Q3 2022 Moderna Inc Earnings Call
Yeah.
Good morning, My name is Kevin and walk you through but during this third quarter 2022 earnings call. At this time all participants are in a listen only mode. Following the formal remarks, we will open the call for your questions to ask a question. During this session. Please press star one one please be advised this call is being recorded at this time I'd like to turn the call over to Luke.
Investor Relations. Please proceed.
Thank you Kevin Good morning, everyone and thank you for joining us on today's call to discuss much or in a third quarter 2022 financial results and business updates.
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 bonds sell our Chief Executive Officer, Stephen Hoge, our president.
The Gray, our chief commercial officer, and Jamey mock our Chief Financial Officer.
After prepared remarks, we will take your questions through 915, a M. This morning.
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 $19 95.
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 with that I will turn the call over to Stephane.
Thank you and.
Good morning Al Good afternoon, everyone.
Welcome to our Q free two conference calls.
To date I wish tough of a quick business overview of a quarter because Stephen reviews, our clinical programs.
I will then take you through commercial banking and Jimmy we present financials.
I will then come back to cross before we take your questions.
In the quarter were $3 4 billion at all your revenues.
We reported net income of $1 billion and.
Cash and investments totaling 17 billion.
We now expect deliveries under advanced purchase agreements in the range of 18 to 19 billion in 2022.
Due to delayed deliveries from our Philippines contract manufacturers, we've got thinking 2 billion to $3 billion of revenue deferrals into 'twenty 'twenty four it.
Thank you for you we have to deal with a lot of complexity launching two products 2017, freaked out to Russell and to what extent if we got to go to at the same time and if so moving products from tangibles buyers two five of those bars.
Q3 was actually a great day.
The amount in terms of buyer produced and was up about 20% would be operational.
Three quarters.
I probably share more thoughts on 'twenty 'twenty free in a moment.
In the first quarter, we repurchased over 7 million shares.
The $3 billion share repurchase program, we announced in February 22 was completed.
Since the start of our share repurchase program in 2021.
We ended the first quarter we.
We have repurchased more than 24 million shares.
Our share repurchase program announced in August two for an additional $3 billion repurchase is ongoing.
Let me now review the pipeline highlights since.
Since our last update.
I am very pleased with the important progress the monarch team has made on advancing the pipeline and close out the product belongs to you.
And at the same time equating the breadth of our pipeline.
We continue to progress with Covid boost up programs and have received before they shouldn't around the world for both for Covid 2019.
Nike free.
You went for program, which targets.
Iran.
And to what extent, they probably got to go to target vehicle five.
We have as you know two respiratory vaccine in phase III trials as we speak the coffee and supports quicker.
For a flu vaccine.
In September we announced our first phase III study was fully enrolled.
We expect data in the first quarter of 'twenty 'twenty four.
As a reminder, we plan to pursue an accelerated approval pathway fall seasonal flu vaccine.
We're supposed to talk to you at the Phase III efficacy study, we've got flu vaccine and that trial is enrolling quickly.
For phase three RSV vaccine, we are on track for data readout. This winter season.
We were pleased to announce that the milk exercise their option to develop and commercialize a personalized cancer vaccine mrna 41 67.
250 million underlying Q4.
We ended up with chef costs and profits 50 50 for this program moving forward.
We continue to expect data from our phase two study for PCV in Q4 this year.
In rare diseases, we are pleased to share at the R&D day that we saw encouraging early signs of clinical benefit above peer and you want it and then also new development candidates for what you see.
On slide six you'll see our usual snapshot of modern art in November 2022, showing the breadth of our pipeline, we've announced 48 programs in development across vaccines.
In therapeutics.
The company continues to grow and we now have more than 3700 more than our team members.
That's great. We are very pleased to announce as a top employer by science for the eighth consecutive year.
We have now 15 commercial subsidiaries globally and a strong balance sheet of 17 begins at all to fund our continued growth.
With this I will now turn over to Stephen who will give a pipeline Steven.
Thank you Stefan good morning, or good afternoon, everyone. This morning, I'll review, our clinical progress.
Launched two vaccine boosters for the current fall winter season to meet different market demands and have received authorizations or approvals worldwide for these vaccines.
We previously shared that $12 73 to one four which targets omicron VA one into significantly higher titers than $12 73 against the VA one NBA for five sub lineages in a clinical trial.
And we're going to see MRA <unk> 73 to one four is now authorized in the United Kingdom, Switzerland, Canada, Australia European Union, Japan, and other countries.
For <unk> 273, <unk>, <unk>, two which targets the omicron NBA for five variance the phase III study is ongoing and we expect data later this quarter.
$12 73 to two two is authorized in the United States and now also in the United Kingdom, Switzerland, Australia, Canada, The European Union, Japan and other countries.
Now moving to slide nine I'll review, our respiratory vaccines pipeline.
I will cover the phase III studies in detail on the next slide here I want to highlight the progress in the earlier stage studies with our respiratory vaccines.
Mrna 10, 2030 or seasonal influenza is in a phase <unk> study and is now fully enrolled.
Hey morning, $13 45 for RSV is in the pediatric <unk> in the pediatric population is now fully enrolled in a phase one study.
Moving now to our combination respiratory pipeline, where we have made meaningful progress.
$10 73, our combination vaccine for Covid and flu is in phase one two and is fully enrolled.
Very pleased to announce that our combination COVID-19 flu and RSV vaccine mrna 12 30 has also started enrolling in its phase one two study.
