Q2 2022 Moderna Inc Earnings Call

Okay.

Good morning.

Good morning, My name is Kevin and I'll be here.

My name is Kevin and I'll be your moderator.

Welcome to Moderna's second quarter 2022 earnings call.

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

Good luck during the second quarter 2022 earnings call at this time, all participants are in a listen only mode.

Following the formal remarks, we'd love to take questions.

We have not acquired any company at this stage.

Just I know that since you've announced that you have been looking at it preclinically and given the, you know, kind of public health emergency and broader vaccine needs, can you comment a bit, you know, your plans from here and any further plans for development?

Mark.

So I asked a question during the session need to press star one on your telephone.

To ask a question during the session, you need to press star 1-1 on your telephone. Please be advised that this call is being recorded.

We see this, to your point, as how do we expand the potential of a company to deliver on its, mission to make innovative medicine.

Thanks.

Please be advised that this call is being recorded at this time I'd like to turn the call over to.

Clark head of Investor Relations. Please proceed.

At this time, I'd like to turn the call over to Lavina Talukdar, Head of Investor Relations at Moderna.

And on the external front, I think there's really two filters that are important for, us is finding interesting assets and finding them at a price that we think we can create value for.

Thank you Kevin Good morning, everyone and thank you for joining us on today's call to discuss <unk> second quarter 2022 financial 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.

On today's call are Stefan Bombshell, our Chief Executive Officer, David Murray, Our Chief Financial Officer, Stephen Hoge, Our President Paul Burton, our Chief Medical Officer, and ARPA Gray, our Chief commercial officer.

Please proceed.

As we've said, and David confirmed today, our BD teams are extremely busy looking at, a lot of things.

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 three.

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.

So let me start with capital allocation, Stephan. As David illustrated on one of our slides, that we've been using for a few quarters now, our priority number one stays in investing in the business.

With that I will turn the call over to Stephane.

Thank you let me know.

Oh good afternoon, everyone.

Thank you, Kevin.

But as you know, it's a bit the same as investors looking for companies to invest in.

We are really excited about the platform that we have.

Welcome to our Q2 2022 conference call.

I'll just start with a quick business overview.

Paul walks you for some new real World evidence data on Starbucks and then Steven will review our clinical programs.

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

I will take you through commercial dynamics and David one quick on financials, and we'll then come back to growth. So just some thoughts.

That's where we're heading.

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.

In the quarter were continued strong financial performance, we reported revenue of $4 7 billion, though at all and if they come up to 2 billion.

We're pleased with the cheap who says.

The decrease in net income is driven by higher cost of sales in the quarter, mostly driven by I'll call back haul trucks, David we call. It that in the financials are strong increasing R&D investments to fund all future increasing the full phase III programs.

Our tax rate with Q2 2000 got you want.

For our share repurchase program, we reduced our share count by 9 million shares.

She pitstop of a share repurchase program in 2000 Lucky one through yesterday, we have repurchased 18 million shares.

We continue to work to find the best purchase agreement for expected degree in 2022 in the amount of approximately 21 billion.

Based on our commercial momentum and our balance sheet. Today, We also announced that our board of directors is approved then use share buyback program for an additional $3 billion.

On today's call are Stéphane Bancel, our Chief Executive Officer, David Moline, our Chief Financial Officer, Stephen Hogue, our President, Paul Burton, our Chief Medical Officer, and Arpa Garay, our Chief Commercial Officer.

You need to look at a lot of things before you decide to go for something.

As you know, in vaccine, given the vaccine modality has been de-risked, we are willing to invest pretty aggressively.

We won't be shy if we find great assets.

It's kind of remarkable that we already have, you know, four vaccines in phase three right now.

Let me now review of our business and pipeline update since our last review.

There's a lot of assets that are very early.

There's a lot of assets that don't really fit the company's strategy, but we'll keep, looking.

I think doing a large acquisition, for lack of large acquisition, is not our strategy.

What we want to do is to build the best nucleic acid company in the world.

As we've said, we'd be very happy to go outside the money as long as we stay into the nucleic, acid space.

I am pleased with the important progress and what our team has made on advancing the pipeline of Closeouts with product launches and <unk>.

We'd be happy to do acquisition if we find good assets.

We'd be happy to do partnerships.

An acquisition is not a goal in itself.

So that's a bit how we think about outside investment.

Increasing the breadth of the pipeline.

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.

Thank you.

And as we shared on the last call, you know, we have shown now three times the ability to go from starting a clinical study in vaccine to starting a phase three in around 12 months time frame, which I think really speak about the platform of CMC capabilities and of course, how we really build a very strong late stage development team.

So the thing that's going to be interesting, of course, is the human proof of concept that we talked about coming later this year in cancer and in rare disease, because, you know, if one of those two or both of those two were to work in terms of getting, you know, interesting clinical signal, you will most probably see us do what we did with vaccine, which is expand very quickly.

On the commercial side.

We recently signed a new agreement with the U S government for initial 66 million doses for <unk> hundred will stop active against somebody chrome yes.

One moment for questions.

Yes, good macros to include the option to purchase an additional 234 million both of these we can.

First as potentially $200 million.

The U S government.

Nice option for an additional $4 million since the contract was signed and announced.

So if I'm correct Lasalle is actually $17 million is contracted.

Photo quality play towards the U S government.

In addition, both Canada and the U K I think the size option program.

For additional deliveries in 2022.

On the regulatory fault I am very happy to expect that.

For pediatric and adolescent population in the U S.

Please go ahead with your thoughts we regulatory clinical teams at <unk> and the U S. FDA now allows the protection of our young guests and the U S population as they head back to school.

Please see slide 2 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.

Our next question comes from Elizabeth Webster with Goldman Sachs.

As you know, one of the beautiful things about messenger RNA and how we build a company, with a lot of robotics and a lot of digitalization is the ability to scale very quickly.

That was kind of an English probably yes, but it's a authorized the use of our vaccine plus <unk> six months to five years old.

Our research and clinical team continued the momentum pipeline we have.

So for phase III development with Covid background was still true.

Alright.

Ami trials ongoing.

Importantly, our phase one study we've been on it since 2010 for LTE.

With that, I will turn the call over to Stéphane.

Your line is open.

We always start in new applications like rare disease or cancer before we know if the technology, is working.

We kind of tend to start piano with only a few programs, but if, let's say, we have positive, results in PA, you know, will you see us developing many more programs than what we have now in rare disease very quickly?

The answer is yes.

And we say the same thing in oncology.

Vaccine targeting a bit traditional proactive agenda as.

As well as been novel anti Gen is now fully enrolled.

And a combination Cooper's COVID-19 vaccine is also fully enrolled its phase one tool. We look forward to these readout on safety and Immunogenicity.

Programs.

In property, we now have an open IV checkpoints backs here.

In oncology and we dosed our first patients.

Thank you, Lavina.

Hey, guys.

So investing in the business is priority number one, priority number two is really expanding, the platform through partnership, licensing, M&A, and then the excess cash that we will return to shareholders.

This is Elizabeth on for Salveen.

And I think the announcement of a failed buyback plan today with a new $3 billion authorization, by the board is a confirmation of the ability to return the capital if we cannot find good use in the company.

<unk> rare disease program.

Finally, we are very pleased to be on track and look forward to sharing data from our proof of concept studies this year for tool therapeutic programs.

Good morning or good afternoon, everyone.

Congrats on the quarter and thank you for taking our question.

Thank you.

Do you have any more questions about the monkey box?

The phase went to fall rather use program property and you can see Danielle appear in our phase II data that we have a personalized cancer vaccine in combination to get to draw. This is kitchen grab one of her opinion.

Yeah, yeah.

Slide six is our usual snapshot of them went down that path.

So look, I think conceptually, we're obviously very aware of the monkey box concern and obviously, very sensitive to recent announcements.

Showing the breadth of our pipeline and we've talked to six program developments across vaccine.

And so what we are looking to do is understand if we were to develop that program, how would, we move it?

The purpose of moving it would be to move very quickly.

So for <unk>.

The company has strong foundation, we will have 3400 <unk> and growing.

As Devon just covered, our platform is pretty well established and our ability to rapidly, scale has been demonstrated.

And if we were to go after a monkey box clinical development program, it would be to very quickly, progress towards an approvable set of endpoints in a clinical study.

Can you give us a conversion of a subsidiary and the strong balance sheets around $18 billion of cash to fuel growth.

Welcome to our Q2 2022 conference call.

And in that sense, we need to engage with regulators and other consultations to determine, what that path would be.

It's not a primary, a principal interest to us to just advance a program and demonstrate, in phase one clinical immunogenicity.

Henry talked about report.

Yeah.

Thank you Stefan and good day everyone.

As the COVID-19 pandemic continues and the Sars cov two virus keeps undergoing significant evolutionary change the subject top of mind for many people is boosting.

To get boosted to get boosted with.

And the next few slides I want to show you how the Medina mrna 12, 73 vaccine is performing clinically in the boost assessing and.

<unk> antibody levels are performing in the real world setting and individuals primed and boosted with mrna vaccines.

Here in this next slide you see the rates of COVID-19 infection.

Today, I will start with a quick business review before Paul walks you through some new real-world evidence data on SPICeVX, and then Stephen will review our clinical programs.

We would really be doing it to try and help generate a public health countermeasure.

And so those conversations, we will start and we'll engage with them.

Over 3 million individuals in the Spanish National Registry.

We obviously also recognize there are other even larger public health threats right now.

The first point these data make boosting is highly effective reducing the risk of infection.

The second point the office make.

Mrna 12 73 of them at the end of vaccine is more effective than BB&T, one six to be too.

The effect size increases over time.

