in the real world setting.

Overall, we had a good start to 2022 and I'm very pleased with our operational and commercial performance.

But on slide 15, I'd like to pivot to our strategic rationale for why we think a seasonal booster will be, necessary.

So first, we think neutralizing titers will wane, similar to the endemic human coronaviruses. And that decline in neutralizing titers will increase the risk of breakthrough infection and hospitalization for those at higher risk, particularly, as Paul just described, older adults or those with medical immune compromise.

The emergence of new variants of concern, like the VA.4 and.5 sub-variants, could accelerate the impact of that waning and broaden the risk of breakthrough across the population.

So with that, we do believe a booster will be needed in the fall, and we're working hard to make improvements to our available boosters.

The desired features for a northern hemisphere fall-winter booster, we think, will be that it, improves the durability of protective neutralizing antibodies against Omicron and its sub-variants beyond six.

Producer, TMAN Productions, When It Rains and Storms Video, Emerging variants or sub-variants that might happen over the coming months.

And you know, the balance of the clinical endpoints and the biomarker data together, will help us decide whether we've found the correct dose to move forward or whether more work is needed to find a more optimal dose for this patient population.

Turning now to slide 29, starting with an overview of our sales performance.

On slide 16, I'd like to summarize our work in developing that improved booster.

I think the encouraging thing is, as we stand today, is that we do know there are patients, that have been on drugs for quite a long period of time, and that longitudinal experience allows us to look at clinical endpoints and also gives us some good indication, hopefully, where we're going to be on safety, which is obviously essential for this medicine to move forward.

Our primary focus, as you know, has been on developing a bivalent vaccine, and we have taken three bivalents into clinical trials. The first, mRNA-1273.211, includes nine of the common mutations and was based on a, combination of our prototype wild-type vaccine and beta. The mRNA-1273.213 bivalent included 11 mutations based on what had emerged from beta and delta.

And our mRNA-1273.214 booster includes 32 mutations, also now based on the wild-type, prototype vaccine and a combination with the Omicron original variant of concern. Our latest bivalent, mRNA-1273.214, that includes those 32 mutations that have emerged, remains our lead candidate for the fall Northern Hemisphere campaign.

The objective of that booster will be to demonstrate superior immunogenicity against, variants of concern when compared to our approved current prototype booster, or mRNA-1273 at 50 microns.

And of course, we want to maintain non-inferiority against ancestral strains in case they reemerge.

Now on slide 17, I'll summarize the ongoing clinical development work across that portfolio of bivalent boosters.

Total product sales in the first quarter of 2022 were $5 9 billion. This compares to product sales of $1 7 billion in the first quarter of 2021.

I'll remind you that mRNA-1273 has been authorized or approved in many markets as a third and even a fourth booster.

Perfect.

The total sales growth was driven by the fact that we were in an earlier stage of our manufacturing ramp up in Q1 of last year.

With our U S based manufacturing lines, roughly three months ahead of or international manufacturing capabilities.

This also explains the different geographic sales mix.

The data for the first bivalent, mRNA-211, has already demonstrated superiority against all variants of concerns tested, including Omicron and Delta, and I'll cover that data in just a moment.

In the first quarter of 2022 sales outside the U S were $5 billion in sales to the U S government were <unk> 9 billion the.

The majority of sales in Q1 of last year were to the U S government.

Turning to slide 30 to go into more detail over Q1 results.

But our lead candidate remains, as I said a moment ago, our mRNA-1273.214, which is being, evaluated in two separate studies, a phase II-III in the United States and a phase III-P305 study in the United Kingdom. Again, both of those are being conducted at a booster dose of 50 micrograms.

Thank you.

Total revenue was $6 1 billion in the first quarter of 2022 compared to $1 9 billion in Q1 of last year.

Our next question comes from Tyler Van Buren with Kaplan.

Hey, guys.

The increase of total revenue was driven by the sale of our COVID-19 vaccine.

Cost of sales was $1 billion or 17% of the company's products sales in the first quarter.

Good morning.

Cost of sales and percent of sales in Q1 of last year was 11% on a reported basis and.

Thanks for taking the questions.

So the Ontario study provides some interesting initial evidence that a fourth dose is beneficial. And you mentioned the populations that should get the fourth dose.

So how big in aggregate is this population in total?

22% adjusted for Prelaunch inventory costs, which were expensed in 2020.

Compared to the prior year adjusted 22%.

What percent of the U.S. and global population do these patient groups comprise?

We're benefiting this quarter from an increased average selling price driven by customer mix favor.

And the second question was just to follow up on prior questions and make sure that I'm clear.

Favorable impacts from the scale up of our manufacturing processes.

<unk> bye.

By higher write downs for excess and obsolescence inventory.

Current period expense related to future purchase commitments.

Research and development expenses were $554 million in the first quarter of 2022.

Third to $401 million in the same period in 2021.

The increasing R&D spend continues to be driven by clinical trial expenses for our expanding and maturing development portfolio.

Selling general and administrative expenses were 268 million for Q1 2022.

Paired to $77 million for the same period in 2021.

The growth in spending was driven by the commercialization of our COVID-19 vaccine globally.

<unk> investments in personnel and outside services in support of the accelerated company buildup.

For Q1 2022 results also include the initial upfront endowment of $50 million for the newly established maternal foundation.

Provision for income taxes was $572 million in the first quarter of 2022.

Compared to $39 million in the prior year period.

Our effective tax rate for the first quarter was 14%.

We remind you of the fact that we held a net operating loss carryforward of $2 3 billion at the end of 2020, which resulted in a nonrecurring benefit to the reported tax rate last year.

We recorded after tax net income of $3 7 billion in Q1 compared to $1 2 billion in the prior year.

Diluted earnings per share in Q1 2022 were $8.58.

As a final point on the quarter and beyond we currently do not have any commercial activities or R&D activities in the Ukraine or Russia.

Now on slide 18, just quickly to update you on the data we have from the 211, first bivalent, not surprisingly, the safety and reactogenicity profile of the bivalent boosters is consistent with what we saw with mRNA-1273. As you'll see on the chart, both solicited adverse local reactions and systemic reactions are broadly consistent in both frequency and severity.

Did you say that the average selling price per Spikevax dose in 2022 will be lower than, 21 due to COVAX orders?

Turning to cash and cash deposits on slide 31.

And the frequency and types of unsolicited adverse events were also comparable between the groups, with no serious adverse events in the bivalent vaccine group up to 28 days after the booster dose.

And does this not account for a potential increased price from future U.S, orders?

We ended Q1 2022 with cash and investments of $19 3 billion compared to $17 6 billion at the end of 2021.

The increase was driven by our commercial activities.

So cash deposits for future product supply was $5 3 billion compared to $6 billion at the end of 2021.

The reduction quarter over quarter is driven by product deliveries against customer deposits.

Moving to slide 19, we have some of the neutralizing antibody data from that study, evaluating again our mRNA-1273.211 bivalent and comparing that with an approved or authorized mRNA-1273 booster. Looking at neutralizing titers and GMTs, both immediately pre-booster at one month or day 29 and at six months on day 181. Across the three variants of concern which we tested, higher neutralizing titers were seen for day 29 and day 181 across all the variants of concern with the bivalent.

And couldn't these offset that decline in ASP, especially if you sell a sizable portion of doses at year end at that $60 per dose price I believe you just mentioned per the CMS announcement?

Now turning to slide 32.

Booster.

Very good.

Our capital allocation priorities remain unchanged our top investment priority has been and will continue to be reinvesting in the base business across multiple areas.

On slide 20, we represent that as a ratio.

Yeah.

Go ahead.

For R&D.

We continue to forecast to spend in the range of $2, a head up to $3 billion in order to advance and accelerate our pipeline both for existing and new programs.

I'm comparing the performance of the, bivalent booster to mRNA-1273 at one month and six months.

Yeah.

And superiority was met for the ancestral and all variants of concern at different time points, as you'll note here. The clinical endpoint for superiority was defined as a geometric mean titer ratio, or GMR, where the lower bound of the 95% confidence interval excluded one. And as you'll note, at day 29, a GMR for the ancestral, SARS-CoV-2 virus was 1.28, beta was 1.3, delta was 1.75, and importantly, Omicron was as high as 2.2. And the 95% confidence interval for Omicron, the lower bound, was 1.74, again demonstrating, strong trend towards superiority in this data.

Excitingly, at day 181, or six months, that superiority was also met for the ancestral virus, beta, and the Omicron variant, which is important because the primary goal we have here is to improve the durability of protection by increasing those titers.

Our second investment priority is to seek attractive external investment and collaboration opportunities to further expand the reach of modern technology and capabilities.

