Q3 2022 Novavax Inc Earnings Call
Good afternoon, and welcome to the Novavax third quarter 2022 financial results and operational highlights all participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask any question. You May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note that this event is being recorded I would now like to turn the conference everybody Silvia Taylor Executive Vice President Chief Communication Officer. Please go ahead.
Good afternoon, and thank you all for joining us today to discuss our third quarter 2022 operational highlights and financial results. Our press release announcing our results is currently available on our website at Novavax Dot Com and an audio archive of this conference call will be available on our website later today.
Before we begin with prepared remarks, I need to remind you that this presentation includes forward looking statements, including information relating to the future of netback. Its key strategic priorities plans and prospects for 2022 and financial guidance, including total revenue the ongoing development of our vaccine candidates, including anticipated timing of trial results.
The scope timing and outcome of future regulatory filings and actions the efficacy safety and intended utilization of our vaccine candidates, including against COVID-19 variance.
Global market opportunities for our vaccine candidates, our manufacturing capacity and the future availability of our vaccine candidates and key upcoming milestones. Each forward looking statement contained in this presentation is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.
Additional information regarding these factors appears under the heading cautionary note regarding forward looking statements in this slide deck, we issued this afternoon and under the heading risk factors in our most recent Form 10-K, and our third quarter Form 10-Q filed with the Securities and Exchange Commission and available at SEC Gov and on our website.
Backstopped com as well as subsequent filings with the SEC.
The forward looking statements in this presentation speak only as of the original date of this presentation and we undertake no obligation to update or revise any of these statements.
During this call in order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results and the non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by GAAP should not be considered measures of liquidity and are unlikely to be comparable to non <unk>.
<unk> financial measures provided by other companies.
Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable GAAP financial measure within the investors section of our website Oh, the vacs Dot com.
Now please turn to slide four.
Joining me today is Stan <unk>, President and CEO , who will provide an update on our recent progress and our upcoming strategic priorities. Additionally, Doctor Philip Dubowski, Chief Medical Officer will discuss our clinical development across our pipeline and John <unk>, Chief Commercial officer, and Chief business Officer will provide an update on our <unk>.
Marshall progress and our outlook for 2023, finally, Jim Kelly, our Chief Financial Officer, and Treasurer will provide an update of our financial results Dr. Greg Glenn President of research and development will also be available for the Q&A section at the end of today's call I'd now like to hand, the call over to Stan Please turn to slide five.
Yeah.
Thanks, Sylvia and good afternoon, and thanks for joining our third quarter earnings call.
In addition to the financial report that Jim Kelly will give Philip will provide our update on important clinical data that we're accumulating which continue to highlight the advantages offered by our adjuvant and protein based vaccine.
And following that John will discuss our commercialization efforts.
But first let me start with the financials and Jim will provide you more details but the highlights include revenue for the quarter was $735 million. This met our target for the quarter and bring us to $1 $6 billion in revenue for the first nine months of the year.
During the last quarter, we continue to gather data that supports the differentiation of our vaccine.
Believe these differences are important and are a predictable consequence or vaccine technology.
Our nanoparticle.
The antigen is formulated with matrix M. It generates a very broad and long lived immune response, which we believe has advantages in the face of the continued emergence of new variants. We believe that these differences will allow us to deploy a vaccine that may not require serial updating it may not require.
Our bivalency.
No vaccines vaccine has been granted regulatory authorizations globally and.
In the third quarter, we received emergency use authorization from the United States represent the last major market in which we have obtained authorization for use throughout the year, we have been developing data.
With our many clinical trials across the globe that support the advantages of our vaccine and together. We believe these advantages will be the basis for the continued long term expansion of our product in markets throughout the world.
We now have data supporting new accidents durable immune response that achieve levels associated with protection in or phase III trials.
With the ever Mutating Covid virus, we want a vaccine that can stimulate an antibody response across any variance with it arises and while we can't predict the future. We can show that our vaccine is a breadth of response. It covers all of the barriers that we measure to date, including the Alpha beta Delta and be a wash.