COVID remains a larger public health threat and many regulators are globally focused on, addressing the updated booster work for this fall.

In the second example, I'm showing your data from the U S VA system.

And so we're respectful of that, but we will engage in those conversations.

Over 450000 individuals boost.

And once we have clarity on whether or not we will go forward, given what we think those, endpoints would be, we'll obviously provide it.

Boost fit with either mrna 270, <unk> shown here in green of BMT, one six to be two shown in red.

But at this point, it's premature to say more because we have not clarified those endpoints, and therefore have not made our own decision about whether we will move the preclinical program into clinical development at this stage.

Thanks for the call, Eric.

Again in terms of infection or hospitalization prevention.

The authors concluded that mrna 12, 73, it's more effective than the old tenant mrna vaccine.

Finally, keira data from over 3 million individuals in the NHS, England database.

Again, showing a clinically meaningful and statistically significant reduction in COVID-19 infection and hospitalization with mrna 12, 73, boosting compared to <unk> 106 to be too.

During the <unk> period of infection.

Arpa will take you through commercial dynamics, and David will present financials.

Well, thank you so much, everybody, for joining the call today and for your questions.

I want to turn now to data from an innovative decentralized pragmatic real World study.

I will then come back to close to share some thoughts about where we're heading.

I look forward to speaking to many of you in the coming days and look forward to welcoming, you at the R&D day early September.

We have recently conducted within the <unk> community a collaborative platform with <unk> of over 100000 participants here in the United States.

In the quarter, we continued strong financial performance. We reported revenue of $4.7 billion and net income of $2.2 billion.

We were pleased with Q2 sales. The decrease in net income is driven by higher cost of sales in the quarter, mostly driven by our COVAX contract.

David will cover that in the financials.

A strong increase in R&D investment to fund our future, including the four phase three programs, and a higher tax rate than Q2 2021.

For our share repurchase program, we reduced our share count by 9 million shares in Q2. Since the start of our first share repurchase program in 2021, through yesterday, we have repurchased around 18 million shares.

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

Based on our commercial momentum and our balance sheet, today we also announced that our Board of Directors has approved a new share buyback program for an additional $3 billion.

This study is called discoveries.

Enrolled approximately 850 of these people into a real world assessment of antibody levels following primary vaccination and boosting.

With either Mcdonough Modena Modena, that's the.

Oh, Thanks, Faiza, that's the PPP group.

Accordingly, the study population has an average age of 44.

At least 60% of the participants are female and ethnically very diverse.

Participants were enrolled into the study consented and received a home self administered micro needle blood collection kit from your buyer.

As you can see here across an array of Sars COVID-19 two variants of concern.

And more durable antibody levels shown here on a logarithmic y axis scale.

<unk> in those individuals' primed and boosted with the medallion vaccine in Red.

Relative to the size of vaccine in Blue.

Eight weeks 232 weeks following the first business day.

Many of the comparisons were highly statistically significantly different.

So it is true even for antibody levels against the Omicron one variant of concern.

We're in approximately 12 week duration advantage is seen in Mcdonough primed and boosted individuals.

Paired to those receiving the highest the vaccine.

Okay.

So taken together these data demonstrate the strong performance of the Mcdonough vaccine.

Real world clinical boosting setting.

It could be explained by higher enduring antibody levels.

Against a wide variety of variance of concern.

Let me now review the business and pipeline update since our last review. I am pleased with the important progress the Moderna team has made on advancing the pipeline closer to product launches and increasing the breadth of the pipeline.

I will now turn the call over to Dr. Stephen Hope to provide comments regarding the composition of the full COVID-19 booster vaccines as well as other pipeline updates Steve.

Thank you Paul good morning, or good afternoon, everyone.

On the commercial side, we recently signed a new agreement with the U.S. government for an initial 66 million doses for a bivalent booster vaccine against COVID-19.

Have a great day.

Dr. Simone Sh бизнес 담우짱 존 Ô, Hylian Basford, Angela Hammel, Ricky, Dr. Simone Sh business 담우짱 존 Ô, Hylian Basford, Angela Hammel, Ricky vaccine in over 3 million individuals in a Spanish national registry.

Thank you.

Ill quickly review some of the recent updates around our omicron containing COVID-19 booster for the upcoming fall season, and then review the rest of our pipeline before handing it to ARPA.

We are advancing two bivalent candidates for the fall winter season of 2022 to meet different market demands mrna.

The first point these data make is that boosting is highly effective, reducing the risk of infection.

Mrna $12 73 to one four is our omicron VA, one containing bivalent vaccine.

The second point the authors make is that mRNA-1273, the Moderna vaccine, is more effective, than BNT162b2, and that the effect size increases over time.

Clinical data previously presented from our phase two three study showed that two one for significantly increased neutralizing titers against B, a four 5% compared to the currently authorized booster.

In the second example, I'm showing you data from the US VA system in over 450,000 individuals, boosted with either mRNA-1273, shown here in green, or BNT162b2, shown in red.

Again, in terms of infection or hospitalization prevention, the authors conclude that mRNA-1273, is more effective than the alternate mRNA vaccine.

Finally, here are data from over 3 million individuals in the NHS England database, again, showing a clinically meaningful and statistically significant reduction in COVID-19 infection and hospitalization with mRNA-1273 boosting compared to BNT162b2 during the Omicron period of infection.

Following regulatory discussions we have submitted application for authorization for 214 in the EU, Australia, UK, Canada, and Switzerland. We have also started our rolling submission in Japan.

Could you walk us through the path to authorization for 1273.222 and just clarify exactly what, the path is here and then when could we see data from the trials you mentioned that are starting this month?

Hey, Marty $12 73 to two two is our bivalent vaccine candidate that combines and omicron containing vaccine based on the VA for PAA sub area and our original way more than a $12 73.

The FDA has asked us to submit for authorization for <unk> based on the demonstrated strength of our <unk> platform against variance of concern.

<unk> data from our phase III studies with 204, <unk> hundred one bivalent boosters.

FDA has also advise manufacturers to initiate clinical trials with <unk> as these data will serve useful as the pandemic continues to evolve.

We expect to start these trials.

I want to turn now to data from an innovative, decentralized, pragmatic real-world study, we have recently conducted within the Moderna community, a collaborative platform with evidation of over 100,000 participants here in the United States. The study is called Discoveries, and it enrolled approximately 850 of these people into a real-world, assessment of antibody levels following primary vaccination and boosting with either Moderna, Moderna, Moderna, that's the MMM group, or Pfizer, Pfizer, Pfizer, that's the PPP group.

And then our second question is, if you had to think of levers for potential upside to, the $21 billion in APAs, where might those come from and could additional new orders come online?

Now to review, our respiratory vaccine pipeline on slide 16.

Thank you.

I just went over omicron containing COVID-19 boosters.

Great.

We were happy to announce that our flu vaccine mrna 10, 10 launched an immunogenicity study in the southern Hemisphere in June .

Thank you for the question.

And we are also preparing to launch an efficacy study for mrna 10, 10, this upcoming fall, which will either serve as a post approval efficacy study or if we are not eligible for accelerated approval will support our application.

I'll take the first one and then I assume that's our book for the second.

So first on the 222, this is a bivalent vaccine that is based on the BA4, BA5 variant.

Our next generation flu vaccines, which have eight mrna is across HCA and antigens and warranty $10 20, and 10 30.

We completed enrollment in their phase <unk> study.

Our RSV programs ongoing, including a phase III in older adults and a phase one in pediatrics.

Importantly, the study population has an average age of 44.

Importantly, we also started and completed enrollment for the phase <unk> study of our Covid plus flu vaccine. This quarter, we look forward to sharing that data when we have it.

Approximately 60% of the participants are female, and it's ethnically very diverse. Participants were enrolled into the study, consented, and received a home self-administered, microneedle blood collection kit from your buyer.

As you can see here, across an array of SARS-CoV-2 variants of concern, higher and more durable, antibody levels, shown here on a logarithmic y-axis scale, were observed in those individuals primed and boosted with the Moderna vaccine in red relative to the Pfizer vaccine in blue from eight weeks through 32 weeks following their first booster. Many of the comparisons were highly statistically significantly different.

This is true even for antibody levels against the Omicron BA1 variant of concern, where an approximately 12-week duration advantage is seen in Moderna-primed and boosted individuals compared to those receiving the Pfizer vaccine. So taken together, these data demonstrate the strong performance of the Moderna vaccine, in a real-world clinical boosting setting, which could be explained by higher enduring antibody levels against a wide variety of variants of concern.

I will now turn the call over to Dr. Stephen Hogue to provide comments regarding the composition, of the four COVID-19 booster vaccines, as well as other pipeline updates.

Our combination Covid flu RSV vaccine also expects to enter the clinic this year.

Our endemic human Coronavirus vaccine is in preclinical along with our pediatric RSV plus H MPV combination vaccine.

And the pediatric H MPV plus PIV three vaccine phase <unk> is now fully enrolled.

Stephen.

Moving onto our leading to public health vaccine portfolio. Our CMV vaccine is ongoing in our phase III, our EBV vaccine to prevent infectious mononucleosis is in a phase one study and our EBV vaccine to prevent long term sequela from the virus is in preclinical.

We have two HIV phase one trials and our phase III Zika vaccine trials that are ongoing.

Thank you, Paul.

Our phase our HSV and bvd vaccines are in preclinical and finally, we dosed the first participants in our phase one study of our Napa vaccine, which is being conducted in partnership with the NIH.

And to close on our therapeutics pipeline on slide 18 Stephane.

Stefan already mentioned that we expect data from our proof of concept studies in our PCV NPA programs later this year.