So on slide 21, in conclusion, the safety and reactogenicity profile of the 50-microgram bivalent 2-in-1 booster was comparable to the 50-microgram of the authorized or approved 1273 booster.

And we believe that the superiority already demonstrated by the bivalent platform in 2-in-1 bodes well for our overall strategy. We continue to believe that bivalent boosters will ensure the broadest immunity across the evolutionary uncertainty of SARS-CoV-2 and maintain current protection while expanding the breadth and durability of neutralizing antibodies, including, as I just demonstrated a moment ago, a 2-in-1 out to six months.

We anticipate the one-month or day 29 data from our Omicron-containing bivalent mRNA-1273.214 in June of 2022.

Now turning to the rest of our respiratory vaccine pipeline on slide 23, we announced positive phase two data from our flu vaccine, mRNA-1010, at our Vaccines Day event.

mRNA-1010 is part of our speed-to-market approach.

We plan to start a phase three immunogenicity study in the second quarter of this year, and a phase three efficacy trial later this year with mRNA-1010.

As part of our flu vaccine strategy, we are also advancing in parallel vaccine candidates that contain both HA antigens and NA antigens.

We started a phase one two trial of mRNA-1020 and mRNA-1030 last month.

Our RSV vaccine, mRNA-1345, phase three trial in older adults is ongoing and we are enrolling, participants worldwide.

We also have an ongoing pediatric RSV trial enrolling as well.

In combinations, we plan to start a phase one trial for both our COVID plus flu and our COVID, flu RSV vaccines this year.

We have three other candidates in preclinical and rare diseases as well.

Sorry.

Considering attractive opportunities that enable and complement our platform and take a disciplined approach in evaluating potential outside investments. We are in multiple active discussions regarding additional external collaboration opportunities.

Our phase one trial for the HMPV-PIV3 combination vaccine is also now fully enrolled.

Now before I hand it off to David, on slide 27, I wanted to provide a bit more color on, our Phase I-II study in Propionic Acidemia. As a reminder, PA is a rare metabolic disorder that's characterized by a deficiency of, propionyl-CoA carboxylase, an enzyme that's involved in the breakdown of several of the building blocks of proteins called amino acids. As a result of deficiency in that enzyme, harmful intermediate compounds can build up, to toxic levels in the body. This can lead to serious health problems, including recurrent episodes of life-threatening, metabolic decompensation events.

And our RSV and HMPV combo and our endemic human coronavirus vaccine combo are in Before moving from respiratory vaccines, I wanted to take a step back and reflect on, the incredible progress over the past two years.

Our therapy for PA encodes for two of those proteins that form the deficient enzyme, PCCA, and PCCB, and has one mRNA for each in the drug.

We have or will have progressed three candidates into pivotal Phase III studies within one, year of an IND being opened.

The Phase I-II study is an adaptive trial design enrolling participants greater than, one years of age in the United States, the United Kingdom, and Canada. Participants receive one dose of mRNA-3927 every two or every three weeks for up to ten, doses in that study.

This speed is made possible by our mRNA platform, and we believe our COVID-19 vaccine success, has de-risked our vaccine pipeline and we can now move quickly into our RSV and flu pivotal studies.

The first cohort is fully enrolled, and we are now enrolling patients in the additional, cohorts. Five patients have now completed the initial ten-dose course of the study and became eligible, for continuing dosing in the open-label extension, and all five of those patients have elected to participate in the OLE. A total of 75 doses have now been administered across Phase I-II and the OLE study. Now, the study is focused on evaluating safety and PKPD.

Importantly, in RSV and flu, we are looking at seasonal endpoints or immunogenicity endpoints, which we believe can allow us to progress faster through Phase III towards its readouts and ultimately to commercialization.

It is also looking at clinical events, those that are most important, including the metabolic, decompensation events I mentioned previously.

Now turning to the rest of our pipeline, we have an ongoing Phase III study for our CMV, vaccine, mRNA1647, which is enrolling well and is now enrolling participants globally.

And of course, we are also evaluating potential biomarkers in the study.

Now, with that, I'd like to turn this over to our financial review.

Go ahead, David.

Our EBV vaccine to prevent infectious mononucleosis is in Phase I, and our EBV vaccine to prevent, long-term sequelae, such as multiple sclerosis, is in preclinical studies.

We look forward to enrolling more patients and sharing the data this year.

You take the first one and then I'll come, in on that. Yeah, sure.

Our HIV vaccines are in Phase I clinical trials with our partners, and the recently announced, HSV and VZV vaccines are in preclinical studies.

Within public health vaccines, our Zika vaccine continues to enroll in Phase II, and we are, pleased to update that our Nipah virus vaccine, IND, was opened, and we look forward to starting that trial soon with our partner.

Now moving to our therapeutic pipeline on slide 26, within oncology, our personalized, cancer vaccine is ongoing in a Phase I study and a Phase II study, and we expect the first look at the data from our Phase II study, which is evaluating personalized cancer vaccine plus Keytruda versus Keytruda alone.

In the fourth quarter of this year, we have four other candidates in Phase I or preclinical, stages across oncology.

Yeah.

In cardiovascular and autoimmune, we have two candidates in each area, in clinical trials, or in the preclinical stage, and within rare diseases, our Propionic Acidemia Program, or PA program for short, which I will give more detail on in the next slide, is ongoing in a Phase I-II study.

Our NMA program is also ongoing in a Phase I-II study, and our GSD-1A program has an, open IAD, and we look forward to enrolling the first patient or participants in that study.

After evaluating internal and external investment opportunities we've done ourselves additional uses of cash.

Yeah.

We completed our initial $1 billion share buyback program January and announced a new share buyback program of $3 billion in February .

Across these two authorizations, we repurchased a total of $3 8 million shares for <unk> 6 billion during the first quarter.

The next slide.

So as the progression of our share count since we initiated our share repurchase program.

So if I track that in terms of pricing, that's correct.

As a reminder, we received board approval for initial $1 billion share repurchase program in August 2021, and begin repurchasing shares in the fourth quarter 2021.

Our quarter end basic shares outstanding declined from $405 million at the end of September 2000, $21 million to $400 million at the end of March 2022.

We repurchased 7 million shares more than offsetting 2 million shares of common stock issued in connection with equity compensation over this period.

Our diluted weighted average shares outstanding also declined from $434 million in the third quarter of 2021.

$226 million in the first quarter of 2022.

Primarily as a result of the share repurchase activity.

Now, let's turn to 2022 financial framework on page 34.

We have signed advanced purchase agreements for expected delivery in 2022, and the amount of approximately 21 billion.

We have had and we continue to have based on the customer mix this year versus last year, we had indicated that we'll have a year-over-year decline in the average price of product being sold when we look at the 21 billion of APAs compared to last year's actual. And the key contributor to that decline for the year is in fact the inclusion of COVAX volume in the confirmed APAs that we've previously were discussing. So that contributes to an average sale price decline.

Will that sale price on average in 2022 change from that outlook?

There was a potential downside to this number from timing of <unk> deliveries.

<unk> is unable to confirm demand aligned to their contracted volume.

Yes, it can to the extent there were a change in volume for COVAX, including if it were some of the volume were to defer beyond 22 into 23, for example, that would improve your average price calculation.

And then likewise, to the extent which we've indicated we have an expectation of additional, sales of product in 2022 for the fall season, including potentially for a private market should that develop, that would then presumably have a favorable impact on the average price.

The 2022 calendar year.

There is also an upside to this number from potential additional contracts for the full booster dose.

Including for the U S market.

Yeah.

In 2022, we believe that the serves koby to virus will evolve into an endemic phase with the more seasonal sales pattern.

As a result, we continue to expect the timing of sales to be larger in the second half of 2022 than in the first half.

Our total cost of sales.

<unk> the cost of goods manufactured.

Third party royalties as well as logistics and warehousing costs.

We continue to expect cost of sales as a percent of product sales to increase compared to prior year driven by both a decrease in our average selling price and the.

Forecast increase in manufacturing cost.

The year on year decrease in average selling price is due to the higher share of kovacs.

As for delivery this year compared to last year.

As the COVID-19.

And then they keep bowls into an endemic phase, we forecast or manufacturing unit cost to increase.

This is driven by a move to smaller dose presentations.

Costs were adjusting our production and supply chain infrastructure, including future purchase commitments.

We continue to expect our full year 2022 reported cost of sales in the low to mid 20% range, which incorporates all the expected adjustments that we've identified for the 2022 calendar year.

The cost of sales per spike folks beyond 2022 will be further impacted by geographic customer mix or.

Pricing effects of the private market as it develops as well as our initiatives to optimize and improve the efficiency.