We announced a new development candidate mrna $10 45. This one targeting combination of RAC in influenza and that has started and its phase one two study.
And lastly, our combination in our combination vaccine pipeline. We also have a pediatric vaccine covering <unk> and PIV three studies ongoing in the fully enrolled phase <unk> study.
Finally, our endemic human coronavirus vaccine is in preclinical development, along with our pediatric RSV <unk> PV combination vaccine.
Now to review, our phase III flu and RSV programs on slide 10.
Portfolio, our phase III Immunogenicity study in the southern Hemisphere is fully enrolled with 6000 participants with a data readout expected in the first quarter of 2023.
As we've previously noted regulators have indicated support for an accelerated approval pathway for our seasonal flu vaccine candidates pending the study the results from this study.
We've also started enrolling our phase III efficacy study in the northern Hemisphere and has now enrolled more than 10000 participants timing of this confirmatory phase III efficacy readout will be driven by flu case accruals in this study and could come as early as this winter.
Looking to RSV, our pivotal phase III efficacy study in older. Adults has now enrolled more than 35000 participants.
As we previously mentioned our primary endpoints in this study are safety and vaccine efficacy.
Timing of the phase III efficacy readout will be driven by RSV case accruals in that study as.
As we're now in the midst of a very strong RFP season, we continue to expect that the results will be available this winter season.
Moving onto our latent in public health vaccine portfolio, our CMV vaccine is ongoing in our phase III study.
Our EBV vaccine to prevent infectious mononucleosis isn't a phase one study, while our EBV vaccine to prevent longer term sequela, such as cancer and multiple sclerosis is in preclinical.
We have two HIV phase one trial is ongoing and our HSV and visa EBV vaccines are an ongoing preclinical studies.
Finally, our public health vaccines for Zika or public health vaccine for Zika is ongoing in our phase III trial, and our nipper vaccine is ongoing in our phase one study.
Now, let's take a look at our therapeutics pipeline on slide 12.
First I want to note that astrazeneca notified us that after a portfolio review they are returning the rights to the IL 12 program to us they're concluding the phase one study and we will then evaluate next steps for the program for ourselves.
Second we are excited that our checkpoint vaccine has started dosing its first patients in a phase one study.
Finally, our partner vertex expects to submit an IND for our mrna cystic fibrosis program at the end of this year.
We recently shared updates on our personalized cancer vaccine Ta and GSD when a program that our latest R&D day, and I will talk to those in more detail in the upcoming slides.
Now recall at R&D day that we shared data from two rare disease programs. The first is in our propionic acid in your program, which is a multi dose study and as of September we had accrued six patient years of experience on the drug and administered well over 100 doses. It has generally been well tolerated, which is encouraging we've also seen in.
Encouraging trend in the reduction of Biomarkers and been observing a numerical decrease in the frequency of metabolic decompensation events, which is also really encouraging given the severity of these events for appropriate <unk> patients.
And the GST when a program we've shared an early set of data from the first two patients in the first cohort.
<unk> is a single ascending dose study that runs a fasting challenge in a controlled and safe environment in patients with <unk>, who are unable to normally faster go without food for long periods of time without becoming hypoglycemic.
<unk> patients in the first cohort have demonstrated that <unk> 830, 745 was well tolerated and showed an extension of fast duration and normalization of key biomarkers, including glucose, which we think is very encouraging signals of activity.
To close I wanted to remind everyone that we expect our phase II results from our personalized cancer therapeutics by the end of the year.
The randomized study comparing PCV plus keytruda versus Keytruda alone enrolled approximately 150, resected melanoma patients with a high risk of recurrence. The primary endpoint is to prevent recurrence recurrence free survival.
As <unk> mentioned earlier, our partner Merck exercise the option to jointly develop and commercialize mrna $41 57, and we look forward to sharing that data this quarter.
With that I will hand, it over to ARPA.
Thank you Steven and good day to everyone I will start with a review of sales on slide six times.
Sales to the U S for $1 billion in the third quarter and were mainly from deliveries of mrna totaled $73 222 are bivalent. Please start targeting <unk> four five.
Sales to Europe of mrna tools 73 to one four we're also $1 billion and the rest of the world totaled $1 1 billion.
Through the first three quarters of the year U S sales were $3 $4 billion sales to Europe were $4 5 billion in sales to the rest of the world accounted for $5 7 billion.
And both the three and nine month periods. Besides geographical diversification of sales across these key regions.
We recognize there are questions regarding the 2023 market and long term culvert booster potential and we wanted to walk you through how we are thinking about it.
As we transition into an endemic market. There are important factors, we considered in our commercial outlook.
These include the ongoing medical need for Covid boosters, and the potential size of the annual booster market.
We used the seasonal flu market to frame the opportunity and I will take you through our thinking on that in the next couple of slides.
I will also detail some of the factors underlying the transition to the commercial market in the U S. In 2023.
I will then wrap up the Covid section with an overview of our currently signed contracts and our outlook for additional expected contracts in 2023.
Finally, I'll close with a reminder of what's coming in 2023 from a respiratory vaccine franchise a potential launch timings that we shared recently at our R&D day in September .
So starting with the medical need for Covid booster at the chart on Slide 18 compares hospitalizations and deaths associated with the seasonal flu and COVID-19 over the relevant time periods.
For flow, we looked back at the top 10 influenza seasons in the U S, but for Covid related interventions disrupted the typical flu season.