A few other important updates to highlight on this slide first we were happy to dose our first patient in our in our <unk> trial and open an IND for our checkpoint cancer vaccine.

Second Astrazeneca notified us that after a portfolio review they are returning the VEGF program and we are currently evaluating next steps for that asset.

Finally based on our review of early clinical data from our IL two program for autoimmune disease and the evolving competitive landscape, we have decided to discontinue further development of our program and we were moving from our pipeline.

With that I'll hand, it over to ARPA.

Thank you Steven good morning, and good afternoon to everyone.

Good morning or good afternoon, everyone.

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

I will quickly review some of the recent updates around our Omicron-containing COVID booster, for the upcoming fall season, and then review the rest of our pipeline before handing it to ARPA.

You may now disconnect and have a wonderful day.

The conference will begin shortly.

Remember Mcdonald's Executive Committee I'm excited to see the impact that we've had in COVID-19 as well as the commercial opportunities ahead for us on Covid as well as future of vaccines and therapeutics a lot around leveraging our mrna technology.

We are advancing two bivalent candidates for the fall-winter season of 2022, to meet different market demands, mRNA-1273.214 is our Omicron BA1-containing bivalent vaccine. Clinical data previously presented from our Phase 2-3 study showed that 214, significantly increased neutralizing titers against BA4, BA5, compared to the currently authorized booster. Following regulatory discussions, we've submitted application for authorization for 214, in the EU, Australia, UK, Canada, and Switzerland.

We have also started a ruling submission in Japan, mRNA-1273.222 is our bivalent vaccine candidate that combines an Omicron-containing vaccine based on the BA4, BA5 sub-variant and our original mRNA-1273.

Turning now to slide 24, you will see the regional sales mix and second quarter and in the first half of 2020 tail.

In the quarter North American sales were $1 6 billion dollar. These sales were driven by 12 73, so Mr deliveries to the United States as we continue to fulfill our first U S government order with the vast majority now delivered through the end of second quarter. This year.

In the quarter. We also delivered primary series for the pediatric group buy American younger as the authorization for this group came through in this quarter.

Sales to EMEA at one 5 billion in sales to Asia Pacific, where $1 1 billion.

As you can see across the first two quarters of the year North American sales were $2 7 billion.

Sales to EMEA, our $3 9 billion as sales to Asia Pacific region retrofit.

Of note for both the three and six months periods, we saw geographic diversification of sales across these key retailer.

This diversification is a reflection of how quickly we built out an exact and executed within our global commercial organization.

Now turning to slide 21, we're also happy to see that as we continue to scale globally around the world that spike faxes market share in the booster market defined as a third or fourth.

<unk> continues to show substantial market share.

The FDA has asked us to submit for authorization for 222 based on the demonstrated strength of, our bivalent platform against variants of concern, including data from our Phase 2-3 studies with 214 and 211 bivalent boosters.

As Stefan has already mentioned.

We see on slide 22, our new U S government contracts for the fall of 2020 and tail.

Specifically the agreement initially with 366 million doses over a five day, unlike COVID-19 booster to be delivered in 2022.

Earlier this week the U S government informed us that they exercised an option for 4 million doses for pediatrics each group.

This brings the total contract value to approximately $1 8 billion.

Our U S government order included the options to purchase an additional $230 million, bringing the total to 300 million doses. If all options are exercised.

FDA has also advised manufacturers to initiate clinical trials with 222, as these data will, serve useful as the pandemic continues to evolve.

This is most, I think the question is directed mostly to the FDA guidance and the focus particularly, in the United States on authorization of that vaccine.

As you heard from Steven earlier after FDA guidance. The U S fall booster products will be the mrna 12, 73, <unk> dot tissue, which consists of $12 73, and the omicron being four five sub farhan.

We expect to start these trials in August.

We continue to work hard to pull together both preclinical and manufacturing data and, all of our underlying bivalent platform data, which includes two different phase 2-3 studies that I referenced, mRNA-1273.211 and mRNA-1273.214, both of which demonstrated superiority of the bivalent platform and the performance against Omicron variant concern.

So the totality of that data, those two phase 2-3 studies plus preclinical data and manufacturing, data will form the submission, which is consistent with the published FDA guidance.

Now to review our respiratory vaccine pipeline on slide 16.

I want to now spend some time on the evolution of the pandemic and the resulting impact on the commercial outlook.

I just went over our Omicron-containing COVID boosters.

FDA has also asked us, as you referenced, to run an additional study really to support, future deployment because we do want to understand the performance of the 222 vaccine if there's further variant evolution, for instance, in December or January as has unfortunately happened every year in this pandemic.

We were happy to announce that our flu vaccine, mRNA-1010, launched an immunogenicity study in, the Southern Hemisphere in June, and we are also preparing to launch an efficacy study for mRNA-1010 this upcoming fall, which will either serve as a post-approval efficacy study, or if we are not eligible for accelerator approval, will support our application.

Early in the pandemic, we anticipated several factors, including the viruses evolution population immunity at any given time and seasonal trends would result in a shift to the endemic studying and we've shared this illustrative graph before.

Our next-generation flu vaccines, which have eight mRNAs across HA and NA antigens, mRNA-1020 and 1030, also completed enrollment in their Phase 1-2 study.

And we want to have samples that allows us to inform that those sorts of decisions about, deployment of the vaccine.

Our RSV program is ongoing, including a Phase 3 in older adults and a Phase 1 in pediatrics.

We expect to enroll that study really in August, but the data wouldn't be available for a few, months because you would follow until approximately a month to get the boosted samples, collect them and then test them in the relevant assays.

We do not at this point expect nor has the FDA suggested that that data would be required, prior to authorization.

In fact, we will be authorizing based on the prior clinical data for 2-1-1, 2-1-4, the, preclinical data, manufacturing data.

But we will have that, those samples in hand.

Now, as to the specific timing of when we would be able to share 222 data, other than, later in the fall, I don't think we have any other specific guidance today, except to emphasize again, that it's really not required for the authorization based on recent FDA guidance.

These same factors have and will continue to emphasize the commercial outlook with.

It really is to support future deployment decisions that are in the later part of the, winter.

And then I can take the second question on the $21 billion guidance.

From an advanced purchase agreement perspective, we do believe the majority of the market demand, is captured in the $21 billion.

With the emergence and then dominance of multiple variance at different time points, we have been able to develop booster to address this variance which includes our bivalent booster as the Galaxy <unk>.

That being said, we continue to work with countries around the world on potential additional, orders for our bivalent vaccines.

We are currently advancing two five valent booster candidates for the fall of 2022 based on different market needs.

As many countries are continuing to assess their public health needs, as well as their, booster population recommendations and considering potential expansions to those populations.

So we're feeling pretty good about the $21 billion, but we do continue to work with countries, to see if and when there is additional demand for either the 2-1-4 or the 2-2-2 bivalent vaccines.

The two bivalent booster candidates, we're advancing R&D mrna 12, $73 two one for an mrna 12 73 Dot 222.

Huffing.

Both contain 25 micrograms of the currently authorized generic $1 73, and 25 micrograms of it on the cross up variant either be a one RBA four five.

Understood.

Deliveries for these boosters will start in September this year and will be more heavily weighted to the fourth quarter as we ramp manufacturing and obtained regulatory authorizations around the world.

And to close to as we look to 2023, we are prepared for a shift to the commercial market in the U S for housing for the service.

Where the market will be more fragmented than it was during the pandemic, where the U S government with the salt purchase or a vaccine.

The commercial organization has already engaged with commercial payers and the channel both channel distributors as well as key pharmacies and anticipation of this shift.

Internationally, we expect public health authorities to remain key purchasers of vaccines, but we're also identifying markets, where there may be a private commercial market as well.

All in all we are well set for the transition as we have invested in building our commercial infrastructure both in the U S and globally.

With that I will turn it over to David.

Importantly, we also started and completed enrollment for the Phase 1-2 study of our, COVID plus flu vaccine this quarter.

Thanks so much.

Okay. Thank you our Po today, we're providing the analysis of actual 2022 second quarter results along with a view of key drivers of financial performance going forward.

Overall, we continue to progress well and I'm very pleased with our operational and commercial performance.

We look forward to sharing that data when we have it.

One moment for our next question.

Turning now to slide 25, starting with an overview of our financial performance in the second quarter.

Our combination COVID flu RSV vaccine also expects to enter the clinic this year.

Our next question, comes from Michael Yee with Jefferies.

Our endemic human coronavirus vaccine is in preclinical along with our pediatric RSV plus, HMPV combination vaccine and the pediatric HMPV plus PIV3 vaccine phase 1b is now fully enrolled.

Moving on to our latent and public health vaccine portfolio, our CMV vaccine is ongoing, in a phase 3, our EBV vaccine to prevent infectious mononucleosis is in a phase 1 study and our EBV vaccine to prevent long-term sequela from the virus is in preclinical.

We have two HIV phase 1 trials and a phase 2 Zika vaccine trial that are all ongoing.

Total product sales for the second quarter of 2022, a $4 5 billion increased by $334 million or 8% compared to the prior period.

Our phase, our HSV and VZV vaccines are in preclinical and finally we dose the first, participants in our phase 1 study of our Nipah vaccine which is being conducted in partnership with the NIH.

And to close on our therapeutics pipeline on slide 18, Stefan already mentioned that, we expect data from our proof of concept studies in our PCV and PA programs later this year.

A few other important updates to highlight on this slide, first we were happy to dose, our first patient in our in our GSD1A trial and open an IND for our checkpoint cancer vaccine.

Second, AstraZeneca notified us that after a portfolio review they are returning the, VEGF program and we are currently evaluating the next steps for that asset.