For R&D and SG&A, we continue to expect full year expenses to be approximately $4 billion driven by our maturing development portfolio and the global scale of the company.

Based on current tax laws, we continue to expect through 2022 tax rate to be in the mid teens as a result of the benefits from the foreign derived intangible income driven by our international business mix.

<unk> based compensation deduction.

Finally regarding capital expenditures, we continue to plan for capital expenditures in the range of six to <unk> 8 billion as we further build out our manufacturing in general company infrastructure globally.

As this is the last earnings call for me as CFO , Madonna I would like to take the opportunity to welcome Laura Gomez, who is well qualified to lead Madonna and the next stage of its development.

So hopefully that is clear.

I would also like to recognize my own team and my colleagues for success in ramping up a global commercial company and contributing to timing the pandemic.

I have great confidence in the company's ability to fully realize the vast potential of it.

RNA technology platform against the many remaining unmet medical needs.

This concludes my remarks concerning the financial performance I would like to turn the call back over to Stephane.

Thank you David well, that's review of a quarter and those kind of world.

And, David.

Yeah, and just to comment on the number of individuals who we think are at high risk, clearly it can change as we see the vaccine, we've seen with the epidemiology of the viruses, as Stephen commented earlier, but just going back to our Vaccines Day earlier, we think that that high-risk population is somewhere in the range of about 1.7 billion people worldwide.

Okay.

Frankly, I would like to thank you for agreeing to come out of retirement.

Thank you, Stephen.

In the spring of 2022 scaled model now.

We're providing today the analysis of actual 2022 first quarter results, along with a view, of key drivers of financial performance going forward.

Thanks Pete.

These stage development.

Overall, we had a good start to 2022, and I'm very pleased with our operational and, commercial performance.

Moving now to slide 29, starting with an overview of our sales performance.

U S centric company to a.

Total product sales in the first quarter of 2022 were $5.9 billion. This compares to product sales of $1.7 billion in the first quarter of 2021. The total sales growth is driven by the fact that we were in an earlier stage of our manufacturing, ramp-up in Q1 of last year, with our U.S.-based manufacturing lines roughly three months ahead of our international manufacturing capabilities.

Commercial global company.

Okay, thanks very much and congratulations again, David, on your second retirement.

I am very grateful.

You agreed to come up over time and to help us.

Our next question comes from Corey Kazma with JP Morgan.

To get vessel at this point was crucial.

Hi, guys, thanks for the question.

You beat the strong team and robust business processes.

This is Tiffany.

Thank you for agreeing to still have a concern as we transitioned to a successful launch.

Wish you and your wife well in the next phase of my life.

As many of you know, we announced that Boeing Gomez will join us as Chief Financial Officer effective next Monday may nine.

This also explains the different geographic sales mix.

I'm for Corey.

Jorge brings we'd be experiencing the capacity of CF for global health care organizations, which I desperately and calling on behalf.

Okay.

Kind of high quality finance training us David as John What's the final aluminite.

The <unk> test in personal experiences in addition to having been CFO of publicly traded companies.

I would also like to welcome all of our gallery we.

Joining us from at the end of this month as our Chief commercial officer.

She was a member of <unk> Executive Committee, where she most recently served as head of marketing.

Also as a very you talked about background and what's your point experience easy books.

And marketing.

I'll walk through partnering with is truly just a coffee to scale rapidly Madonna.

In the first quarter of 2022, sales outside the U.S. were $5 billion, and sales to the, U.S. government were $0.9 billion.

So as the U.S. government, hasn't procured a budget for boosters this fall and if they continue to not place orders, can you walk us through some of the implications of what that privatization potentially means and how the company is thinking about it?

The majority of sales in Q1 of last year were to the U.S. government.

Before moving to Q&A.

Turning to slide 30 to go into more detail of our Q1 results, total revenue was $6.1, billion in the first quarter of 2022, compared to $1.9 billion in Q1 of last year. The increase of total revenue was driven by the sale of our COVID-19 vaccine.

You mentioned potentially higher prices, but anything from market research that might suggest demand change or how you're thinking about discounts, et cetera?

I'd like to review with you our 2022 priorities.

Cost of sales was $1 billion, or 17% of the company's product sales in the first quarter.

Cost of sales in percent of sales in Q1 of last year was 11% on a reported basis, and, 22% adjusted for pre-launch inventory costs, which were expensed in 2020.

Compared to the prior year-adjusted 22%, we are benefiting this quarter from an increased, average selling price driven by customer mix, favorable impacts from the scale-up of our manufacturing processes partially offset by higher write-downs for excess and obsolescent inventory, and a current period expense related to future purchase commitments.

Research and development expenses were $554 million in the first quarter of 2022, compared to $401 million in the same period in 2021. The increasing R&D spend continues to be driven by clinical trial expenses for our expanding and maturing development portfolio.

Number one.

Selling general and administrative expenses were $268 million for Q1 2022, compared to $77 million for the same period in 2021. The growth in spending was driven by the commercialization of our COVID-19 vaccine globally, with continued investments in personnel and outside services in support of the accelerated company build-out.

On the $21 billion of same Apu and to prepare for a successful fall 'twenty rates will boost our CFO .

Our Q1 2022 results also include the initial upfront endowment of $50 million from the newly established Moderna Foundation.

So, Stphane, this is Stphane.

Provision for income taxes was $572 million in the first quarter of 2022, compared to $39 million in the prior year period.

Our effective tax rate for the first quarter was 14%. Let me remind you of the fact that we had a net operating loss carry forward of $2.3 billion at the end of 2020, which resulted in a non-recurring benefit to the reported tax rate last year. We recorded after-tax net income of $3.7 billion in Q1, compared to $1.2 billion in the prior year.

Product and number two to execute on our four phase III vaccine programs and nonrecurring call Sidney <unk>, fluke and saving Prime series vaccine, which could lead to free respiratory commercial launches over the next two to four years.

Diluted earnings per share in Q1 2022 were $8.58.

As a final point on the quarter and beyond, we currently do not have any commercial activities or R&D activities in the Ukraine or Russia.

Turning to cash and cash deposits on slide 31. We ended Q1 2022 with cash and investments of $19.3 billion, compared to $17.6 billion at the end of 2021. The increase is driven by our commercial activities.

The balance of cash deposits for future product supply was $5.3 billion, compared to $6 billion at the end of 2021. The reduction quarter over quarter is driven by product deliveries against customer deposits.

Now turning to slide 32.

So, in this, you know, while we're having discussion with, the U.S. government, as you would assume is appropriate, we're also working toward assuming that there is no government order, that a lot of Americans are on vaccines.

Protein number for you to expand beyond infectious disease vaccine into therapeutics and ship proof of concept readout for Pierre.

Our capital allocation priorities remain unchanged. Our top investment priority has been, and will continue to be, reinvesting in the base business across multiple areas.

I want to make sure we can protect, you know, as many Americans as we want the vaccine.

MMA and PCB programs.

Proxy number fall to bring forward more among the candidates into clinical development.

And last but not least breaking number five to continue to expand our monarch platform. So a possibility, but I'm on the impact to patients continues to increase over time.

And so with our commercial U.S. team, we're working very diligently.

And David and I have spent quite some time in the last, you know, weeks and months to make sure that we have all the World Seller Contracts and all the pieces you need to be able to be commercial in the, traditional sense of the word in vaccine.

So I wanted to remind people of upcoming events DCF Primo signs there and just two weeks on May 17.

For R&D, we continue to forecast a spend in the range of $2.5 to $3 billion in order to advance and accelerate our pipeline, both for existing and new programs.

And we have, you know, quite a number of executives that have vaccine sales experience in the U.S. on our team.

I'll keep you quote on your R&D day in September and first ESG day in November .

Our second investment priority is to seek attractive external investment and collaboration opportunities to further expand the reach of Moderna's technology and capabilities. We are considering attractive opportunities that enable and complement our platform and take a, disciplined approach in evaluating potential outside investments.

And so while we hope that the U.S. government, like other countries in the world, will decide to place an order like we've done in the past to allow the maximum number of people, including people uninsured, to get vaccinated, we're getting fully ready, assuming that there is zero order from the U.S. government, just in case if that happens, that it's 100% private market in the fall, and the company will be ready for that.

While we have had a profound impact on humanity over last two years. We believe that is what is ahead of us to help protect and tweet hundreds of people is even more exciting.

We are in multiple active discussions regarding additional external collaboration opportunities.

Okay, great.

And then just a second one.

We will continue to execute on our mission and we thank you for your support this is just the beginning.

So how should we think about operating expenses, moving forward and potentially steering away from COVID as a big driver there?