And for Covid, we looked at hospitalizations and deaths from October 2021 to September 2022, which covers the period of widespread immunity against Sars cov, two and its variance either through vaccination or infection.
We believe this period is a close proxy to what population immunity to cope it could be and then Tom exceed them.
As you can see here on the chart hospitalizations due to covered during the past 12 months are three times higher than the 2017 2018 flu season, which represents a year with the highest medical burden for them that 10 year period included in the analysis.
And the deaths due to covered or even higher coming in at a rate of seven times higher than the same severe flu season.
This comparison shows the higher medical burden of Covid in a period that we believe more closely approximates an endemic season and underscores the need for a booster with <unk>.
It also helps frame the potential in that make annual COVID-19 market, which I want to take you through on the next slide.
Besides the endemic carbon booster market, we start with the flu market volumes.
Volume in the annual flu market is approximately 500 to 600 million doses around the world.
The size of the market is highly dependent on the number of doses as well as global price as shown in the sensitivity table on the left hand side of the slide.
The prices shown here are purely illustrative to demonstrate a range of outcomes on global pricing.
Ultimately global price recovered boosters will reflect sales mix and differential pricing across markets.
Our endemic pricing will be focused on the value that the vaccine brings to healthcare systems around the world.
As we move to an endemic market in 2023 key factors that will impact our volume in the year include the medical need.
Ongoing viral evolution recommendations from public health authorities and consumer motivation to vaccinate.
So while we believe that volumes in the global endemic cobot market should approximate to at least 600 million doses over time.
We believe it is too early to reliably predict the variables impacting the volume of Joseph in 2023.
Turning to slide 'twenty, and specifically addressing the transition to the commercial market in the U S. We anticipate a more fragmented customer base, including private Payors and health plans pharmacy chains individual pharmacies in physician offices.
We also anticipate reduced predictability in orders.
Analogy of deliveries similar to flu vaccine deliveries.
Shifting to full distribution costs assumed violent arena as.
As well as other major factors in the U S such as shifting to a single dose presentation.
And continued innovation and product differentiation.
Moving on to slide 21, we summarize the contracts that have been signed so far for 2023.
Have advanced purchase agreements for the United Kingdom, Canada, Switzerland, Taiwan in Kuwait totaling $2 $5 billion.
Additionally, we expect deferrals of $2 billion to $3 billion for 2022.
These deferrals are from the country is listed on the slide.
Together these advanced purchase agreements and deferrals totaled four five to $5 $5 billion in sales for 2023.
Finally, and very importantly, we have a number of countries, where we expect additional 2023 contracts to be signed.
We are working to secure 23 orders in the U S EU, Japan, Australia, Asia, Latin America and callbacks.
Back to have visibility into these orders as contracting season.
Ken its later this quarter and continuing into next year.
So to summarize the COVID-19 outlook on slide 22.
With the continued higher medical burden of Covid relative to flow, we expect the internment COVID-19 vaccine market could be as large or larger than flu market volumes over time.
The U S market is transitioning to a commercial market and we believe we are well positioned to serve its evolving needs.
And finally, we have established a base of confirmed contracts of $4 5 billion to $5 5 billion in 2023, two which we anticipate adding a number of important orders in the months ahead from key markets, including the U S EU, Japan and others.
Now before I close I am excited to review the formation of a respiratory vaccine franchise that we highlighted during our R&D day in September .
As early as next year, we could be expanding into flu and RSV.
And as we look at fluid RSV combines with Covid. They lead to more deaths annually, then all timer stroke or diabetes and developed markets.
As Stephen highlighted depending on case accruals and vaccine efficacy, we could see data from our flu and RSV phase III trials. This winter.
We are actively preparing for the commercial launches for these additional respiratory vaccines and will leverage the COVID-19 commercial infrastructure that we are currently building.
With that I'd like to turn it over to Jamie.
Thank you Arthur and Hello, everyone.
Nice to be here with you today after two months I Madonna I'm, even more excited about our company's future and the role we are playing in bringing a new generation of medicines to patients.
For those of you, whom I haven't had the pleasure of meeting yet I look forward to working with you in the months and years ahead.
Today, I will start by providing additional color on our third quarter results and capital allocation priorities and finished with the view on the key drivers on our remaining 2022 financial performance.
Turning now to slide 25.
Total product sales in the quarter of $3 1 billion.
Decreased 35% year over year.
The decrease was driven by lower sales volumes due to the timing of market authorizations for our updated COVID-19, booster vaccines and the related manufacturing ramp up with our CMO partners.
As a reminder, we received the marketing authorization for the U S. On August 31 for the European Union on September 2nd in Japan on September 12.
We anticipate that product sales will be higher in the fourth quarter of 2022 and in the third quarter as we continued to deliver against our supply contracts for booster vaccines.
Cost of sales was 35% of product sales compared to 15% of product sales last year. This includes a charge of $333 million.
For inventory write downs related to excess and obsolete COVID-19 products.
<unk> expense for Unutilized manufacturing capacity of $209 million.
And a loss on firm purchase commitments and related cancellation charges of $102 million.
These charges are driven by a shift in product demand to our own crime targeting COVID-19 bivalent boosters.
Costs associated with surplus production capacity.
Research and development expenses were $820 million, an increase of 57% versus the prior year.
The increase in R&D spend continues to be driven by our increasing and maturing pipeline, including phase III studies for RSV flu CMV and Covid boosters.
Selling general and administration expenses of $278 million increased by 65% year over year.