Finally, based on a review of early clinical data from our IL-2 program for autoimmune, disease and the evolving competitive landscape, we've decided to discontinue further development of our program and we'll remove it from our pipeline.

The total product sales growth in 2022 was primarily driven by higher average sale price of our COVID-19 vaccine due to changing customer mix.

With that, I'll hand it over to Arpa.

Thank you, Stefan.

Your line is open.

Good morning and good afternoon to everyone.

Hey, good morning.

Total revenue was $4 7 billion for the second quarter of 2022, an increase of $395 million compared to Q2 of last year driven by the increase of sales of our COVID-19 vaccine.

As the newest member of Moderna's Executive Committee, I'm excited to see the impact that, we've had in COVID as well as the commercial opportunities ahead for us in COVID as well as future vaccines and therapeutics in the long run leveraging our mRNA technology.

Thanks for the questions and thanks for the updates.

A quick question in relates to the comments around getting the BA45222 authorized.

Turning now to slide 20, where you will see the regional sales mix in second quarter and, in the first half of 2022.

Stephen, you had mentioned the pathway there, but I actually wanted to think a little bit forward.

Cost of sales was $1 4 billion or 30% of product sales in the second quarter of 2022.

In the quarter, North American sales were $1.6 billion. These sales were driven by 1273 booster deliveries to the United States as we continue to fulfill, our first U.S. government order with the vast majority now delivered through the end of second quarter this year.

Do you envision that future variants and development vaccines would be able to be authorized quickly via just preclinical data, such as like flu?

In the quarter, we also delivered primary series doses for the pediatric group five, years and younger as the authorization for this group came through in this quarter.

Do you think that that's where the path is going and that the FDA seems to be going along, that route?

3rd% to 18% of product sales for the same period in 2021.

Sales to EMEA were $1.5 billion and sales to Asia Pacific were $1.1 billion.

As you can see across the first two quarters of the year, North American sales were $2.7, billion, sales to EMEA were $3.9 billion, and sales to Asia Pacific region were $3 billion.

This includes a charge of $499 million for inventory write downs related to excess and obsolete COVID-19 products.

Of note for both the three and six month periods, we saw a geographic diversification of sales across these key regions. This diversification is a reflection of how quickly we built out and executed within our, global commercial organizations.

That's the first question.

A loss on firm purchase commitments of 184 million and an expense for unutilized external manufacturing capacity of $131 million.

These charges are driven by a substantial reduction of our expected deliveries to callbacks as indicated as a potential variable impacting our advance purchase agreements in our last call.

And to a lesser extent.

The deferral of deliveries to other customers, particularly to the European Union in light of the expected upcoming launch over updated bivalent vaccine.

Research and development expenses were $710 million for the second quarter of 2022, and increased by $299 million or 69% compared to the year ago period.

The increase in R&D spend continues to be driven by clinical trial expenses, particularly with our COVID-19, and RSP programs.

Well as personnel related costs for our expanding and maturing.

Development portfolio.

Selling general and administrative expenses for $211 million for the second quarter of 2022 increased by $90 million or 74% compared to the year ago period.

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 buildup.

The effective tax rate for the second quarter 2022 was 11%.

3rd% to 9% for the same period in 2021.

And then second question, just ironically, you had made comments around monkeypox vaccine, and now WHO has made comments around global health emergency.

Let me remind you of the fact that we had 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.

After tax net income in Q2, 2022 decreased by $593 million or 21% to $2 2 billion.

Compared to the same period in 2021 the.

The decrease was primarily due to higher cost of sales and other operating expenses in the current period.

Diluted EPS in Q2, 2020 to decrease by $1 22, or 19% to $5.24 a share.

Which is compared to the same period in 2021.

Now turning to slide 21, we're also happy to see that as we continue to scale globally, around the world, that spike vaccine market share in the booster markets, defined as a third or fourth booster dose, continues to show substantial market share.

So I didn't see any update there and wondering if that actually had made any progress.

Turning now to year to date financial results compared to the prior year on slide 26.

As Stephane has already mentioned, we see on slide 22, our new U.S. government contract, for the fall of 2022. Specifically, the agreement initially was for 66 million doses of our bivalent COVID, booster to be delivered in 2022. Earlier this week, the U.S. government informed us that they exercised an option for 4 million, doses for the pediatric age group. This brings the total contract value to approximately 1.8 billion. Our U.S. government order includes the options to purchase an additional 230 million doses, bringing the total to 300 million doses if all options are exercised.

Thank you.

Total product sales for the first six months of 2022 were $10 5 billion increased by $4 5 billion or 76% compared to the prior year period.

The total sales growth in 2022 was mainly attributable to our manufacturing capacity ramp up and to a smaller extent to a favorable customer mix, resulting in increased average selling price.

Sure.

Total revenue was $10 8 billion for the first six months of 2022 compared to $6 3 billion in the same period in 2021.

Thank you for the question, Michael.

I'll try and take both.

The increase in total revenue was primarily driven by the increase of sales of our COVID-19 vaccine outside of the U S.

So first on the approach, I think you're right.

We do believe that the flu model for authorization, of strain supplements, strain updates every year, will make sense in the future for COVID vaccines and boosters.

Cost of sales was $2 4 billion or 23% of product sales for the first six months of 2022.

And in that sense, the authorization of 222, if that does happen with the FDA and other markets follow, really becomes the first instance of that.

We are still going to have to file for a supplemental BLA, instantiating that, pulling together that framework.

This compares to 16% of product sales in the prior year period on a reported basis or 19% adjusted for prelaunch inventory cost, which were expensed in 2020.

But we are actively working with regulators, not just in the US, but globally, to try and establish that pathway.

Because at the end of the day, in order for us to take full advantage of the platform and respond every year, it makes sense that we don't conduct clinical studies before authorization in the future.

We also think that the flu model and the performance of the platform globally, now in billions of people, really does start to demonstrate the potential for us to mature to more of an endemic approach that doesn't require a clinical study every time.

So that is our expectation and hope.

The increase in cost of sales as a percent of product sales was mainly due to higher write downs for excess and obsolete inventory expense and expenses related to future purchase commitments on unutilized external manufacturing capacity.

And to a lesser extent the lack of prelaunch inventory benefit was realized in the first quarter of 2021.

Research and development expenses were $1 3 billion for the first six months of 2022, an increase of 442 million or 54% compared to the prior year.

The increase in R&D spend continues to be driven by clinical trial expenses personnel related costs and outside services for expanding and maturing development portfolio, including the development of a COVID-19.

Lynn boosters.

Selling general and administrative expenses of $479 million for the first six months of 2022.

Increased by $281 million or 142% compared to the year ago period.

The growth in spending was driven by the commercialization of our COVID-19 vaccine globally in support of the accelerated company buildout, including substantial investments in digital.

Additionally, in Q1 2022.

There was an initial up from endowment of $50 million for the newly established where there are no foundation.

The effective tax rate for the first six months was 13% compared to 7% for the same period in 2021.

The increase was primarily due to the benefit recorded in 2021.

Related to the release of the valuation allowance on the majority of our deferred tax assets.

After tax net income increased by $1 9 billion or 46% to $5 9 billion for the first six months of 2022 compared to the same period in 2021.

The increase in net income was driven by the growth of our product sales.

Diluted EPS for the first six months of 2022 increased by $4 55 or 49%.

$213 95 compared to the same period in 2021.

We'll obviously engage with regulators over the fall and winter as we complete those filings and try and prepare for a 2023 that might look just like that.

Turning now to cash and cash deposits on slide 27.

Because again, I think that 222 experience this fall really might just be that first instance of what becomes the new normal.

Now, on monkeypox, we did initiate a research program.

We are tracking that very closely.

We ended Q2, 2022 with cash and investments of $18 $1 billion compared to $19 3 billion at the end of Q1 of this year.

And obviously, given the recent public health announcements and increasing concern about, availability of vaccine supply, we have been beginning to look at what it would take for us to use our platform to provide a monkeypox vaccine, both to intervene in the current epidemic, but also to try and address long-term issues of supply in this public health threat.

The decrease reflects the share repurchase activities in Q2 of $1 3 billion.

The ending balance of cash deposits for future product supply was $4 1 billion compared to $5 3 billion.

At the end of the previous quarter.

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

We do not have any updates on those discussions.

Now turning to slide 28.

Our capital allocation priorities remain unchanged.

We will firm them up.

Those will include, if appropriate, some regulatory consultations.

Top investment priority has been and will continue to be.

And once we have clarity on whether we are moving to clinical development and what that path would be, we'll, of course, provide an update on it.

Reinvesting in the base business across multiple areas.

But at this stage, it remains a preclinical program, but one that we're tracking very closely given the recent developments.

Got it.

Previously stated R&D spending was $1 3 billion in the first half 2022, a 54% increase on a year over year basis, we remain on track with our full year R&D forecast of two $5 billion to $3 billion.

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

We are considering attractive opportunities that enable and complement our platform and take a disciplined approach and no valuation potential outside of the investments. We are in multiple active discussions regarding additional external collaboration opportunities.

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

In the second quarter of 2022, we repurchased 9 million shares for $1 $3 billion.

Since inception of our repurchase activities last year up until August 2nd.

We have purchased 18 million shares or approximately 4% of our outstanding diluted shares.

$3 billion in total.

As a reminder, we announced a share repurchase program for $3 billion in February of this year and currently have approximately $1 billion of remaining capacity from that authorization.

As part of today's press release, we announced that the board has authorized an additional share buyback program of $3 billion with no expiry.

Thank you guys.

Now, let's turn to our 2022 updated financial framework on page 29.

One moment for our next question.