Operator, we'd be happy to take questions.

Ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone.

After evaluating internal and external investment opportunities, we then assess additional uses of cash.

Will it be pipeline dependent or something else?

We completed our initial $1 billion share buyback program in January and announced a, share buyback program of $3 billion in February. Across these two authorizations, we repurchased a total of 3.8 million shares for $0.6 billion during the first quarter. The next slide shows a progression of our share count since we initiated our share repurchase, program. As a reminder, we received board approval for our initial $1 billion share repurchase program in August 2021 and began repurchasing shares in the fourth quarter of 2021. Our quarter-end basic shares outstanding declined from $405 million at the end of September 2021, to $400 million at the end of March 2022.

We repurchased 7 million shares, more than offsetting 2 million shares of common stock issued in connection with equity compensation over this, period. Our diluted weighted average shares outstanding also declined from $434 million in the third quarter of 2021 to $426 million in the first quarter of 2022, primarily as a result of the share repurchase activity.

Question has been answered or you wish to move yourself from the queue. Please press the pound key our first question comes from <unk> Richter with Goldman Sachs.

Now let's turn to 2022 financial framework on page 34.

Thank you.

We have signed advanced purchase agreements for expected delivery in 2022 in the amount of approximately $21 billion.

Yeah, it's a good question.

There is a potential downside to this number from timing of COVAX deliveries if COVAX is unable to, confirm demand aligned to their contracted volume in the 2022 calendar year.

We've, you know, tried to give you the indication of the trends, for expenses across the business.

Good morning, Thanks for taking my questions, David it's been a pleasure working with you.

Two questions for me one is for.

Covid based on what's known right now what regimen as you think about dosing in Canada do you have the most confidence on per annual boosting as you look to 2023 and beyond and then secondly.

Just given your balance sheet and the.

As you look to kind of entering endemic phase here. How are you thinking about later stage BD and M&A to bolster the revenue line.

There is also an upside to this number from potential additional contracts for the fall booster dose, including for the US market.

What I would expect to continue is a very significant investment in R&D as that pipeline progresses and expands. And I would say it, you know, shouldn't be surprising if you see, if you move past 2022, that you'll see a continued increase in the investments in that area, you know, presuming success, which we're feeling very good about.

Thank you Stephen so so first on the Covid booster in what we perceive.

As of today.

In 2022, we believe that the SARS-CoV-2 virus will evolve into an endemic phase with a more seasonal sales pattern. As a result, we continue to expect the timing of sales to be larger in the second half of 2022 than in the first half. Our total cost of sales includes the cost of goods manufactured, third-party royalties, as well as logistics and warehousing costs.

Subject to data and obviously cooperating with regulators.

We continue to expect cost of sales as a percent of product sales to increase compared to prior year, driven by both a decrease in our average selling price and a forecast increase in manufacturing cost. The year-on-year decrease in average selling price is due to the higher share of COVAX APAs for delivery this year compared to last year.

We are as I said, most excited about our bivalent vaccine platform and including Omicron as the now dominant variant and family of sub variants that are infecting people today.

As the COVID-19 pandemic evolves into an endemic phase, we forecast our manufacturing, unit costs to increase. This is driven by a move to smaller dose presentations and the cost for adjusting our production, and supply chain infrastructure, including future purchase commitments. We continue to expect our full year 2022 reported cost of sales in the low to mid 20% range, which incorporates all the expected adjustments that we've identified for the 2022 calendar year.

The cost of sales for Spikevax beyond 2022 will be further impacted by geographic customer, mix, the pricing effects of the private market as it develops, as well as our initiatives to optimize and improve efficiency.

Our our objective just like with our bivalent too and one poster data that I presented today is to provide at least six months of protection.

From that and because we think this will be a seasonal vaccine that will be very similar to what people are used to from a flu perspective, meaning the northern hemisphere you'd get that boosted in the October time horizon that would cover you well through the early part of spring when transmission will subside and so provided that we are able to provide that duration of protection as we.

Demonstrated already with the 201, we actually think then that means a seasonal annual booster in the fall it would cover people for the year.

And as I said, we think it will be the bivalent omicron containing booster for this year for 2023, plus we would expect to continue to update the bivalent platform to reflected and dominant or then at risk circulating strains of the great start. So it may be omicron. This year. It may be I'm trying again next year or it may be something there.

And then in terms of the other considerations, in terms of cost, in terms of SG&A, and if, you look at the business now, we've substantially built out the company, as we've talked about as a global commercial enterprise.

Thanks, Stephen Good morning, Stefan So as you know in terms of capital allocation, our pricing number one is to invest in the business. We believe we have this really unique platform.

So I think we're, you know, while perhaps not precisely there yet, we're largely there in terms of, if you look at the structure of the business globally.

So, you know, that I think you might consider to be more of a steady state.

He is very different from typical pharma companies or biotech companies, where we are and that leads to scale very quickly as we discussed today.

For R&D and SG&A, we continue to expect full year expenses to be approximately $4 billion, driven by our maturing development portfolio and the global scale up of the company.

Based on current tax laws, we continue to expect our 2022 tax rate to be in the mid-teens, as a result of the benefits from the foreign-derived intangible income driven by our international business mix and stock-based compensation deduction.

Are actively preparing you know the pivotal studies and the launch of a full program into phase III as we discussed as you know there's another problem in phase III and I think there is around 50 vaccines in development today and Stephen are struggling today that we believe we have built for our platform and notably investments in digital and the great team we have.

Finally, regarding capital expenditures, we continue to plan for capital expenditures, in the range of $0.6 to $0.8 billion as we further build out our manufacturing and general company infrastructure globally.

As this is the last earnings call for me as CFO of Moderna, I would like to take the opportunity, to welcome Jorge Gomez, who is well qualified to lead Moderna in the next stage of its development.

I would also like to recognize my own team and my colleagues for success in ramping up, a global commercial company and contributing to taming the pandemic.

I have great confidence in the company's ability to fully realize the vast potential of its, mRNA technology platform against the many remaining unmet medical needs.

This concludes my remarks concerning the financial performance, and I would like to turn the, call back over to Stefan.

The ability and around 12 months to go from opening a 19 vaccine to starting the phase III. So if you think about where the pipeline is and where it's going to be 12 months 24 months from now that is really exciting.

So that would be my initial comments on the thinking on that.

Thank you, that's helpful.

Our next question comes from Jeff Meacham with Bank of America.

And then just to start off with <unk>.

We always get questions around COVID-19 for obvious reasons, but as we've said in our remarks.

Hi, guys.

This year it will be very exciting therapeutics, we have two rare genetic disease program. That's how we're recruiting as Stephen described but which we are eager when we have it to shove they thought we view.

Thank you for taking our question.

And assuming this is positive.

We do more and we often use as youll recall, because you've been following the company for a long time.

We thought there were few weeks pictures these vaccines and that's because more.

More confirmation that the technology was working in human and more recently in more capital.

Very.

I am pushing that that acceleration of fixtures this vaccine.

We will plan to do the same in Rev genetic disease.

If we get positive clinical data evidenced plus hodgkins cell vaccine and as you know Stephen signal.

More cancer programs autoimmune programs.

So quite exciting to work with a partner of ethics to what getting following application.

The CF ammonia condensate into the clinic.

In terms of M&A I can tell you our teams.

Never been as busy.

They are looking at a lot of opportunities literally across the world across therapeutic area, both with technologies and so we will not be shy to invest to expand the platform either through technology products.

And Thats really where we are in some of M&A. So multiple come when things get finalized and signed and as you know we've got the bucket of our priorities in terms of buying <unk>.

Returning shareholders capital via share buyback and so this is David.

We continue to.

Buy back shares drop prices and we will continue to have a dialogue we've evolved as to what should we do after the current plan if needed, but now will focus on executing the current plan.

Thank you, David, for that review of a quarter and those kind words.

Thank you.

More importantly, I would like to thank you for agreeing to come out of retirement in, the spring of 2020 to help us scale Moderna at an unprecedented speed from an early-stage development U.S.-centric company to a commercial global company. I am very grateful for you agreeing to come out of retirement to help us. Your work to get us to this point was crucial.

You built a strong team and robust business processes.

This is Alex Hammond on for Jeff Meacham.

Our next question comes from Matthew Harrison with Morgan Stanley .

Great. Good morning, Thanks for taking the questions I guess two for me so first.

Thank you for also agreeing to stay on as a consultant as we transition to your successor.

I also want to wish you and your wife well in the next phase of your life.

So, on BD, how do you think about partnerships versus acquisitions?

As many of you know, we announced that Jorge Gomez will join us as Chief Financial Officer, effective next Monday, May 9.