The growth in spending was driven by continued investments in personnel and outside services in support of the accelerated commercial and overall company build out.
The effective tax rate of 14% compared to 6% last year.
As a reminder, 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 in 2021.
After tax net income decreased by 69% to $1 billion.
Diluted EPS in Q3, 2022 decreased by 67% to $2 53.
As a result of our share buyback activities the diluted weighted average share count reduced by 22 million shares to 412 million shares as of the end of Q3 2022.
Compared to 434 million shares the prior year.
Turning now to the year to date financial results on slide 26.
Total product sales for the first nine months of 2022 were $13 6 billion, an increase of 26% year over year.
The growth was mainly attributable attributable to a favorable customer mix and higher manufacturing capacity to fulfill customer demand.
For the first half of 2022 compared to the first half of 2021.
Cost of sales was 26% of product sales compared to 16% of product sales last year.
The increase was driven by substantial demand reduction from Kovacs as mentioned in our Q2 earnings call.
A shift in demand to our <unk> targeting Tobey 19 bivalent boosters.
And costs associated with surplus production capacity.
After tax net income was $6 9 billion, a decrease of 6% versus prior year.
The decrease in net income was primarily due to higher cost of sales.
Other operating expenses and a higher tax rate.
Diluted EPS decreased by 3% to $16 46.
Turning to cash and cash deposits on slide 27.
We ended Q3, 2022 with cash and investments of $17 billion.
Compared to $18 1 billion at the end of the second quarter the.
The decrease reflects the share buyback in Q3 of $1 billion and our federal tax payment of $0 8 billion.
The ending balance of cash deposits for future product supply at the end of the quarter was $3 8 billion.
Now turning to slide 28.
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.
R&D spending was $2 1 billion in the year to date September period.
55% year over year increase.
We continue to be excited about our mrna platform and now have 48 development programs with multiple ongoing studies now in phase III.
We increased our year to date capital expenditures by 88% year over year to $308 million as we expand our manufacturing footprint.
We also continue to invest in our commercial and digital capabilities as well as the overall company Buildout.
Our second investment priority is to seek attractive external investments and collaboration opportunities.
To further expand the reach of <unk> technologies and capabilities.
We are considering attractive opportunity set enabling complement our platform and take a disciplined approach in evaluating potential outside investments.
We are in multiple active discussions regarding additional external collaboration opportunities.
Then after evaluating internal and external investment opportunities. We then assess additional uses of cash in the third quarter of 2022, we repurchased 7 million shares for $1 billion.
Year to date through September 30, we repurchased 20 million shares for $2 9 billion.
In October we completed the $3 billion authorization approved in February 2022, and.
And began to utilize the additional $3 billion.
<unk> authorization.
Now, let's turn to our 2022 updated financial framework on slide 29.
We now expect delivery in 2022 against signed advanced purchase agreements of 18% to $19 billion.
<unk> deferrals of $2 billion to $3 billion into 2023 due to short term supply chain supply chain constraints.
This total includes expected negative foreign exchange impacts compared to the contract value exciting, which we estimate to be approximately one 5% of sales for the full year 2022, assuming current exchange rates remained through the year end.
Our total cost of sales includes the cost of goods manufactured third party royalties as well as logistics and warehousing cost.
We now expect our full year 2022 reported cost of sales to be in the 26 to 28 percentage range.
Driven by the previously mentioned cost incurred year to date, our range on our Q4 volume and potentially further charges due to product updates.
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 our global scale up of our company.
Based on current tax laws, we continue to expect our 2022 effective tax rate to be in the low to mid teens.
As a result of benefits from the foreign derived intangible income driven by our international business mix and stock based compensation deduction.
Finally regarding capital expenditures, we now expect capital expenditures to be approximately $2 5 billion.
Slightly below the previous range of <unk> six to <unk> 8 billion driven by the timing of project completion.
This concludes my remarks concerning the financial performance and I will turn the call back over to Stephane.
Okay. Thank you Jamie.
And Stephen for this update.
Before opening to Q&A I, just want to review some of our key priorities as we close out this year.
And look into 2023.
Although remainder over year, we'll continue to focus on delivering our updated omicron boost sales and drive 2022 states.
We are already working on 2023 sales contract.
In Europe , Japan, and Europe from all around the world.
I'll find a female so setting up the U S team and getting it so that we can go private in the U S market the pipeline for you.
Yeah.
We continue to execute on our pipeline.
We look forward to be able to present when we have it.
Phase II data, our PCV expected probably out of it yeah.
The team is doing a great job to enroll our phase III study for flu and RSV and <unk>.
And I am excited to have Steve young brands.
Already these programs.
Looking to next year APA.
And the team and the entire organization, including manufacturing is preparing for multiple vaccine and oxy in the year.
Including commercial Covid market as well.
We'll next go to Paul therapeutic programs can move very quickly in phase III.
And finally, we opened that many of you can join US next week.
First ESG there on November 10.
Event will be available from our webcast.
With this we'd be happy to take your questions operator.
Ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your Touchtone telephone, we will pause for a moment, while we compile the Q&A roster.
Our first question comes from <unk> Richter with Goldman Sachs. Your line is open.
Good morning, Thanks for taking my questions.
Pricing here for the Covid vaccine Pfizer's guiding to a price of 110 to 130 and the private market is this in line with what your discussions thus far suggest and when do you think the private market will emerge next year and then a second question here you were talking about some of the cost burden for <unk>.
First year with distribution costs and <unk>.