We continue to have signed advanced purchase agreements for expected delivery in 2022, and the amount of approximately $21 billion. This includes expected sales from the recently announced new agreement with the U S government.

Our next question comes from Gena Wang with Barclays.

Adjustments for doses that remain unallocated by kovacs due to lack of demand we.

We indicated this was a possibility on our last call.

Furthermore, this total includes expected negative foreign exchange impacts compared to the contract value at signing which we estimate to be approximately one 5% of sales for the full year 2022, assuming current rates remain through year end.

We anticipate.

For sales in the second half of 2022 sales will be greater in the fourth quarter than the third quarter driven by the timing of anticipated the approval of our updated COVID-19 vaccines and the related manufacturing ramp up of the new products.

Our total cost of sales includes the cost of goods manufactured third party royalties as well as logistics and warehousing costs.

We now expect our full year 2022 reported cost of sales to be in the mid 20% range driven by the previously mentioned costs related to a reduction of doses to kovacs and deferral of doses to other customers cost of sales could increase to the high 20 percentage range.

In the event of further charges due to product updates.

For R&D and SG&A, we continue to expect full year expenses to be approximately $4 billion drill.

Driven by our maturing development portfolio and the global scale of the company.

Based on current tax laws, we now expect our 2022 effective tax rate to be in the low to mid teen range. As a result of the benefits from the foreign derived intangible income driven by our international business mix as well as stock based compensation deductions.

Finally regarding capital expenditures, we continue to plan for capital expenditures in the range of $6 billion to $8 billion as we further build out our manufacturing in general company infrastructure globally.

This concludes my remarks concerning the financial performance and I'll turn the call back over to Stephane.

As you heard from Stephen earlier, as per FDA guidance, the U.S. fall booster product, will be the mRNA-1273.222, which consists of 1273 and the Omicron VA45 sub-variant.

Thank you David Alpha Steven on for those updates.

I want to now spend some time on the evolution of the pandemic and the resulting impact on, the commercial outlook.

Your line is open.

In 2022, we set out to execute on five key priorities for two.

Early in the pandemic, we anticipated several factors, including the virus's evolution, population immunity at any given time, and seasonal trends would result in a shift to the endemic setting, and we've shared this illustrative graph before. These same factors have and will continue to influence the commercial outlook.

Hi, this is Sheldon for Gena.

We execute on delivering vaccine against $21 billion advance purchase agreement.

We have half a year behind us.

Thanks for taking our question and congrats on the good quarter.

And this time periods for the 2022.

And a strong manufacturing team we are on target.

We have two questions.

We have continued the momentum in our late stage clinical.

Clinical trials, we will phase II trial is now going through IV on CMV and I. Thank our team for delivering on such aggressive timelines.

One is on the current APA for 2022.

We are on track to show data from proof of concept studies from two therapeutic application of technology with data from a peer had PCV trial, and so you're going to have.

We are continuing to make progress with new development candidates in a vacuum I put up with.

Some have already been announced and what will come in the second half of a year.

And finally.

We've always have announcements of inhaled LNP, we've helped bump now of FX, we've expanded our monarch platform to target primary disease.

As we grow we are committed to doing the right things in the right way for patients.

Stakeholders.

As a company led by our founding team, we're thinking 510 20 year increments.

This year, we published our very first ESG report, which highlights a key pillar of our corporate responsibility framework.

Medicine for patients.

Employees.

<unk>.

Our community and of course governments.

I am proud of what we are doing in each one of these P&L and so probably the ambitious goals we set for ourselves.

The first steps to achieving those ambitious goal is to serve them.

Great.

Post driven culture and go into this framework to meet those goals.

As an example, and I'll go to have a net zero carbon emissions by 20 <unk> among the global leaders.

Long term sustainable growth for our planet and our organization.

We will share more detail on the ESG drawn the ASO ESG day on November Tammy.

We look forward to seeing you at the annual R&D day in September .

With the emergence and then dominance of multiple variants at different time points, we have, been able to develop boosters to address these variants, which includes our bivalent boosters against the Omicron variants.

Could you comment on how many doses, for the COVAX contracts are still unallocated and how they were accounted for in the current 21 billion guidance?

Modern mission to deliver on the promise of an honest science to create a new generation of transformative medicines for patients.

We are currently advancing two bivalent booster candidates for the fall of 2022 based on different, market needs. The two bivalent booster candidates we're advancing are the mRNA-1273.214 and mRNA-1273.222. Both contain 25 micrograms of the currently authorized booster, 1273, and 25 micrograms, of an Omicron sub-variant, either VA1 or VA45. Deliveries for these boosters will start in September this year and will be more heavily, weighted to the fourth quarter as we ramp manufacturing and obtain regulatory authorizations around the world.

And could you also remind us on the current APA for 2023 and how should we think about the demand next year?

And to close, as we look to 2023, we are prepared for a shift to the commercial market in the, U.S. for COVID boosters, where the market will be more fragmented than it was during the pandemic, where the U.S. government was the sole purchaser of vaccines. The commercial organization has already engaged with commercial payers and the channel, both, channel distributors as well as key pharmacies, in anticipation of this shift.

Has always been our north star.

Despite the challenges facing the financial market with consumer inflation.

Internationally, we expect public health authorities to remain key purchasers of vaccines, but we are also identifying markets where there may be a private commercial market as well.

And a quick follow-up, another question on mRNA 1010 flu vaccine, the phase three immunogenicity trial.

And to an increase in interest rates and a cost of capital in a very fortunate position.

How do you think about the expected data timeline?

Do you need to enroll also in the Northern Hemisphere?

We have a unique among the platform, enabling the generation.

<unk> innovative medicine.

All in all, we are well-prepared for the transition as we have invested in building, our commercial infrastructure, both in the US and globally.

Yeah, thanks.

We have a strong team of 3400 mission driven employees.

We have 18 billion of cash on our balance sheet and we have a strong commercial momentum.

Maybe I'll take the last question first, or do you want to take it?

We have no intention of slowing down loan growth, we're putting our head down and doing the work.

With that, I will turn it over to David.

I hope you're as excited about the Joe Mondello now is not the time to slowdown patients are waiting for innovative medicine.

Thank you for listening and now we'd be happy to take questions operator.

Okay.

Sure, we'll take it in order.

Ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your Touchtone telephone.

Really compile the Q&A roster.

Okay.

Our first question comes from Matthew.

Australia Your line is open.

Thank you, Arpa.

So, just to reiterate, the 21 billion in advanced purchase, agreements does not include any additional COVAX doses to be allocated.

So, that already reflects demand that we're seeing from the COVAX countries.

Great. Good morning, Thanks for taking the question.

I was hoping you could just maybe address.

A little bit more specificity, how youre thinking about.

Opportunities for either acquisitions or collaborations I think it's a topic that comes up a lot.

Investors and I think there is a different scope that a lot of people think about including the things that are quite large versus things, which might be more complementary on a technology side to the platform. So if you could just address how youre thinking about that in your priorities that would be great. Thank you.

Sure. Thanks for the question Matthew.

Today, we're providing the analysis of actual 2022 second quarter results, along with a view of key drivers of financial performance going forward.

And we anticipate that for the remainder of the year, we'll see very few additional orders and or demands from these countries.

Overall, we continue to progress well, and I'm very pleased with our operational and commercial performance.

In terms of 2023 orders, we have already signed deals with five countries that we've previously announced, the United Kingdom, Canada, Australia, Kuwait, and Taiwan.

We've also signed options with Canada, Switzerland, Taiwan as well.

Turning now to slide 25, starting with an overview of our financial performance in the second, quarter.

And we are actively having dialogue with countries around the world, for additional orders in 2023.

As you know we're about at that now for over a year.

Total product sales for the second quarter of 2022 of $4.5 billion increased by $334 million, or 8% compared to the prior period.

We will be able to provide additional guidance on what these advanced purchase orders look like later this year or early next year.

The total product sales growth in 2022 was, primarily driven by a higher average sale price of our COVID-19 vaccine due to changing customer mix. Total revenue was $4.7 billion for the second quarter of 2022, an increase of $395 million compared to Q2 of last year, driven by the increase of sales of our COVID-19 vaccine.

Cost of sales was $1.4 billion, or 30% of product sales in the second quarter of 2022, compared to 18% of product sales for the same period in 2021. This includes a charge of $499 million for inventory write downs related to excess and obsolete COVID-19 products, a loss on firm purchase commitments of $184 million, and an expense for unutilized external manufacturing capacity of $131 million.

These charges are driven by a substantial reduction of our expected deliveries to COVAX, as indicated as a potential variable impacting our advanced purchase agreements in our last call, and to a lesser extent by deferral of deliveries to other customers, particularly to the European Union, in light of the expected upcoming launch of our updated bivalent vaccines.

Our capital allocation strategy that is growing cash flow positive situation, probably the number one invest in the business too exciting investment to build the company and free share buyback.

Great.

And then on the question of the flu phase three study that's ongoing, so that is a Southern Hemisphere Immunogenicity and Safety Study.

As we said, that study is ongoing.

As you have seen for what we have done over the last quarter sales were.

We haven't characterized, where we are.

We do not expect at this point that we would need to rotate that study into the Northern Hemisphere.

So, we'll be concluding that Safety and Immunogenicity Study and rolling in the Southern Hemisphere.

We do expect to run a phase three efficacy study in the Northern Hemisphere in the later part of this year.

I think.

And so, we will be studying Northern Hemisphere, comparators this year, but not the current ongoing phase three that is the Safety and, Immunogenicity Study that we believe could support accelerator approval.

Your line with this strategy in some of our investment in internal R&D.

So, quick follow-up on the Southern Hemisphere immunogenicity data. So, likely the data will be available later in 2022?