One through five.
This is an important for obvious reasons, but it should be pointed out that we don't have any data, which suggests that it's a good decision to switch to a be a five vaccine given that our current vaccine stimulates levels.
A V a five antibody that should be protective of our.
Our data also shows show that we have an 82% prevention of infection over an extended period plus our data continues to provide confidence in the use of our vaccine and its safety its favorable safety and Tolerability profile.
Our mission must be to remind and educate the regulatory and policy bodies that as a protein based adjuvant in vaccine our vaccines is different from what's on the market.
As long as we continue to demonstrate that our current vaccine stimulates a relevant immune response against circulating birds.
We believe our current vaccine will be a good choice for ongoing vaccination campaigns.
Portly.
It has the added advantage that when you continue to boost with the same vaccine you continue to see maturation of these responses with the expectation that youll see more effective.
Longer lasting responses when.
When we see data that suggests the need to update our vaccine with a new strain we will.
We will do so with either a monovalent and bivalent vaccine based on data that we didn't have and relevant policy recommendations at the time.
There may be some public health agencies prefer either a strain change are bivalent vaccine and our plan is to develop in parallel.
<unk> containing monovalent and bivalent vaccine.
Switching topics, we have mentioned in the past that we have been collaborating with the serum Institute at Oxford University on a new malaria vaccine that includes our matrix M. Adjuvant I'm very pleased that Adrian Hill of Oxford University presented a very high level summary of phase III efficacy data at a late breaking session.
Tropical disease and malaria coverage in Seattle last week.
More detailed safety and efficacy data will be available when approved for publication later this year.
Going forward, we believe that weird very good position, we have a global manufacturing capacity to support our planned sales would have actually did this capacity will also support our pipeline vaccine candidates for flu recombination flu COVID-19 and for malaria.
And we now have a global marketing and regulatory presence to support our goals for 2023 and beyond.
I'll now turn the call the presentation over to our Chief Medical Officer, Philip Dubowski, who will be followed by John <unk>, Our Chief commercial officer, and our Chief Financial Officer, Jim Kelly.
We will end with a session of Q&A.
Thanks, Dan since the last call we have developed a significant amount of new clinical data today I'm going to review data from study three O seven which is our locked a lot consistency study that includes head or August boosting on top up two and three doses about an hour and it.
Then I'll describe preliminary findings from the study 311, our string change study that evaluated boosted responses to a prototype vaccine from our Crosby, a one vaccine and bivalent vaccine when given on top of three doses of mrna vaccine, but first I want to review some findings we have recently disclosed please advance to slide seven.
From a U T study, we originally published that our vaccine had 82% efficacy.
Renting all infections over six month observation period.
This was despite the majority of cases being caused by the Alpha variant protection.
Protection from infection is important because if you don't get infected you can't transferred virus you can get a quote for Covid and you can get long Kobe and you can't be the source of new variants.
And our adult U S. Mexico Phase III study, we achieved a formal regulatory endpoints supporting boosting in the U S population and we demonstrated durable immune response as well as a broad immune response.
<unk> cross reactive antibody levels directed against Omar Khan variance, there were consistent with levels associated with protection and our phase III studies.
And in our adolescent phase III study, we met the regulatory endpoint for boosting and 12 to 17 year olds and show the Macik responses to omicron variance were comparable to those associated with her protection.
Okay, Let's go to slide eight and talk about study three O seven which is our last two lot consistency study.
For this study I'll discuss the data supporting that shipment of our locked lot endpoint and the magnitude and breadth. The heterologous boosting response. This is still preliminary data in additional hematologic assessment is ongoing.
Let's move to slide nine please.
Yeah.
Study 307 enrolled 911 adults in the U S who had no history up recent COVID-19 infection, and who had received two or three doses of an approved COVID-19 vaccine with a the last dose being at least six months prior to enrollment.
As you can see on this slide most of our subjects received two or three doses of either <unk> or Pfizer. If you received one or two doses of J&J and a very small number had received two doses another box.