Building out the commercial infrastructure around flu RSV and trials could you just give us some directional color on the opex situation as we look to the fourth.
So I can take the pricing question so.
So first.
Not in a position to comment on competitor pricing, but as we think about our pricing as we evolved from a pandemic setting to an endemic setting the real focus for us is on ensuring that our vaccines are priced based on the value that they provide to the health care system and reflect the cost effectiveness guidelines that are set by <unk>.
Black Hawk authorities around the world. So for here in the U S that would be in CIP I think it's important to note that some of the pricing guidance that has been released in the past is really at a gross level and we do anticipate some discounting across different channels.
Additionally, here in the United States as we evolve into the commercial setting. It's also important to remember that for all his CIP recommended vaccines. There is a zero out of pocket costs for consumers. So from a consumer access perspective, we do expect that the pricing will not be a barrier to uptake.
And so maybe I'll take the cost part of that so yes, our cost will change in the.
Endemic mode.
Number one there are presentation preferences can move in Florida pre filled syringe and single dose vials that I think it will be different year over year, we have to continue to invest in bivalent vaccines as well as majority will now pick up the distribution cost moving forward, particularly in the United States.
And so yes, our cost profile will change and we'll come out and update in terms of what that means at a later date.
Thank you.
One moment for our next question.
Our next question comes from Matthew Harrison with Morgan Stanley . Your line is open.
Great. Good morning, Thanks for taking the question I was hoping to ask on on PCV. Just given that this is a phase II study that's proof of concept a P value greater than <unk> five could be considered a success in this study. So maybe you could just.
Help us think about how youre thinking about our success in the study and then just given that it's an open label study how much data is available to you internally.
Great. Thanks.
Thank you. Thank you for the question so.
So as you said, it's a phase II study, but it's actually quite sizeable one time. It was 150 patients and they were randomized two to one to 100 patients have received the combination therapy and 50, the standard of care, which in this case is keytruda, that's actually quite a sizeable sample and does allow for us to look at efficacy now it is a phase III.
Study and so we didn't pre specify.
A statistical threshold that we want to hit but we are looking at hazard ratios across that and we will get P values.
Wont comment on.
A specific P value or hazard ratio at this time its premature to do so but obviously we are looking against their <unk> to demonstrate a significant benefit over that standard of care. It's just important to note that the study wasn't powered for that at 150 participants and so we.
We will be looking.
Two that hazard ratio and the P value as indicative and then depending upon the strength of that result, if it is in fact as you said a P value less than <unk> five and there's a very strong result, we will then make our subsequent decisions about how to proceed forward with development, obviously, the better the stronger the benefit in terms of the hazard ratio and the lower the P value the more we're going to move very quickly.
Towards advancing that program.
Thank you one moment for our next question.
Next.
Comes from Edward <unk> with Piper Sandler Your line is open.
Great. Thank you very much and congrats on all the progress I appreciate all the detail on sort of the outlook both for the Covid market.
As we move forward.
Questions back to my favorite topic, the orphan diseases with <unk>.
Proof of concept into him from the first programs is there a desire to be expanding.
Pipeline similar to what you did with vaccines upon.
Proof of concept with Cobra. Thank you very much.
Thanks, Ted for the question and so I think the short version is absolutely.
In any of our modalities, whether their cancer vaccines or our infectious disease vaccines or now our orphan disease, where we believe we have achieved a technological proof of concept, where we've achieved what we wanted to patients. We look to rapidly expand the number of diseases and applications that we can bring forward that technology and in the case of orphan rare.
On the back of that Derisked clinical data.
Alright excellent. Thank you Steven.
One moment for our next question.
The next question comes from Michael You were Jeffries Your line is open.
Hi, good morning, Thanks for the questions that may be a question for Steven.
In RSV, we've had two players read out results I think one is 80 per cent plus or minus 166% plus or minus depending on the end points. So I wanted to ask you. How you view the bar in terms of being competitive and where there is some differentiation opportunity for you R. S V vaccine.
That could read out soon she'll talk a little bit about that and then just as a follow up to P. C. V. Again, just to clarify Merck had opted in can you comment on I guess the idea of the timing just before the data whether they had insufficient information or or maybe just talk a little bit about the implications of that often.
Just before the data thank you.
Yeah. Thank you for the question Michael So first of all RSV. Obviously, we're we're incredibly encouraged by the results that are been seen by other vaccines given our platform as previously demonstrated his potential in COVID-19, specifically in respiratory vaccine, we think it bodes well for us in terms of the study you know there's a bar.
That has been established in terms of severe diseases you reference in the 80% range. We are looking at three symptom or quote unquote severe disease, it's hard to compare between the studies. They are not conducting the exact same time and they always have exactly the same definition as you know, but we would absolutely hope and expect that the type of efficacy, we're going to see against severe disease will be.
On par with an I would even hope for better than what's been seen by others. It's certainly been the case with our platform technology compared to others in terms of Covid that we've been able to see those sorts of potential benefits. I'll also note that we looked at titers and we've previously shared our titers as well as other companies have from their early clinical phase one and phase two <unk>.
Salt and we believe that that boosting of anti neutralizing RSV titers against both RFA, a N or S. A b that we were achieving was on par and you know you can.
You should know you could always argue perhaps better or worse, but on par with what others that scene. So we're quite encouraged by that and I think we're looking forward to the RSV efficacy results over the over this coming winter.