So, we haven't specifically guided on when the data will be available, but generally, as you know, those Safety and Immunogenicity Studies, after they're enrolled, follow non-inferiority or superiority endpoints at day 29, so one month after boosting. And so, the data will follow shortly once we've completed enrollment.

But ultimately, we will also want to follow up with safety data and consult with regulators about their expectations of what sort of follow-up and data they would like to see.

Research and development expenses were $710 million for the second quarter of 2022, an increase by $289 million, or 69%, compared to the year-ago period. The increase in R&D spend continues to be driven by clinical trial expenses, particularly with our COVID-19 and RSV programs, as well as personnel-related costs for our expanding and maturing development portfolio.

And so, until we've had all of those consultations, we won't specifically guide on time.

Selling general and administrative expenses were $211 million for the second quarter of 2022, an increase by $90 million, or 74%, compared to the year-ago period. 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.

Good.

The effective tax rate for the second quarter of 2022 was 11%, compared to 9% for the same, period in 2021. 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. After-tax net income in Q2 2022 decreased by $583 million or 21% to $2.2 billion, compared, to the same period in 2021. The decrease was primarily due to higher cost of sales and other operating expenses, in the current period.

8% increase in R&D investments.

The looted EPS in Q2 2022 decreased by $1.22 or 19% to $5.24 a share, which is compared, to the same period in 2021.

Moving now to year-to-date financial results compared to the prior year on slide 26.

Total product sales for the first six months of 2022 were $10.5 billion, increased by $4.5, billion or 76% compared to the prior year period.

Q2, this year versus Q2 last year as you've seen in <unk> and also have the luxury of share buyback plan too they're also.

The total sales growth in 2022 was mainly attributable to our manufacturing capacity, ramp up and to a smaller extent to a favorable customer mix, resulting in increased average selling price.

Total revenue was $10.8 billion for the first six months of 2022, compared to $6.3 billion, in the same period in 2021. The increase in total revenue was primarily driven by the increase of sales of our COVID-19, vaccine outside of the U.S.

Now turning to slide 28.

Cost of sales was $2.4 billion or 23% of product sales for the first six months of 2022.

This compares to 16% of product sales in the prior year period on a reported basis or 19% adjusted for pre-launch inventory costs, which were expensed in 2020.

The increase in cost of sales as a percent of product sales was mainly due to higher, write-downs for excess and obsolete inventory and expenses related to future purchase commitments and unutilized external manufacturing capacity, and to a lesser extent the lack of pre-launch inventory benefit that was realized in the first quarter of 2021.

Research and development expenses were $1.3 billion for the first six months of 2022, an increase of $442 million or 54% compared to the prior year. The increase in R&D spend continues to be driven by clinical trial expenses, personnel-related, costs, and outside services for expanding and maturing development portfolio, including the development of our COVID-19 bivalent boosters.

Selling general administrative expenses of $479 million for the first six months of 2022, increased by $281 million or 142% compared to the year-ago period. The growth in spending was driven by the commercialization of our COVID-19 vaccine globally and support, of the accelerated company build-out, including substantial investments in digital.

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. As previously stated, R&D spending was $1.3 billion in the first half of 2022, a 54% increase, on a year over year basis. We remain on track with our full year R&D forecast of $2.5 to $3 billion.

Additionally, in Q1 2022, there was an initial up-from-endowment of $50 million for the newly, established Moderna Foundation.

Being very aggressive there.

The effective tax rate for the first six months was 13% compared to 7% for the same period, in 2021. The increase was primarily due to the benefit recorded in 2021 related to the release of, the valuation allowance on the majority of our deferred tax assets.

After-tax net income increased by $1.9 billion or 46% to $5.9 billion for the first six months, of 2022 compared to the same period in 2021. The increase in net income was driven by the growth of our product sales.

As you see we have done a few deals.

The looted EPS for the first six months of 2022 increased by $4.55 or 49% to $13.85 compared, to the same period in 2021.

Turning now to cash and cash deposits on slide 27.

We ended Q2 2022 with cash and investments of $18.1 billion compared to $19.3 billion, at the end of Q1 of this year. The decrease reflects the share repurchase activities in Q2 of $1.3 billion. The ending balance of cash deposits for future product supply was $4.1 billion compared to, $5.3 billion at the end of the previous quarter. The reduction quarter over quarter is driven by product deliveries against customer deposits.

In the last year.

Collaborations we have another quarter that a company at this stage, we see these to your point.

How do we.

Expand the potential of our company to deliver on this mission of making innovative medicine.

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.

External front I think there's really two field sales are very important for us is frightening.

We're in multiple active discussions regarding additional external collaboration opportunities. After evaluating internal and external investment opportunities, we then assess additional uses of cash.

In the second quarter of 2022, we repurchased 9 million shares for $1.3 billion. Since inception of our repurchase activities last year and up until August 2nd, we have purchased 18 million shares or approximately 4% of our outstanding diluted shares for $3 billion in total. As a reminder, we announced a share repurchase program for $3 billion in February of this year, and currently have approximately $1 billion of remaining capacity from that authorization. As part of today's press release, we announced that the Board has authorized an additional share buyback program of $3 billion with no expiry.

Now let's turn to our 2022 updated financial framework on page 29.

Interesting assets.

Sure.

And finding them.

I'm not surprised that we think we can create value recall.

As we've said and David.

<unk> our BD teams.

<unk> looking at a lot of things.

But as you know it's a bit.

Investors are looking for companies to invest you need to look at a lot of things before we decided to go for something we won't be shy if you find great assets does.

There is another asset that is all very early.

I.

Don't really fit the company's strategy, we will keep looking I think I think Olaf acquisition from a lack of large acquisition that is not our strategy. What we want to do is to be the best nucleic acid company in the world.

As we've said we'd be very happy to grow outside of the Montney as long as we stay to the nucleic acid space.

We'd be happy to do equity if any if we find good assets.

Yes.

And acquisition and other Guardian itself.

So that's a bit how we think about.

Sure.

Outside the investment platform.

Yeah.

Thank you.

One moment for our next question.

One moment for questions.

Yes.

Our next question comes from Tyler Van Buren with, Dachau and your line is open.

Our next question comes from Elizabeth Webster with Goldman Sachs. Your line is open.

Hi, good morning, and this is Tara on for Tyler.

Hey, guys. This is Elizabeth on for <unk>, Congrats on the quarter and thank you for taking our question could you walk us through the path to authorization for 12, 73 Dot Q2, two and just.

So I was hoping you could provide some comments on the 11% share gain that Pfizer, was referring to since January 1st and where that might be coming from.

Like is most of it coming from the adeno vaccines given the share that they have lost?

Just clarify exactly what the path is here and then when could we see data from the trials you mentioned that are starting this month and then our second question is if you had to think of levers for potential upside to the 21 billion and Apis.

We continue to have signed advance purchase agreements for expected delivery in 2022 in the amount of approximately $21 billion. This includes expected sales from the recently announced new agreement with the U.S. government, and an adjustment for doses that remain unallocated by COVAX due to lack of demand.

We indicated this was a possibility on our last call. Furthermore, this total includes expected negative foreign exchange impacts compared to the contract value at signing, which we estimate to be approximately 1.5% of sales for the full year 2022, assuming current rates remain through year end.

We anticipate that for sales in the second half of 2022, sales will be greater in the fourth quarter than the third quarter, driven by the timing of anticipated approval of our updated COVID-19 vaccines and the related manufacturing ramp up of the new products. Our total cost of sales includes the cost of goods manufactured, third party royalties, as well as logistics and warehousing costs.

We now expect our full year 2022 reported cost of sales to be in the mid 20% range, driven by the previously mentioned costs related to a reduction of doses to COVAX and deferral of doses to other customers. Cost of sales could increase to the high 20% range in the event of further charges due to product updates.

Where might those come from cut additional new orders come online. Thank you.

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 now expect our 2022 effective tax rate to be in the low to mid teen range, as a result of the benefits from the foreign derived intangible income driven by our international business mix, as well as stock based compensation reductions.

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.

Thank you, David, Arpa, Stephen and Paul for those updates.

This concludes my remarks concerning the financial performance and I turn the call back over to Stphane.

And of course, I'd be interested to know where the spike VAX share changes are coming from as well.

Sure, I can take that question.

Great. Thank you for the question.

I'll take the first one and then I assume at DARPA for the second.

In 2022, we set out to execute on five key priorities. First, to execute on delivering vaccine against $21 billion of signed advanced purchase agreements.

In terms of the share, the shares that we reported today, are looking at the cumulative share for spike VAX across just the third and fourth boosters, which is a difference compared to some of the data that Pfizer has shared, and also look at the major markets, the OECD markets that we plan.

So first on the Q2 two this is the bivalent vaccine that is based on the VA for <unk> five.

We have half of a year behind us and the signed deals for the fall of 2022 and a strong manufacturing team we are on target.

<unk>.

So as we think about the majority of where our source of business is coming from, we're seeing substantial market share holds and in some cases, even some market share gains year to date. Again, focusing just on the booster population, which is where the vast majority of our current and future growth is coming from.

This is.

Most I think the question is directed mostly to FDA guidance and the focused particularly in United States on authorization of that vaccine.

Okay, thanks.

We continue to.

We have continued the momentum in our late-stage clinical trials.

One moment for our next question.

<unk> worked hard to pull together, both preclinical and manufacturing data and all of our underlying bivalent platform data, which includes two different phase III studies that I referenced of mrna 2070, 3211, an mrna 12 73 to one four both of which demonstrated superiority of the Baidu platform.

We will face free trials now in two, RSV and CMV, and I thank our team for delivering on such aggressive timelines.