Hoge brings with him experience in the capacity of CFO for global health care organizations, such as DensiPly and Cardinal Health.

Hoge has the same kind of high-quality finance training as David at the General Motors Finance Alumni.

And how large of a deal would you be willing to consider?

He has a broad set of international experiences in addition to having been CFO of publicly traded companies.

David could you just comment a little bit more on the upside and downside lovers to Covid revenues this year and in particular.

And then if I may, can you provide your thoughts on the, RSV competitive landscape, and any color on timelines for the readout?

What what would be the features that would not allow kovacs to accept the deliveries or what should we be looking out for to understand that and then secondly, just on flu could you maybe give some updated comments on where you are in terms of regulatory discussions.

Thank you so much.

Yeah, so this is Stphane.

It sounds like it's not clear, yet whether or not youre going to need a full efficacy study for approval and so I'm just wondering where those discussions are and when you think you'll be ready too.

Give people a clearer picture on what the outlook is for the flu program.

I would also like to welcome Arpa Garay, who is joining us from Merck at the end of this month as our Chief Commercial Officer. She was a member of Merck Executive Committee, where she most recently served as the Head of Marketing. Arpa also has a very international background and multiple experiences in both sales and marketing.

I look forward to partnering with these two leaders to continue to scale rapidly Moderna.

Sure so.

Before moving to Q&A, I would like to review with you our 2022 priorities. Priority number one, to execute on the $21 billion of signed APS and to prepare for a successful fall 2022 booster season.

Priority number two, to execute on our four phase three vaccine programs, an Omicron-containing COVID-19 B-Valent booster, flu booster, RSA booster, and saving prime series vaccine, which could lead to free respiratory commercial launches over the next two to three years.

The first one in terms of the outlook for sales in 2022.

Priority number three, to expand beyond infectious disease vaccine into therapeutics and share proof of concept with us for PA, MMA, and PCV programs.

I think the most important point is.

As cold box.

Had an option for additional doses in 2022, which they chose not to exercise so.

So that's impacted the outlook, we've formally we're reporting.

Options that could be taken up.

That's been taken off the table as they didn't exercise.

And what we see is in our.

Plans and the 21 billion there continued to be some.

The volume for Cold box they are actually the.

Consolidator of demand from the countries. So what they need to do is is get the confirmed requirements from each country.

That becomes a confirmed order to the company.

And notwithstanding that when contracts are still that process. They have to go through so that's why we wanted to flag. There is some level of uncertainty associated with it.

The timing of the demand that were reflected in the Apis and then of course.

We have as we've said before.

Number of negotiations and discussions going on with other countries around the world.

As we look forward to the fall season and look forward to.

Varian booster offerings that are making their way through the approval process.

So likewise that presents some potential for additional sales that are not presently in the P. Eight for this year.

Partnership versus M&A, I think it's really a question of risk, and then willingness of a seller to sell.

It doesn't need to be two to tango.

And so as we've done, for example, with Metagenome, you know, why did we do a partnership in terms of licensing for Metagenome?

It's because we are very excited about the science and the team that we discovered over time and with diligence.

Thanks.

We thought at this stage of the gene editing technology of that company, it was not the best thing for us to do from a risk-adjusted basis to acquire the company.

And, you know, in terms of M&A, we would be very happy to buy the right company that we really believe will drive value to what are now risk-adjusted basis.

This is Steve Matthew So on the question of flu and where we are we have been consulting with regulatory agencies globally as you might imagine around the path forward for our mrna 10 10 program.

In terms of deal size, we are looking at a lot of different things.

But again, we are staying very disciplined.

We are here to create value, not to do things just, for the sake of doing things.

Sure.

As you know, a lot of us own a significant share in the company, and we are really focused on creating value.

So the BG team, as I said, is the most busy they've been in a long time.

We're looking at a lot of things literally around the world, because the best science is not always, you know, in this country.

There's a lot of amazing science in this country, but there's a lot of other smart people around the planet.

And we think with modernized infrastructure and capital, actually, there's a lot of technology that we could possibly scale up, where there's potential teams that have cool science, but not necessarily the right balance sheet and infrastructure to scale and to maximize patient impact.

Priority number four, to bring forward more mRNA candidates into clinical development.

So on RSV, so first, where we are on the data of our program, 1345, you know, we think the titers, the neutralized antibody titers, the GMTs, we've seen look really strong relative to competitors.

Stephen, do you want to take the RSV?

And, you know, we also feel quite optimistic and positive about our history of generating strong T cell responses against respiratory viruses.

As there are issued guidance around accelerated approval that are still open.

And last but not least, priority number five, to continue to expand our mRNA platform so the possibility about mRNA impact to patients continues to increase over time.

And the mRNA platform in particular has demonstrated, we think through the COVID pandemic, you know, pretty remarkable performance relative to more traditional approaches.

I also wanted to remind people of our upcoming events this year, including our Science Day in just two weeks on May 17.

And so the combination has us optimistic.

We also host our typical annual R&D day in September and first ESG day in November.

We ultimately don't need to go demonstrate in a, clinical trial that potential benefit.

At the end of the day, we still believe that Theres, a potential path towards an accelerated approval at least in some markets with our mrna <unk> program using a safety and Immunogenicity endpoint.

While we have had a profound impact on humanity over the last two years, we believe that what is ahead of us to help protect and treat hundreds of millions of people is even more exciting.

We will continue to execute on our mission, and we thank you for your support.

This is just the beginning.

Operator, we'd be happy to take questions now.

As has been previously discussed.

At the end of the day that will be a review matter and we will have to generate that data and have conversations on the back of that data with regulators as a path forward.

But even if we do move forward with accelerated approval, which is the study that we're starting the Q2 <unk> phase III study that we're talking about starting this quarter, even if we do move forward on the back of that we will have an obligation even under accelerated approval to demonstrate efficacy at some point in a follow on study to move from accelerated to full approval.

And that's the phase three study that we're now in and going full speed at. That phase three study, like our other respiratory virus efficacy studies, is a case-driven design.

And so at the end of the day, we have to enroll people, vaccinate them, and then make sure that we accrue enough cases to conduct the interim and final analyses.

That is something that we're trying to make sure we're enrolling in geographies where we, expect and anticipate RSV surges.

And there have been recent reports, you know, from a competitive landscape perspective of others modifying their studies to increase the number of enrolled subjects in their pivotal studies, because perhaps they haven't yet hit that rate of case accrual.

In some ways, we think that provides an opportunity to close even more ground, because now we're all rapidly working to try and demonstrate the potential of RSV vaccines to help the same older adult population.

So it's beyond our control to know when exactly we will have those cases accrued.

But obviously, we will be working hard to make sure that we're as enriched as possible.

Kevin, we have time for one more question.

Now, from an overall competitive perspective, other than the vaccine, the freestanding RSV vaccine in older adults, which, as I said, we're quite optimistic about the GMTs and T cell response to the platform, we are also studying combos, because at the end of the day, these are not the only virus.

It's not the only virus infecting these populations.

And so I'll remind you that we have a RSV flu COVID combo, which we are going to start a clinical study on, we believe, this year, which would be a combination of all of the three most common respiratory pathogens that are impacting older adults.

And as I said a moment ago, we fully enrolled our RSV and human metapneumovirus combination, which I'll remind you, that's in the pediatric population, another important population for RSV, where both of those viruses can lead to morbidity in young children.

Okay, our last question comes from Justice Springer with Needham & Company.

And so we're continuing down our strategy of making sure that we're not just addressing one pathogen, but that we're providing the best potential health intervention. So that includes that combination strategy.

And over time, we think as we demonstrate the potential of our platform against any individual virus, the part of the real value we will deliver to healthcare systems and patients is the ability to do those combinations quickly to reflect the epidemiology of the underlying patient populations, different in younger kids than it is in older adults.

So because we're certain of that at some point. We're also planning to start a phase III efficacy study, which will then be conducted perhaps in the northern hemisphere winter. This coming fall and we also announced today the plans for that and what that would do is we would hope.

You can find a path forward for both accelerated approval, but also rapidly being able to move that to full approval on the back of that efficacy result, now for some reason the accelerated approval is not available in sub markets or all markets. We would instead go directly to full approval with a very short latency given the timing of those two studies.

Great. Thanks very much.

Our next question comes from Gena Wang with Barclays.

Ladies and gentlemen, if you have a question or a comment at this time, please press the, star and the one key on your touchtone telephone.

If your question has been answered, or you wish to move yourself from the queue, please press the pound key.

Thank you for taking my questions Congrats on a strong quarter.

David We will Miss you.

Our first question comes from Salveen Richter with Goldman Sachs.