Our bar for for for this has to be as good or better than than others have been in terms of P. C V. Our in terms of piece of the Merck has after that and as you said and I know Matthew ask a question as well. So it is an open label study as we previously disclosed and so we have been following events through that study those that have received the.
The the cancer vaccine in combination keytruda versus those that have not and as we have now passed the one year Mark for follow up of the last patient to be randomized in that study. We now have at least a year a follow up and in many cases, two plus years of follow up across those those two different cohorts those that receive combo and it was received.
Kerry Keytruda that data was known to us an mirc, but it's important to know that that's that's an ongoing an unclean and not primary analysis once in a while it is open label. The correct thing to do at this point now is <unk> begin the closing process get all of the scans review all of the data associated with the clinical out because.
Make sure nothing was missed.
And in that cleaning process, then finalize that database and conduct a primary analysis for the study which is to evaluate the hazard ratio and statistical significance to that had a ratio between the two arms. That's actually the process. We're undergoing right now and it's important that before we make a decision on whether that data is positive or negative and the strength of of that positivity how quick.
We move forward per Matthews question into whatever the next stage of development that we conduct all of the right diligence on the those datasets and that's the work so I'm going right now so while Merck made their often decision, which was really more calendar and contract driven based on obviously, having access to that open label information the really important analysis the primary analysis.
The one on which we will base our decisions of what to do next as will regulators and others is the one that we're trying to conduct right now and is not yet completed but we do expect that result in this court.
That's that's very helpful. I appreciate it.
One moment for our next question.
Our next question comes from Gina Wang with Barclays. Your line is open.
Thank you, Steve maybe just fun.
How much I'll, Mark and I, just want to confirm that mark.
That's C open label the so do we covering free survival rate and then also wanted to just confirm that you know.
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And also how would you shared data for that P 50 face to data.
Another question is regarding Sly 19th of global Covid Lock you up to 96, we expect significantly increasing price in the U S. What is your expectation for the exercise price change across major market since you're keeping like 20 to $40 price range.
[noise] Ah Gina Thanks for that question. So again it was not a continuous data set it wasn't open label study and so per our agreement with Merck. They had the right to know what what do we know about the program at the point in which they were had to make their decision about what.
Adopting or not and so of course, what we did as we provided them the access to the data of the study at that point in time and as as you. All have noted they they elected to opt into that program and we are encouraged by that decision on their part.
They they obviously do have a tremendous amount of experience and so in terms of the control arm. You. You. Obviously have the keynote 54 study which is their prior Registrational studies have experience of what to expect in the control arm and you know I think you can infer whatever you'd like from their decision to to say that they believe it's worth opting into that program.
And proceeding to the the primary analysis that we're conducting right now we will obviously be able to compare the control arm that 50 patients who just received it keytruda as standard of care against the rich traditional studies, others are done and actually that many years of patient experienced that companies like Merck and others have just to be confident that in fact that we are seeing a difference between.
We are seeing it hasnt ratio difference that it is not a difference in terms of that control, which will bardwell because again patients were randomized in this state.
Now in terms of the data will have and share at this point all we'd expect to share this quarter. Once we've completed the analysis uhm. The primary analysis on efficacy in the study is just the top line data in terms of P. C V, which as I mentioned previously is looking at the hazard ratio and then characterization statistically of that and subsequent an appropriate for.
Including you know meetings and otherwise we will look to then share the full or data set in overtime.
And then I can take the pricing question. Your question, that's primarily around an ex you asked pricing and our expectations. A couple of factors are coming into play here. The first is the timing of where and how quickly X U S markets are going to be shifting from more of a central procurement pandemic setting to an antenna.
Makes studying so we are looking at how it different regions and countries aren't gonna be shifting back toward some more endemic or a commercial approach when we get to that position, we will be again pricing the vaccine. According to the value that it provides in different health care systems around the world and again following established.
Tons around cost effectiveness guidelines and based on the country regulations and a public health it's already guidance.
The over all global average price, we do anticipate will be largely driven by the original mix. So it is hard to predict what that price. So I ended up being but will continue to share more as we see evolving demand as well as involving pricing.
Okay.
One moment for our next question.
Our next question comes from Terribad Croft Mccowen Your line is open.
Hi, guys. Thanks for taking the questions. So is it fair to say that the 2023 signed a P. As of the 4.5 to 5.5 billion as the floor and what minimum revenue do you think could be added from the geographies ear contracts from.
And related to that then to what extent does it include sales and the key markets Superman send in the press release like for example does it include the option from the latest you acid right now.
Thank you for that question. So the $4.5 billion to $5.5 billion is a floor ourselves that we anticipate in 2023 as we already have signed a P. As as well as deferrals from 20 twenty-two into 23. This number does not include options from the U S government.
And then we do anticipate additional sales coming from key markets such as the U S U Japan, Australia. It sounds reach ourselves in Latin America Asia Pacific Middle East and Kovacs. So again to answer your question, specifically that says what we anticipate to be the floor, but.
Unknown in terms of the total opportunity asked me evolved, particularly in the U S market until commercial setting.
[noise]. Thank you one moment for next question.
Our next question comes from just Ghafar with J P. Morgan Your line is open.
Hey, guys. Good morning. Thanks for taking my question are the short term supply constraints mentioned as the reason for delivery delays resolved at this point.
How does bivalent booster uptake so far this fall compared to your expectations.
And as it relates to China's potential orders of western mrna vaccine, what's your level of optimism that that could come to fruition within some reasonable time timeline say the next year or so.