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

We are on track to share data from proof-of-concept studies from two therapeutic applications of our, technology with data from a PA and PCV trial in second half.

Your line is open.

We have continued to make progress with new development candidates in vaccine and therapeutics. Some have already been announced and more will come in the second half of the year.

Hi, thanks for the question.

And finally, we have a recent announcement of our in-health LNP with our partner Vertex.

We've expanded our mRNA platform to target preliminary disease.

And the performance again very concerned.

As we grow, we are committed to doing the right things in the right way for patients and our stakeholders.

As a company led by a founding team, we are thinking in 5, 10, 20-year increments.

<unk> of that data two phase III studies, plus preclinical data manufacturing data will form the submission, which is consistent with the published FDA guidance.

To that end, this year we published our very first ESG report, which, highlights the key pillars of our corporate responsibility framework, medicine for patients, our employees, the environment, our community, and of course governance. I'm proud of what we are doing in each of these pillars and so proud of the ambitious goals we set for ourselves.

I believe that the first steps to achieving those ambitious goals is to set them, to create and foster a purpose-driven culture and governance framework to meet those goals.

As an example, our goal of a net zero carbon emission globally by 2030 will put Moderna, among the global leaders in promoting long-term sustainable growth for our planet and our organization.

We will share more detail on our ESG journey at our ESG day on November 10.

This is possible while we compile our Q&A roster.

But first, we look forward to hosting you at our annual R&D day on September 8.

Moderna's mission to deliver on the promise of mRNA science to create a new generation of, transformative medicine for patients has always been our north star.

Despite the challenges felt in the financial market with concern on inflation and the ensuing increase in interest rates and the cost of capital, Moderna is in a very fortunate position. We have a unique mRNA platform enabling the generation at unprecedented speed of innovative medicine.

We have a strong team of 3,400 mission-driven employees.

We have $18 billion of cash on our, balance sheet and with a strong commercial momentum.

We have no intention of slowing down on growth.

<unk> has also asked US as you referenced to run an additional study really to support future deployment, because we do want to understand the performance of the 200 to two vaccine. If theres further variant evolution for instance in December or January assets. Unfortunately happened every year in this pandemic.

We are putting our head down and doing the work.

I have never been as excited about the future of Moderna.

Now is not the time to slow down.

Patients are waiting for innovative medicine.

Thank you for listening, and now we'll be happy to take questions.

Operator?

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

And we want to have samples that allows us to inform that those sorts of decisions about deployment of vaccine. We expect to enroll that study really in August but the data wouldn't be available for a few months because you would follow until.

Approximately a month to get the boosted samples collect them and then test them and the relevant assets. We do not at this point expect nor has the FDA suggested that.

That that data would be required prior to authorization in fact, we will be authorizing based on the prior clinical data for <unk> for the preclinical data manufacturing data.

But we will have that those samples in hand now as to the specific timing of when we would be able to share <unk> two data.

On slide 23, you guys give sort of an illustrative example, of kind of the longer term opportunity for COVID.

I want to just get, you know, as you invest in 23 and beyond, not asking for guidance, but how do you think about, you know, what would be the tail of, you know, of the endemic phase in terms of either volume or patients, et cetera?

Other than later in the fall I don't think we have any other specific guidance today, except to emphasize again that its really not required for the authorization based on recent FDA guidance. It really is to support future deployment decisions that are that are in the later part of the winter.

And then a related question in terms of capital allocation, how do you guys think about investing in businesses?

I know, Stefan, you know, the goal here is to further expand the reach of Moderna's technology in one of your slides, but how do you, you know, think about adding, you know, capabilities that are outside of that, that may be peripheral, so I wasn't sure how far you're willing to sort of steer a little bit away from the core mRNA.

And then I can take the second question on the $21 billion guidance from an advance purchase agreement perspective, we do believe the majority of the market demand is captured in the $21 billion that being said, we continue to work with countries around the world on potential additional orders for our bivalent vaccine as well.

Thank you.

Many countries are continuing to assess their public health needs as well as their booster population recommendations and considering potential expansions to the population. So we're feeling pretty good about the $21 billion, but we do continue to work with countries to see if and when there is additional demand for either of the two.

One four or the Q2, two bivalent vaccine.

Our first question comes from Matthew.

Okay, so I think maybe, Arpa, you and I will tag team on the first question, then come, to Stefan on the mRNA one.

Understood. Thanks, so much.

One moment for our next question.

Our next question comes from Michael Yee with Jefferies. Your line is open.

Your line is open.

Hey, good morning, Thanks for the questions and thanks for the updates.

Great.

Quick question and relates to the <unk>.

Comments around getting the da four five <unk> to authorize Steven you had mentioned the pathway there, but actually I wanted to think a little bit forward do you envision.

That future variance.

Development vaccine would be able to be authorized quickly via just preclinical data suggests like flu or do you think that that's where the path is going in.

The FDA seems to be going along that.

That's the that's the first question and then second question just.

Ironically, you had made comments around monkey pox vaccine and now with Debbie Rachel I made the comments around global health emergency. So I didn't see any update there I'm wondering if that actually have made any progress. Thank you.

Good morning.

So first, maybe on the morbidity of disease in that picture, you know, we do believe that endemic human coronaviruses point to a picture here which suggests there's going to be seasonal disease.

Sure. Thank you for the question, it's Michael I'll try and take both.

Thanks for taking the question.

It will unfortunately be breakthrough infection, some hospitalization, even some death, and that will happen indefinitely, particularly in those that are higher risk.

So first on on the approach I think you are right. We do we do believe that the flu model for authorization of strained supplement strain updates every year, we will make sense in the future.

For for Covid vaccines and boosters.

And in that sense, the authorization of two to two <unk>.

The FDA if that does happen with the FDA and other markets follow really becomes.

The first instance of that we are still.

We're going to have to file for a supplemental BLA.

<unk> that point together that framework.

But we are actively working with regulators not just in the U S, but globally to try and establish that pathway because at the end of the day in order for us to take full advantage of the platform and respond every year. It makes sense that we don't conduct clinical studies.

Before authorization in the future. We also think that the.

Flu model and the performance of the platform globally now in billions of people really does start to demonstrate that the potential for us to to mature to more of an endemic approach that doesn't require a clinical study every time, so that is our expectation and hope we're honest.

We engage with regulators.

Over the fall and winter as we complete those filings and try and prepare for 2023 that might look just like that and then again I think that <unk> experienced this fall really might just be that first instance of what becomes the new normal now.

Monkey pox.

We we did initiate a research program, we are tracking that very closely and obviously given the recent public health announcements and increasing concern about availability of vaccine supply.

We are.

Been beginning to look at what it would take for us to use our platform to provide a monkey pox vaccine both intervene.

In the current in the current epidemic, but also to try and address.

Long term issues of supply in this public health threat.

We do not have any update on those discussions we will we will firm them up does will include.

If appropriate some regulatory consultations and once we have clarity on whether we are moving to clinical development and what that path would be.

Course provide an update on it but at this stage remains a preclinical program, but one that we're tracking very closely given the recent developments.

Stephane, I was hoping you could just maybe address in a little bit more specificity how, you're thinking about opportunities for either acquisitions or collaborations.

Got it thank you guys.

<unk>.

One moment for our next question.

Okay.

I think it's a topic that comes up a lot among investors, and I think there's a different, scope that a lot of people think about, including the things that are quite large versus things which might be more complementary on a technology side to the platform.

Our next question comes from Gena Wang with Barclays. Your line is open.

So if you could just address how you're thinking about that in your priorities, that would, be great.

Hi, This is sheldon on for Gena. Thanks for taking my question and congrats on the good quarter.

Thank you.

We have two question one is on the current API for 2022 could you comment on how much how many doses for the <unk> contracts are still unallocated in how they were accounted for in the.

Sure.

Currently 21 billion guidance and could you also remind us on the.

Current API for 2023, and how should we think about the demand next year.

And a quick follow up another question on MRI <unk> flu vaccine the phase III Immunogenicity trial.

How do you think about the expected data timeline do you need to.

Also in the northern Hemisphere.

Maybe I'll take the last question first.

Thanks for the question, Matthew.

Okay sure I will take it and Robert.

So just to reiterate the 21 billion and advanced purchase of greenhouse does not include any additional callback doses to be allocated so that already reflects a lower demand that we're seeing from the cutbacks countries and we anticipate that for the remainder of the year, we will see very few additional orders and our demands from these <unk>.

In terms of 2023 orders, we have already signed deals with five countries that we've previously announced the United Kingdom, Canada, Australia, Kuwait in Taiwan, We have also signed options with Canada, Switzerland, Taiwan, as well and we are actively having dialogue with countries around the world.

For additional orders in 2023, we'll be able to provide additional guidance on what these advanced purchase orders look like later this year or early next year.

Great and then on the question of the fluid Phase III study that's ongoing so that is a southern hemisphere Immunogenicity and safety study.

As we said were.

Moving where that.

That study is ongoing we haven't characterize where we are.

We do not expect at this point that we would need to rotate that study into the northern hemisphere. So it will be concluding that safety and Immunogenicity study enrolling in the southern Hemisphere, we do expect to run a phase III efficacy study in the northern hemisphere in the later part of this year.

So we will be studying northern hemisphere competitors this year, but not the current ongoing phase III that is the safety Immunogenicity study that we believe could support accelerated approval.

So quick follow up.

Southern Hemisphere, Immunogenicity data as the likely data will be available later in 2022.

So we haven't specifically guided on when the data will be available, but generally as you know the safety and Immunogenicity studies after their role following non inferiority or superiority endpoints at day, 29% one month after goosing and so the data.