Few questions regarding the revenues David you mentioned the second half this year will be higher than the first half since the first quarter, we already delivering $5 9 billion revenues should we expect less than $4 5 billion for the second quarter. This year.

Good morning.

Thanks for taking my questions.

And David, it's been a pleasure working with, you.

My second question is regarding the ex U S. <unk> revenue what is the breakdown between you and the rest of the world.

Third question is regarding the prices for U S and the rest of the world and where do you see these prices change for the remaining of 2022 and also 2023.

Two questions for me.

One is, for COVID, based on what's known right now, what regimen as you think about dosing and candidate do you have the most confidence on for annual boosting as you look to 2023 and beyond?

Okay. Good so I'll try to cover them, all and if I Miss one come back to it so.

In terms of first of all maybe I'll start at the end on pricing.

We previously disclosed.

The ranges of pricing that we had in the contracts last year and what you'll see is that pricing has continued as we contracted for 2021.

So really no change on the play.

Twice across the various customers.

It's really net prices being impacted as I mentioned by the mix of customers, where we help our pullback sales at the.

Very lowest price offer.

Whereas the other countries to developed countries.

During higher prices so those continue.

We haven't commented on pricing for BR.

Beyond 2022, but certainly.

I think it's fair to assume that to the extent that the market moves to a private market.

Typically you see high.

Higher prices in private markets based on the needs of the market as opposed to when Youre addressing.

The government acquired product for.

The spend doesn't content. So that's one.

And then secondly, just given your balance sheet and as you look to kind of entering an endemic phase here, how are you thinking about later stage BD and M&A to bolster the revenue?

Secondly in terms of the 2020 two.

Outlook.

I think you've got it right so.

Basically first of all I think it would be a mistake for us to move into quarter by quarter.

Thank you Salveen and Stephen.

Accounting, where are we where we see the demand given the variability of this pandemic, but what we see with the $21 billion of <unk>.

So first on the COVID booster and what we perceive as of today, subject to data and obviously collaborating with regulators.

We are, as I said, most excited about our bivalent vaccine platform and including Omicron as the now dominant variant and family of sub-variants that are infecting people today.

We mentioned last quarter and that's the same this quarter.

That $21 billion, we think will be somewhat higher.

Second half sales in the first half and as you correctly pointed out the math would then point to the second quarter.

Being likely but bolus that we will see throughout this year. So I think I think you're thinking on that is right.

And sorry, the third point wounds.

Thank you very much that's very helpful. That's fair question is ex U S 5 billion revenue what is the breakdown between Europe and the rest of the world.

Yes so.

We had it.

It was a pretty broad spread I don't have top of mind, but specific quantities by country or region, but it was a pretty.

Broad spread of demand if you look across the world.

In the first quarter.

And maybe just on the pricing as David said, you know as moving when they meet because we've been saying.

We will have to discuss with us about kind of had to pick one that makes them value of product as it's done for every pharmaceutical product, especially in the U S and as you might be aware CMS has already communicated that for fiscal 2020 free which starts in October 2022, the reimbursement for COVID-19 impact.

Youre going to be skewed at all.

Thank you very much.

Yes.

Our objective, just like with our bivalent 2-in-1 booster data that I presented today, is to provide at least six months of protection from that.

Our next question comes from Michael Yee with Jefferies.

And because we think this will be a seasonal vaccine, that'll be very similar to what people are used to from a flu perspective, meaning in the northern hemisphere you'd get boosted in the October time horizon that would cover you well through the early part of spring when transmission will subside.

Hi, good morning.

Hi, good morning.

And so provided that we are able to provide that duration of protection as we've demonstrated already with the 2-in-1, we actually think then that means a seasonal annual booster in the fall that would cover people for the year.

You have to I guess ask the last question to David before he gets to go back and then a question for Steven on the pipeline Im going back to the question around the guidance.

And as I said, we think it will be the bivalent Omicron containing booster for this year.

Thanks for taking our questions.

I had one on the rare disease programs.

Can you maybe help us quantify the exposure to <unk>. There was an article I guess talking about some of that recently in the press and I think thats part of what Youre API commentary out today as I'm, sorry are you, saying that that is partly in the 'twenty 1 billion, but then offset by potential USA orders that could come later this year. So maybe you could.

Just talk about that dynamic a bit and then a question for Stephen.

I'm just curious, you have the PA and MMA and clinical development here and initial readout and PA.

Again definitely excited about propionic acid anemia can you just right size your expectations because it's five patients at the lowest dose. So is that a therapeutic dose you would expect to see biomarker changes, maybe just talk a little bit about that thank you.

For 2023 plus, we would expect to continue to update the bivalent platform to reflect the then dominant or then at risk circulating strains of the variant. So it may be Omicron this year, it may be Omicron again next year, or it may be something new.

Sure so yeah.

Yes.

I'm not sure I have too much debt.

In terms of the color as to the outlook for the balance of the year.

Certainly again.

The 21 billion, we don't right now have included any contracts.

As a result of.

Additional U S business, which we think is quite likely we certainly believe there is a recognition of the need for boosters in the U S.

And the dialog is quite active that's also true around the world with our <unk>.

Customers in other countries and regions.

And then we wanted to be clear that in the case of cold box, which is.

No.

As we've said before the lowest claims biz.

Business.

In the portfolio.

But we have confirmed contracts there in place.

And we wanted to flag that they are as I said, the consolidator of underlying demand.

And the <unk>.

<unk> to work through in those developing markets.

What is exactly that demand picture and what is the timing of it and the ability of those countries to absorb the product that they're receiving so we wanted to flag that.

Quite frankly.

You asked me should this be a you know.

Issue a big concern in terms of the total outlook I would tell you I would put it is quite modest.

But we're trying to give some sense as to the range of outcomes in terms of this.

Sure.

Thanks, Stephen.

Perfect. Thanks, Steven sure. Thank you Michael So look you point to the most important things I'll say, which is this rote remains a small number of patients to rare disease.

Good morning, Stephen.

So as you know, in terms of capital allocation, our priority number one is to invest in the business.

How much is the PA readout?

We believe we have this really unique platform that is very different from typical pharma companies or biotech companies where we have an ability to scale very quickly.

Would that be sort of de-risking in terms of bringing additional rare disease programs into the clinic?

As we discussed today, we are actively preparing the pivotal studies and the launch of four programs in phase three, as we discussed.

As you know, there's a lot of programs in phase two, and I think there's around 30 vaccines in development today.

Has it been more of a, you know, some of the hurdles and challenges to expanding that area of the pipeline?

And as you said, we're looking now in cohort, one and cohort two at our lowest dose levels and we're continuing to enroll.

And Stephen, I showed you today that we believe we have built for our platform and all our investment in digital and the great team we have, the ability in around 12 months to go from opening an IND vaccine to starting a phase three.

So if you think about what the pipeline is and where it's going to be, you know, 12 months, 24 months from now, that is really exciting.

And then this is therapeutics.

Has it been more on an indication-specific basis or have you been sort of waiting for the initial proof of concept readouts to bring more programs into the fold?

Or has it been more of an influence by sort of the focus on COVID and potentially headwinds related to the COVID pandemic?

And I would expect as it is appropriate for our phase one study, where we are doing dose finding phase one two that we will continue to enroll and explore a range of doses.

Any additional color on that would be helpful.

Thank you.

Potentially higher doses in cohort three.

Great.

Now that said, we will have a body of data building as we said we've got five participants who moved into the open label extension one has already.

Thank you for the question.

At least one has already been approaching approximately a year on drug.

Total of 75 doses and so as you look.

As you look at that body of data it will start to provide potentially an early signal I think in that sense. The things that I will personally be looking I think we will be focused on first and foremost it's clinical endpoints. It is the clinical endpoints that matter most for these patients obviously.

You know, we always get questions around COVID-19 for obvious reasons, but as we've said, you know, in our remarks, this year is going to be very exciting around therapeutics.

And, you know, it is going to be a mix of all of the factors you listed.

We have two rare genetic disease programs that are well recruiting, as Stephen described, for which we are eager when we have it to share data with you.

So, first, let me talk about PA and what that readout means for us as a platform.

And assuming this is positive, you know, we will do more in rare genetic disease, as you recall, because you've been following the company for a long time.

So, it is our most advanced rare disease platform with an mRNA LNP targeted for those metabolic diseases.

You know, we started with a few infectious disease vaccines, and as we got, you know, more confirmation that the technology was working in humans, and more recently, more capital, we had a very, you know, unprecedented acceleration of our infectious disease vaccine.

And in that sense, MMA and PA both will provide validation that the technology risks associated with that are, you know, are addressed.