After enrollment all subjects were boosted with one of three different lots of Mubarak's vaccine and the survey was collected at day 28 for hematologic assessment.
Let's move to slide 10.
Yeah.
Demographics shows the three groups were well balanced the ratio makeup was broadly representative of the general U S population. The median interval prior to the Novavax boost was approximately nine months.
Go to slide 11, and look at the primary endpoint.
As you can see here the primary endpoint of non inferiority mention that said he was achieved as measured by anti S. Agg Titers at day 28. This was the regulatory endpoint confirming consistency of our manufacturing process. You can please note the extremely tight confidence intervals here.
But let's look at the immune responses following her August and homologous boosting on slide 12. Please.
Because most of the subjects in this trial are received another box vaccine is the heterologous booster, we had the opportunity to evaluate the magnitude and breadth of immunogenicity and different subsets.
Shown on the far left are IGT responses in a small group of seven subjects, who received two doses of Vacs priming series, followed by a single Novavax boost.
We're also showing responses for those who received two prior doses of modernity to prior doses of Pfizer and windows from J&J.
Ah superimpose across the protection threshold drive by the U S government based on our U S phase II trial and the actual paid three levels, we obtained in our two phase III studies.
But post the post booster levels, we saw in this trial matched or exceeded the levels achieved in the phase III efficacy study.
With what we've seen previously we observed the highest antibody titers for the homologous novavax boosting subset.
Okay, Let's go to slide 13, and looking ahead August boosting on top of three doses of mrna.
This is a similar set up to the previous slide but for the group's received three prior doses over there now or Pfizer or two prior doses of J&J.
So a full primary course, plus one prior boost in each of these subsets of antibody levels exceeded the phase III levels.
And for the mrna recipients levels were approximately 20% to 30% higher than we saw in the previous slide with a primary with just two doses of mrna.
The group with two doses of J&J had brought conference intervals because of a small sample size.
Now, let's look at slide 14 to look at the breadth of immune response.
Here, we evaluated IGT responses to prototype and to Omicron sub variants B a one in five are.
You're displaying the two doses of Novavax boosted once with Novavax has a solid a bar on the far left hand side of each trip out and.
And that's compared to three doses of <unk> or three doses of Pfizer boosted ones with Novavax.
In all cases, <unk> titers of cheap levels predicted to be a kohl's or protection of approximately eight to nine 5%.
That's before the highest antibody titers against both prototyping variance when the homologous novavax boosted subjects.
In summary, we believe the three are some findings are important because they confirm consistency of manufacturing, which is critical for a vaccine and accenture in the U S and because they showed robust immune responses to prototyping variants after homologous and hit our August boosting with post boosting antibody levels approximating those levels associated with protection and our phase III studies.
So let's move to slide 15, and talk about the next study.
Now I'll review the top line data from study 311. The study was designed as a strain change study evaluated the performance of our prototype vaccine and I'm going to try and be one vaccine and a bivalent formats vaccine when given after two and three doses of mrna. So let's go to slide 16, all the design.
The study was conducted in Australia, and adults 18 to 64 years of age. The participants received two or three doses of mrna and were boosted with either a prototype vaccine that'd be one vaccine or the bivalent vaccine today I will only talk about participants who are who received three prior dose of mrna and who are boosted at least 90 days after their last dose.
So let's look at the demographics on slide 17.
The study groups were well balanced with racial groups representative of the overall Australian population the participants receive their boost a median of 180 days after their last mrna you dose.
You can see that Australia did a better job of controlling infection is a relatively large proportion of this group did not have evidence of prior COVID-19 infection. So let's look at the endpoints on slide 18.
The primary endpoint for the <unk> portion was pre specified to be in the three dose group and participants who had no. Prior COVID-19 infections, we compare the day 14 neutralizing responses against B, a one in three treatment groups and.
In the first column, we compare be a one inch realization responses after being boosted with b one vaccine to be one of our sponsors after being boosted with prototype.
This was a strain change endpoint.
And because it would be a one vaccine responses against be able and were higher than those induced by the prototype vaccine. The study achieved statistical endpoint, allowing for spring change eventually need it get it.