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Sure. So it's different I'm gonna take the first question on supply and then I'll transfer off off over the commercial P. CS cause I surely my remarks.
We actually have to deal with a very complex.
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Doing these kind of in the recall times as you are aware.
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And the Prozac was airborne and promised seasonal labor day weekend.
And and the sheep from 10 goes provide which is what we saw were 12 74 Ya.
And for the first time sitting fargo's basically doubling them both I needed.
Sending them both guilty until we've had quite a number of paint points Weaver could finish.
Manufacturers.
We are looking for another one of those issues.
So it will cost you being so does the speak.
Yeah, many of those things to be learned.
That we are working on to put no.
Robust excuse.
For the end of a year. So that we are in a much better place for a total of 2024.
Okay.
Sure. So the first question around vaccine uptake.
We're seeing some variability around the world in terms of vaccination rate with the best data, thus far really coming from the U S market as we look at 20 twenty-two vaccination uptake verse has 2021, specifically for covered boosters are actually tracking a similar pattern.
And it's a little bit early to see what November December and the rest of them to fall and winter season will look like but the the early right well in absolute terms are fairly low they are tracking the trends that we expected compared to last year.
Around the World, we are seeing Submarkets with very high I've take a vaccination rates really instrument by public health authorities.
And in other markets, we're still looking at sort of the the dynamics I have played out this year with populations have recently gotten there there are fourth booster I'm in the summer time.
And regulation regulatory body is recommending that the wait a few months before they got their first booster. So I think more to come as we continue to track around the world, but the early signs of uptake are encouraging.
Your last question on China, we continue to look at the opportunities in China.
Nothing new to report here as of now, but it is certainly a key market of interest for us commercially.
Thank you.
One moment for our next question.
Our next question comes from Jeff, Michigan with Bank of America. Your line is open.
[noise] morning, guys. Yeah. Thanks to the question just had just had a couple of just wanted to follow up on your last comment you know you mentioned booster adoption has been mixed depending on Geography's Uhm is this something that you that modern it expects to further invest in with regard to you know value of boosters additional follow up and.
Studies that that's the the first question the second one will be more for for Stefan. The you know the balance sheet remains pretty strong Oh, you guys have done some you know some buybacks, but we haven't seen you know.
A cluster of you know Ah Ah Ah.
Acquisitions or any you know any sort of.
Real capital allocation. You know is is where would would M&A sort of fall and your and your priority list with with uses of cash and does that change as you know COVID-19.
<unk> continues to you know to sort of wind down with regard to the you know the the revenue base twenty-three over 22, and and maybe maybe even more modest going forward. Thank you.
So did the first question on if we are investing in the vaccination rates F. A shared earlier today the medical need continues to be clear for Covid booster vaccination, especially if you compare it to you know the hospitalizations and deaths compared to flu. So what we're really doing is par.
And rang with governments and public health agencies to share in the data that we have in terms of the ongoing medical need at a country level as well as the value of Covid booster vaccination and their populations and it's a partnership with the public health authorities, that's really driving increased urgency.
Action around vaccination. So that's our approach I must we believe public health authorities are in the best position to encourage vaccination for their populations.
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But the team he's very active we are looking at the the drink on a regular basis.
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Alright, Thank you guys.
One member for next question here.
Our next question comfortably letting them know if you'd be extra line or something.
[noise] no. Thank you so much for taking my question just another one on our S. B in terms of thinking about I'm Marnie.
Any of the vaccine modality in the context of R. S. B as we move beyond Covid vaccines I guess, how are you thinking about the potential for mrna and potential advantages relative to other more traditional vaccine modality is in the context of R. S C and I got what we could learn from some of the upcoming read out.
Both I guess with opportunity and honestly you, but also what it could tell us about at Marni potential vaccines relative to other modality, it's more broadly thanks.
Great well. Thank you for the question so.
So first we have previously demonstrated with our platform in Covid and in fact in some recent publications even flu <unk>. We're we're we generally see a really broad based and balanced immune response. So we tend to see very high T cells in cell mediated immunity and you know I would.
I would argue some of the highest if not always the highest antibody neutralizing titers and both of those are really important as you start talking to you about older adults and respiratory infections, which is probably why we have tended to see higher efficacy with the mrna platform than other approaches in that high risk population, including Covid you know over the last couple of.
Years, and so those features of the platform the ability to generate really strong selling museum UDP boost T cells, which are important for providing stewardess severe disease, but also pair that with good achieving very high titers for a seasonal protection, where again, you'll get high neutralizing titers, which provide a barrier to the amount of infection that you're gonna get <unk>.
Which is really really important for older adults because their their cell mediated responses or indeed immune system, just isn't as strong even with a great vaccine and it's that combination that we think defines.
Our advantage for a plot for perspective and why we're so excited about developing a portfolio respiratory vaccines and of course, all the leading killers in that space.
Killers, no space for older adults. It also fits right into that as we all know right now there is a huge on that need in that space.
We're very pleased to have enrolled believable that phase three study and we're gonna we're actually quite pleased with the Tigers and sell me the immunity that we saw in early development some of which we presented publicly so we're looking forward to that actually read up.
In terms of other approaches, but also just celebrate the recombinant protein and viral vector and agitated approaches have also really exciting progress in the last two and the last really year year and a half across a range of companies RSV. The huge on might need it will take many different approaches to have an impact there and if.
Anything I think the success of others gives us optimism that our approach is going to also be successful, but they were likely going to need many different solutions to this for older populations. We do believe that our platform has an advantage, but given the success of the other vaccines and really I think quite encouraging advocacy results. It's important to note that there are many good.