We will follow shortly once we've completed enrollment, but ultimately we will also want to follow up with the safety data and consult with regulators about their expectations of what what sort of follow up on data they would like to see and so until we've had all of those consultations.

We won't specifically guide on timing.

Thank you so much.

One moment for our next question.

Our next question comes from Tyler Van Buren with Cowen Your line is open.

Hi, Good morning. This is Sarah on for Tyler.

I was hoping you could provide some comments on the 11% surrogate that Pfizer was referring to Houston.

January 1st and where that might be coming from I guess most of that coming from the <unk> vaccine given that share that they have launched and of course I'd be interested to know where the share changes are coming from as well.

Sure I can take that question in terms of the share the share that we reported today are looking at the cumulative share for buybacks.

<unk> jumps at third and fourth boosters, which is a difference compared to some of the data that Pfizer has chair and also look that the major markets. The OECD markets that we plan. So as we think about the majority of where our source of business is coming from we're seeing substantial market share Hall.

And in some cases, even some market share gains year to date again, focusing just on the booster population, which is where the vast majority of our current and future aircraft that's coming from.

I think.

One moment for our next question.

Our next question comes from Geoff Meacham with Bank of America. Your line is open.

Hey, guys. Thanks for the question.

Sure.

On Slide 23, you guys gave sort of an illustrative example of kind of the longer term.

Opportunity for <unk>, but I wanted to just get as you invest.

So as you know, we're allotted now for over a year of capital allocation strategy.

In 'twenty, three and beyond not asking for guidance, but how do you think about what would be the tail of.

The endemic phase in terms of either volume or.

Or patients et cetera.

That's why in a cash flow positive situation, priority number one, invest in the business, number two, external investment to build the company, and three, share buyback.

Then a related question in terms of capital allocation.

How do you guys think about.

As you have seen from what we have done over the last quarters, we have been, I think, totally aligned with this strategy in terms of investment in internal R&D. As David said, 69% increase in R&D investments Q2 this year versus Q2 last year.

Investing in businesses I know Stephane.

Goal here is to further expand the reach of <unk> technology in one of your slides, but how do you think about.

Adding.

Capabilities that are outside of outside of that that maybe peripheral but I wasn't sure how far you're willing to sort of steer.

A little bit away from from the core mrna. Thank you.

Okay. So I think maybe ARPA, you and I will tag team on the first question then comes to follow on on the M&A one.

First maybe on the morbidity of the disease in that picture.

We do believe that endemic human Coronaviruses point that picture here would suggest there's going to be seasonal disease. Unfortunately be breakthrough infection, some hospitalization and even some debt and that will happen indefinitely, particularly in those that are higher risk the question.

The question, you know, of how we define that higher risk is, you know, 65 plus, 50 plus, or is it 18 plus with high risk factors, or is it broadly?

We define that higher risk is 60.

$65 50, plus or is it 18, plus with high risk factors where is it broadly.

We'll really depend upon the evolution of the virus. It's hard to anticipate, but we, do believe over time this will become a seasonal market where boosting and elevating, neutralizing protection to prevent breakthrough infections will happen annually in a large population, and they will benefit from it, just like they do for flu, or they would for endemic human coronaviruses.

It really depends upon the evolution of the virus, it's hard to anticipate but we do believe over time this will become a seasonal market.

Boosting and elevating neutralizing protection to prevent breakthrough infections will happen annually in a large population and they will benefit from it just like they do for flu where they would for endemic human Coronavirus I don't know if you want comment on how that marketable.

Arpa, I don't know if you want to comment on how that market evolves.

So the only comment I would add to that is we will continue to work closely with NITAGs, as well as governments around the world to see how their recommendations evolve for their populations in terms of the populations that are being covered and how often they're recommending boosters.

The only comment I would add to that is we will continue to work closely with <unk> as well as governments around the world to see how their recommendations evolve for their population in terms of the populations that are being covered and how often theyre recommending booster. So well continue to work with them in over time and see how that is.

So we'll continue to work with them and over time see how that demand shapes up.

Shapes up.

Thanks, guys.

Thanks, guys and on the capital allocation.

As we've shared in the past.

And on the capital location, as we've shared in the past, we are very interested, by playing with information molecules, so nucleic acid.

We are very interested by playing informational molecules.

So a nucleic acid.

So we're not only looking at mountaineer.

And so we're not only looking at mRNA to express human protein, as you know, we're also looking at mRNA to do gene editing, as you know, we've already done some partnership there.

Human protein as you know.

What do we think about it.

And we look forward to giving you some updates in the near future.

Gene as you think.

And we look forward to giving you some updates in the near future, but that is showing a gene therapy that we talked about on the outage for being productive space of interest. So I think when you guys nucleic acid I think as we said in the past.

But then also in the gene therapy, we talked about RNA also being potentially a space of interest.

So I think we're defining it as nucleic acid.

I think as we shared in the past, going to small molecule or large molecule is not something, that we think will be the best version of Moderna.

Going through some omani crude oil off of Monte Carlo.

Again, taking a three, five, 10 year view of things.

That's something that we think will be the best version of Marianna.

Again thinking out there you know three 510 year view of things I think there is a lot of things. We can do we've got all the nucleic assay that we like the ability to plug and play onto the platform across with self's across developed lots across north CMC, because it's very true benefit is just.

I think there's a lot of things we can do in terms of nucleic acid, and we lack the ability to plug and play onto the platform across research, across development, across CMC.

So there's very true benefit and synergies that's just, you know, getting a product for the sake of getting a product and driving more complexity into a company and getting into technologies that we see have little in common with nucleic acid.

Yes.

Shifting our product policy, because it gets into a product and driving more complexity into the company.

You guys need to take note of is that we literally have come on we've nucleic acid.

Okay, great.

Okay, great. Thanks, guys.

Thanks, guys.

One moment for our next question.

Our last question comes from Ellie Merle with UBS. Your line is open.

One moment for our next question.

Our last question comes from Ellie Murl with UBS.

Okay.

Hey, guys. Thanks, so much for taking the question just as you think about the pipeline and capital allocation from here can you help us think about just with the buybacks as well as further business development, how youre thinking about prioritization and then just a second question.

Monkey pox, just I know that since you've announced that you have been looking at it pre clinically and Kevin.

You know kind of public health emergency and broader vaccine needs can.

Can you comment on that.

Plans from here and any further plans for development.

Yes.

Your, line is open.

So let me start with capital allocation.

David No.

Maybe just picking on one of our slides that we've been using for Q4 close now.

Hey, guys, thanks so much for taking the question.

Pricing number one investing in the business.

Just as you think about the pipeline and capital, allocation from here, can you help us think about just with the buybacks as well as further business development, how you're thinking about prioritization?

We are really excited about.

The platform that we have as you know in vaccines.

<unk> seen modality has been Derisked we have.

Willing to invest.

We are aggressively.

It's kind of a remarkable growth for vaccines in price for you right now.

And as we shared on the last call.

We have shown now three times the ability to grow from suffering a clinical study in vaccine to something that pays for it.

Quite a multiplying frame, which I think really speak about the platform of CMC capabilities and of course, how we really we have been very strong.

It should be broken up.

So.

Is that going to be interesting of course is the human proof of concept that we talked about coming later this year in your concept and in rare disease, because they know it.

One of those two are both of those who have to work.

Got.

Interesting clinical signal.

You will most probably see us do what we did with vaccine which is expand very quickly.

As you know whatever Judah.

If we think about messenger RNA in how we build the company we block of robotics startup of digitalization.

Gary you to scale very quickly.

We always felt in your application like rare disease.

All I can say it before we know you have a technology.

Working with kind of tankers called piano.

Only a few programs.

Even if we have positive without the NPA.

Do you see us developing many more programs than what we have and I don't know whether these very quickly.

Yes.

And we see something in oncology so.

Investing in the business is probably the number one question number two is really expanding the platform.

Sheep licensing M&A and then the excess cash we will return to shareholder and I think the the announcement of a failed buyback plans today.

As you've seen with the announcement of actually our third share buyback plan today, also being, very aggressive there.

And we began our position by the bulb is a confirmation of the ability to return the capital if we cannot find with using the company.

Thank you and if you have any of them whether multiplex.

Yes.

So.

So look I think conceptually.

We're obviously very aware of the monkey pox.

And obviously very sensitive to recent announcements.

And so we are looking to do is understand if we were to develop that program. How would we move at the purpose of moving it would be to move very quickly as demand just covered our platform is pretty well established.

And our ability to rapidly scale.

It has been demonstrated.

And if we were to go after a monkey pox clinical development program. It would be to very quickly progressed towards an approvable endpoints in our clinical study.

And in that sense, we need to engage with regulators.

And other consultations to determine what that path would be.

It is not primary of principal interest adjusted just advance a program and demonstrate in phase one clinical immunogenicity, we would really be doing it to try and help generate a public health countermeasure.

So those conversations we will start to move gauge with them.

Obviously.

So recognize there are other even larger public health threats right now Covid remains a larger public health threat and many regulators are totally focused on addressing the updated this to work for this fall.

And so we're respectful of that but we will engage in those conversations and once we have clarity on whether or not we will go forward given what we think those endpoints would be will obviously provide it but at this point it's premature.

To say more because we have not clarified those endpoints and therefore have not made our own decision about whether we will move the preclinical program into clinical development at this stage.

Thanks for the color.

Alright. Thank you so much everybody for joining the call to therefore your questions. We look forward to speaking to many of you in the coming days.

I look forward to welcoming you at the R&D day early September have a great day. Thank you.

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

As you see, we have done a few deals in the last year in terms of external collaborations.

And then just a second question on monkeypox.

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].