Well, we plan to do the same in rare genetic disease, if we get, you know, positive clinical data in this personalized cancer vaccine.

And as you know, there are, as Stephen said, you know, more cancer programs, autoimmune programs, and also quite exciting to work with our partner, Virtex, towards getting, for long application, you know, the CF mRNA candidate into the clinic.

Thank you.

And that would cause us, you know, from a de-risk perspective, from a strategy perspective, to expand the number of diseases we go into quite quickly there that could use that same technology.

We are developing the medicine to try and prevent the disease.

In terms of M&A, I can tell you our teams have never been as busy.

They are looking at a lot of opportunities literally across the world, across therapeutic, care.

We have also technologies.

Disease, and so obviously that includes things like metabolic decompensation events hospitalization other interventions other progression signs of their disease.

And so we will not be shy to invest, to expand the platform either through technology or, through products.

Our next question comes from Matthew Harrison with Morgan Stanley.

And that's really where we are in terms of M&A.

So more to come when things get finalized and signed.

And as you know, the first bucket of our priorities in terms of balance sheet is returning, shareholders capital via share buyback.

And so this, as David said, will continue to buy back share at attractive prices.

And we'll continue to have a dialogue with the board as to what should we do after the, current plan if needed.

Great.

But now we are focused on executing the current plan.

Good morning.

And importantly, that's something you really only measure over time as opposed to biomarker, which I'll get to in a second.

Thanks for taking the questions.

I guess two for me.

You really need to see about what that looks like over time, another benefit of where we will be this year is that we will have a reasonably large amount of time for these small number of patients on drug.

We have been waiting for that readout.

We haven't sat on our hands, though.

I'll note that we have a third program, GSD1A, with an open IED that, as we've said before, is in a slightly-is in a different lipid nanoparticle system.

So, we've continued to look at whether other improvements could help.

And so that's something that we'll be focused intensely on but again, it's small in.

And we will continue to look at those.

Ed.

That will be looking at.

When it comes to Biomarkers.

Looking at a range of Biomarkers is important to note there are no validated biomarkers in this disease.

Not even guaranteed that we discover a validated biomarker in this disease.

But, obviously, if we have a very strong signal out of PA, we will be ungating other programs that can benefit from the technology that would then be de-risked from the PA program.

But obviously it will be helpful. As an evidence of pharmacology and the potential for benefit in clinical endpoints that we do try and measure those and so we are looking at a range of Biomarkers. We've described many of the ones that are associated with the disease.

When it comes to just the challenges of conducting these studies, I'll remind you that these are, you know, unfortunately very ill children often in these studies and relatively rare diseases.

And so, yes, it has been difficult throughout the pandemic in an experimental context to bring people in.

And there have been several times during the last two years that we have actually taken an active decision with investigators and families not to be enrolling people because, obviously, bringing sick children into hospitals was exposing them to risks around SARS-CoV-2.

There are obviously also, even more recently in the Omicron surge, lots of disruption that these institutions have faced as staff and others have become ill and, therefore, that we can't conduct the studies.

We hope that a lot of that is behind us now as we move to an endemic phase for SARS-CoV-2 and that that will-that we will really see a pickup in our ability to continue to execute those studies.

So, we're proud of the progress we've made in the last year.

And that will be other data that we will have as we pull together. These first couple of cohorts and we have a cogent story to tell around them.

The balance of the clinical endpoints and the biomarker data together will help us decide whether we found the correct dose to move forward or whether more work is needed to find a more optimal dose for this patient population I think the encouraging thing is as we stand today is that we do know there are patients that have been on drug for quite a long period of time and that longitudinal experience.

It allows us to look at clinical end points and also gives us some good indication hopefully where we're going to be on safety, which is obviously essential.

Before.

Perfect. Thank you.

Well, thank you very much for joining us today.

We look forward to meeting a lot of you in person in Boston when we do the R&D Day two weeks from now.

Our next question comes from Tyler Van Buren with Cowen.

Hey, guys. Good morning, Thanks for taking the questions.

Have a great day.

So the Ontario study provides some interesting initial evidence of the ports doses beneficial and you mentioned in the populations that should get the fourth dose so how big an aggregate.

Is this population in total what percent of the U S and global population do these patient groups comprise.

And the second question was just a follow up on prior questions and make sure that I'm clear did you say that the average selling price per dose in 2022 will be lower than 21 due to <unk> orders and does not account for a potential increase price from future U S orders and couldn't be offset that decline in ASP.

Especially if you sell a sizeable portion of doses at year end, but at $60 per dose price I believe you just mentioned for the CMS announcement.

So first, David, could you just comment a little bit more on the upside and downside, levers to COVID revenues this year, and in particular, what would be the features that would not allow COVAX to accept the deliveries or what should we be looking out for to understand that?

Very good.

Go ahead.

Sorry go ahead, David you take the first one and then I'll come in.

Yeah.

Yeah. So.

If I track that in terms of pricing that's correct.

We have had and we continue to have.

Based on the customer mix.

This year versus last year.

We had indicated that we will have a year over year decline in the average price of product being sold.

We look at the $21 billion of Apa's compared to last year's actual.

And the key.

Contributor to that decline.

For the year is in fact the IND.

Inclusion of Comex volume and the confirmed.

Yes.

Previously we are discussing.

So that contributes to an average sale price decline will the sale price on average in 2022 changed from that outlook.

Yes, it can.

To the extent there were change in volume.

For cold box.

<unk> if it were some of the volume were to differ beyond 'twenty two into 'twenty. Three for example that would.

Prove your average price calculation and then likewise to the extent, which we've indicated we have an expectation of additional <unk>.

Sales of product in 2022 for the fall season, including potentially.

For private market should should that develop.

That would then presumably hello unfavorable impact on the average price so hopefully that's clear.

Clear.

Okay.

And just to comment on the number of individuals who we think.

High risk clearly it can change as we see the vaccine.

We've seen with the epidemiology of the virus as Stephen commented earlier.

Just going back to our vaccines day earlier, we think that that high risk population is somewhere in the range of about $1 7 billion people worldwide.

Okay. Thanks, very much and congratulations again, David on your second retirement.

Okay.

Thanks.

Our next question comes from Cory <unk> with J P. Morgan.

Ladies and gentlemen, this does conclude today's presentation.

You may now disconnect and have a wonderful day.

Hi, guys. Thanks for the question listen took me on for Corey.

U S government patent procured a budget surplus.

Please.

Please sorry, guys can you walk us through some of the implications of what that privatization potentially means and how the company is thinking about it you mentioned potentially.

Potentially higher prices, but any thoughts on market research that might suggest demand changed or how youre thinking about discounts.

Sure. This is Stefan so indeed, what we are having discussion with the U S. Go on in Memphis, you would assume as appropriate.

So walking toward assuming that there is no government Aldo.

Kind of on a hump vaccines.

Sure we chemicals as many Americans as one of the vaccine and so we've got commercial U S team, we're working very heavily.

And David and I have spent quite some time in the last weeks and months to make sure that we have all the works at our contracts and all the pieces you need to be able to be commercially these traditional sense of the world.

In vaccine and we are.

Quite a number of executives that vaccine since experience in the U S on our team and so.

While we hope that the U S going nuts Blackhawk countries in the World, We have decided to place another like we've done in the past to allow the maximum number of people, including people uninsured to get vaccinated.

Eric I think full year idea, assuming zero order from the U S. Go on that just in case, you've got happens as you say, 100% private markets and the phone.

And the company, we'd be ready for that.

And then secondly, just on flu, could you maybe give some updated comments on where, you are in terms of regulatory discussions?

Okay, Great and then just a second one so how should we think about operating expenses moving forward and potentially steering away from Colgate is a big driver there will it be.

Pipeline dependent or something else. Thank you.

Yes, it's a good question.

We.

To give you the indication of the trends for expenses across the business.

What I would expect to continue as a as a very significant investment in R&D.

As that pipeline progresses, and expands and I would say.

Shouldnt be surprising if you see if you move past 2022 that Youll see a continued.

Increase in the investments in that area.

Presuming success, which we're feeling very good about.

And then in terms of the <unk>.

Other considerations in terms of cost in terms of SG&A and <unk>.

If you look at the business now we've substantially.

Built out the company as we've talked about as a global commercial enterprise.

So I think we're.

While perhaps not precisely there yet.

Largely there in terms of if you look at the structure of the business globally. So.

I think you might consider to be more of a steady state so that would be my initial.

Comments on the thinking on that.

Thank you that's helpful.

It sounds like it's not clear yet whether or not you're going to need a full efficacy, study for approval.

Okay.