Successful options out there and it may not always be possible to differentiate between them, but we hope to be in that first class.
Great. Thanks.
One of them before next question.
Our next question comes from Joseph Stringer was need them. Your line is open.
Hi, good morning, Thanks for taking our questions just a clarification on the deferrals from the 2022 contracts. There's two to 3 billion are those locked in signed a P. As in there just being deferred to twenty-three years, there any optionality built into that.
And then the second question is just broader base pipeline, you know you're expanding pipeline 48 programs thirty-five clinical trials.
But what was curious if you could comment on the relative mix of the pipeline respiratory vaccines immuno oncology rare disease, you know what.
<unk> now and how you sort of see that evolving and that relative mix of the pipeline programs.
Overtime.
Maybe I'll take the first one quickly so yes those are locked in advance purchase agreements for 2000 twenty-three and so they're just shifting to the right from 2022.
Great.
Broader question of the pipeline as you mentioned, we've got 48 programs now multiple phase III zone going with some we hope to be quite a minute Readouts you know as as you look at it right. Now we are we have most of our late stage pipeline is respiratory vaccines for sure right. We have four programs there and we expect the flu and RSV data to come up quickly.
And we will then move rapidly in respiratory into combination vaccines and so we have three adult combination vaccines in clinical studies, we have two pediatric respiratory combination vaccines that are that are moving forward and that you should expect to expand into very quickly. We would hope registration will studies over the coming period, which will allow us to then build up.
What we hope will be the best respiratory portfolio, both from a monovalent vaccine protected but most most importantly from combinations against the viruses that matter in the different populations that we really want to protect particularly older. Adults is very young so respiratory will be a growth area for us for the near term, but we will you'll start to.
See some diversification again talking about the late stage, we already have a C. M V phase III program, which is up and running in enrolling has been and you should expect us in our latent virus vaccines to add additional late stage programs were quite passionate about Epstein Barr virus as you all know and we expect to move that in and so you'll start to see some first diversification in terms of our waiting.
[noise] virus portfolio, something that's already happened with CMV Uhm, a couple of things that will come quickly as well or we will we hope that the the read out from a personalised cancer vaccine therapeutic vaccine berm and is it really a therapeutic because we are preventing cancer from recurring but we're intervening in somebody who's got that cancer already and because of that it.
Really has a therapeutic profile to it as an intervention and that that therapeutic read out that we expect to have over the next month or so this quarter will trigger if it's successful moving at a pivotal state studies and and as we all know immuno oncology is obviously a competitive space, it's a space, where they're still substantial need to improve upon the current Idaho thorough.
And there are many different histologies and types of cancer in which it will make sense to develop a program. If we show a benefit so that expansion could happen very quickly and we'll be the large diversification into oncology and the therapeutic context outside of the vaccine space.
And then the last one is what is is is rare diseases, which we spoke about we have a couple of programs that have already starting to show some very encouraging results of pharmacology and potential clinical readouts and as soon as we decide on doses for for instance, appropriate on a Cassidy and your program and get confident that we've got a line with regulators and the path for for that program.
You should expect us to move into pivotal studies, there as well and then as I said in Israel. Prior question that will not just be a one off for us once we really believe we've got a modality, we will be bringing forward many programs in succession in parallel there.
As you look forward on how do we think about the diversification of the pipeline to the bigger question. It really is a question of time horizon, Yeah, right now, it's a lot of respiratory and and waiting very quickly, though we expect to be both expanding that respiratory and expanding our move into therapeutics, particularly cancer and rare metabolic disease and that could happen.
And quite short order based on upcoming clinical redux.
Great. Thank you for taking my questions.
One moment for our next question.
Our next question comes from any for her with SBB Securities. Your line is open.
Hi, Good morning. This is living on 594 huh.
Just have a question related to volume to be expected. So I know that your volume production. You've mentioned that you know you'd exclude 20 2020 based on because of the variability there and I was wondering for 2023, how much I'm, calling volumes alright, Let's say call me go ahead and use to anticipate you meet you then by the <unk> and also.
Moved to Oregon, and then <unk> Fort locally vaccine do you continue to anticipate a P. As in the future. Thank you.
Sure. Thank you for that question on as I outlined in terms of volume expectations for next year on the outside of the signs of a P. As we are looking at a number of variables that could impact the total volume so in the long term.
We do believe we should approach is five to 600 million volume comparable to the flu volumes that exists today in 2023, there will be a range depending on the the viral evolution doesn't.
Ongoing medical need across different regions, where we see a public health authorities coming out with recommendations as well as just a broader consumer appetite came back Tonight. So the reason for that sensitivity on the volume that I shared earlier is we still have a number on variables since we're continuing to transition into an endemic stage.
And so in the short term, we don't have a clear picture of that total volume and what that could look like but we do believe from a medical perspective of her time, we should be approaching at least at least the same items as a flea market.
Yeah.
Thank you.
And I'm not showing any further questions at this time I'd like to turn the clock back over to stuff My bad software to closing remarks.
Well I. Thank you everybody for joining the call today and for your first 20 questions. We look forward to speaking to many reviewing the hours to come in the days to come in there. So we're coming to you next week all across the U S. A.
Alright.
Ladies and gentlemen does conclude today's presentation, you may know disconnected have a wonderful day.
Yeah.
The conference will begin to T to raise your hand during Q&A you can dial 911.
[music].