Our next question comes from Geoff Meacham with Bank of America.

And so I'm just wondering where those discussions are and when you think you'll be ready to, give people a clearer picture on what the outlook is for the flu program.

Hi, guys. Thank you for taking our question. This is Alex Salmond on for Geoff Meacham.

Sure.

BD, how do you think about partnership versus acquisition, how large of a deal would you be willing to consider.

So on the first one, in terms of the outlook for sales in 2022, I think the most important, point is, is COVAX had an option for additional doses in 2022, which they chose not to exercise. So that's impacted the outlook.

We formally were reporting, you know, options that could be taken up, that's been taken, off the table as they didn't exercise.

And what we see is in our plans in the 21 billion, there continued to be some volume, for COVAX.

They are actually the consolidator of demand from the countries. So what they need to do is get the confirmed requirements from each country and then that, becomes a confirmed order to the company.

And notwithstanding having contracts, there's still that process they have to go through.

So that's why we wanted to flag there's some level of uncertainty associated with the timing, of that demand that we're reflecting in the APAs.

And then, of course, we have, as we've said before, a number of negotiations and discussions, going on with other countries around the world as we look forward to the fall season and look forward to the variant booster offerings that are making their way through the approval process.

So likewise, that presents some potential for additional sales that are not presently, in the APA count for this year.

And then if I may can you provide your thoughts on the RFP competitive landscape any color on timelines for the readout.

So much.

Yeah. So this is stefan.

Partnerships <unk> M&A.

Really good question.

Off risk.

And then a willingness.

So it needs to be two to tango.

And so.

As we've done from the effort we've made that whether you would do a partnership in licensing.

Because we're very excited about the science and the team that we.

We just called out overtime and with <unk> we.

At this stage of the gene editing technology of the company. He was not the best thing for us to do from a risk adjusted basis.

Acquire the company.

And.

In terms of M&A, but we'd be very happy to buy the right.

Alright.

We believe we can drive value.

Well there are now three petrostate basis.

In terms of deal size no. We're looking at a lot of different things.

But again, we are staying very disciplined where you have to create value.

Not to do things just for sake of doing things.

As you know I don't know.

A significant checking the company and we're really focused on creating value.

So the BD team as activities must be deviated being in their own time.

Looking at a lot of things literally around the world.

Because of the best banks is not always you know.

In this contract if there is a lot of amazing staffing. This contributed another August smart people are on the path and we think we've run out of infrastructure and capital actually is another technology that we put pushes cannot.

Well it is a hoot teams.

<unk> science, but not necessarily the right balance sheets, and all infrastructure as Kevin and to maximize patient feedback Steve I don't think the Aussie sure.

On an RSV, so first where we are on the data of our program 30 to 45.

We think that the titers of neutralizing antibody titers Gmt's, we've seen look really strong relative to competitors.

And we also feel quite optimistic and positive about our history of generating strong T cell responses against respiratory viruses.

The mrna platform in particular has demonstrated.

Through the Covid pandemic.

Remarkable performance relative to more traditional purchase and so the combination has us optimistic we ultimately they'll need to demonstrate in our clinical trial.

That's.

Benefit.

And that's the phase III study that we're now in and.

And going full speed at that phase III study like our other respiratory virus efficacy studies is a case driven design.

And so at the end of the day, we have to enroll people vaccinate them and then make sure that we accrue enough cases to conduct the interim and final analysis.

That is something.

That we're trying to make sure we're enrolling in geographies, where we expect expect and anticipate RSV surges.

I've been recent reports from a competitive landscape perspective of others modifying their studies to increase the number of enrolled subjects in their pivotal studies, because perhaps they haven't yet hit that rate of case accrual.

In some ways, we think that provides us an opportunity to close even more ground. Because now we are rapidly working to try and demonstrate the potential of RSV vaccines to help the same older adult population. So it's beyond our control to know when exactly we will have.

Those cases of crude but obviously, we will be working hard to make sure that we're as enriched as possible now from an overall competitive perspective other than the vaccine the freestanding RSV vaccine in older adults, which as I said, we are quite optimistic about the GMT T cell response to the platform. We are also studying combos because at the end of the day. These are not the only buyer.

It's not the only virus affecting these populations and so on.

To remind you that we have a RSV flu COVID-19 combo, which we are going to start a clinical study and we believe this year, which would be a combination of all of the three most common respiratory pathogens that are impacting older adults and as I said, a moment ago, we fully enrolled our RSV and human Metapneumovirus combination, which I'll remind you that's in the <unk>.

Pediatric population another important population for RSV, where we're both of those viruses.

Can lead to morbidity.

In young children, and so we're continuing down our strategy of making sure that we're not just addressing one pathogen, but that we're providing the best potential health intervention. So that includes that combination strategy and over time, we think as we demonstrate the potential of our platform against any individual virus.

The real value, we will deliver to healthcare system and patients is the ability to do those combinations quickly to reflect the epidemiology of the underlying patient population is different in younger kids and it is in older adults.

Thanks.

Kevin we have time for one more question.

And this is Steve Matthews.

Okay. Our last question comes from Joseph Springer with Needham <unk> Company.

So on the question of flu and where we are, we have, been consulting with regulatory agencies globally, as you might imagine, around the path forward for our mRNA 1010 program. As there are issued guidance around accelerated approval that are still open, at the end of the day, we still believe that there's a potential path towards an accelerated approval, at least in some markets, with our mRNA 1010 program using a safety and immunogenicity endpoint, as has been previously discussed.

Hi, good morning, Thanks for taking my questions one on the rare disease.

Programs and just curious you have.

PAA and M&A and clinical development here, an initial readout in pn.

How much.

Is the PK readout would that be sort of.

De risking in terms of.

Bringing additional rare disease programs into the clinic has it been more of the.

Some of the hurdles and challenges.

Expanding that area of the pipeline has it been more of an indication specific basis or.

Have you been sort of waiting waiting for these initial proof of concept readouts.

Bring more programs into the fold or has it been more of a.

Influenced by sort of the <unk>.

On COVID-19 and potentially headwinds related to the Covid pandemic any additional color on that would be helpful. Thank you.

At the end of the day, that will be a review matter, and we'll have to generate that data and have conversations on the back of that data with regulators as a path forward.

Great. Thank you for the question.

Got it.

It is going to be a mix of all of the factors you listed so first let me talk about.

But even if we do move forward with accelerated approval, which is the study that we're starting, the Q2 phase three study that we're talking about starting this quarter, even if we do move, forward on the back of that, we will have an obligation even under accelerated approval to demonstrate efficacy at some point in a follow-on study to move from accelerated to full approval.

And what that readout means for us as a platform. So it is our most advanced rare disease platform with an mrna LNP targeted for those metabolic diseases.

<unk>.

In that sense MMA MPA, both will provide validation that that technology risks associated with that.

Our are addressed and that would cause us from a de risk perspective from a strategy perspective to expand the number of diseases. We go into quite quickly there that could use that same technology.

We have been waiting for that readout, we haven't sat on our hands, though I'll note that we have a third program GSD one eight with an open I'd that as we've said before is in a slightly different lipid nanoparticle system. So we've continued to look at whether other improvements could help and we will we'll continue to look at those but obviously, if we have a very strong signal.

We will be on gating other programs that can benefit from the technology that would then be de risked from the Ta program.

When it comes to just the challenges of conducting these studies I'll remind you that these are Peter Unfortunately very.

Children often in these studies.

And relatively rare diseases, and so yes, it has been difficult throughout the pandemic.

And so because we're certain of that need at some point, we're also planning to start a phase three efficacy study, which will then be conducted perhaps in the Northern Hemisphere winter this coming fall.

And we also announced data plans for that.

And what, that would do is, we would hope, we'd find a path forward for both the accelerated approval, but also rapidly being able to move that to full approval on the back of that efficacy result.

Now, for some reason, the accelerated approval is not available in some markets or all markets.

We would instead go directly to full approval with a very short latency given the timing of those two studies.

And experimental context too to bring people in and there have been several times during the last two years that we have actually taken an active decision with investigators and families not to be enrolling people, because obviously, bringing sick children into hospitals was exposing them to risks around Sars Covid. Two there are obviously also even more recently in the Omaha search lots of disrupt.

These institutions have faced as staff and others have become ill and therefore that we can conduct the studies, we hope that a lot of that is behind us now.

As we move to an endemic phase for Sars Cov two.

That will that we will really see a pickup in our ability to continue to execute their states. Although we're proud of the progress we made in the last year.

Well. Thank you very much for joining us today, and we will follow up to meeting a lot of you've got some in Boston when we do the R&D there two weeks from now I have a great day.

Great.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

[music].