Click.
The second column compares the bivalent vaccine to prototype there.
Chances were similar with the conference intervals overlapping one and the final column compares the bivalent vaccine to the VA, one vaccine and the responses were lower for the bank of Ireland vaccine.
Ive a quick so as far as the B one responses go the data does not support a measurable benefit for the bivalent vaccine.
Okay, let's look at some comparative data on slide 19.
Here, we're looking at IGT responses against B E. One and all the participants who received three prior doses of mrna vaccine. This group most closely resembles the general population.
Here the responses were similar between all three vaccines, although I wouldn't boosted with our prototype it.
It was numerically higher by about 15%.
Please advance to slide 20.
Here, we're looking at IGT responses against prototype do Hahn Street once again, the responses were statistically comparable.
Up to a 20% numerical benefit for boosting with a prototype vaccine of course, neither prototype nor be Avon arent circulation. Currently so let's look at four drifted strains slide 21. Please.
Displayed here is the neutralization a response I can be a five make sure it isn't functional pseudo.
Pseudo neutralization assay.
Oh go concept variant that was not in any of the vaccines, but it's related to the B. One. So we don't expect a superior response would it be a one vaccine it.
However, there was no benefit observed for either be a one vaccine nor the bivalent vaccine compared to the prototype vaccine in fact that prototype vaccine give numerically higher responses. This indicates that boosting with our current vaccine is a viable approach can be considered as a future proof strategy for emerging variants.
Let's look at some records you can see on slide 22.
When given as a second boost dose for all three formulations. They were similarly, well tolerated with patterns consistent with what we've seen previously.
Here are the most common local reactions are pain and tenderness, the vast majority being none mild or moderate in severity.
Slide 23.
And look at solicited a systemic symptoms and the pattern is also very similar to what we've seen previously with very low rates of grade three events and a negligible fever signal.
Okay lets sum this up on slide 24.
So to sum up we believe our data supports the continued and future use of <unk> 23, 73, as a booster for our U S. Mexico Phase III study using our per type vaccine.
Describe your durable immune response.
Data, indicating that the levels achieved against drifted omicron variants were consistent with levels associated with protection and our phase III studies.
Today I showed you data that when we are usually the heterologous booster after two or three doses of arthritis vaccine, we achieved broad immune responses against drifted omicron variants in.
And the magnitude of these responses are considered to be protective when applying the NIH U S government corrosive protection thresholds.
Finally, our study with omicron be one vaccine in bivalent vaccine indicated no measurable benefit over a prototype vaccine.
So when we think about what it'll be causing illness over the next few months it'll not be be a five.
Or there's some varied that has yet to emerge and vaccines that induces high levels of cross variant responses might be appealing as the way to future proved up ongoing boosting effort imports.
Importantly, the vaccine is currently stocked and can be deployed immediately finally, because this is our original vaccine we have confidence in the preexisting long lived safety database. This might be a feature that's attractive to individuals who are hesitant to be boosted.
Okay. Let me turn this over to John for you now.
Thank you Phil.
Okay.
Thank you our doses delivered to date also include over 19 million doses by our strategic partners Serum Institute of India, <unk> Bioscience and Takeda.
Licensed territories.
We remain in ongoing discussions with our customers around the world, including the EU U S, Canada, U K, Australia, and others to ensure optimal supply of doses through the remainder of the year and into 2023.
Notably in the U K, we delivered an initial 1 billion doses in the third quarter. We are in active discussions with the UK Health services agency around supply and continued to provide data to J C V. I to support policy recommendations for boosting in adolescence and expect to receive M. HRA approval for <unk>.
<unk> booster imminently.
In the EU, we are expanding our presence and strengthening our partnerships for now and well into the future to support. This we are in the process of finalizing a revised delivery schedule for the remaining 23 million doses committed under our E. P. A.
In the U S. We remain in ongoing discussions around additional supply of our Covid vaccine now available for boosting of adults 18 and over.
Please turn to slide 27.
We continue to closely monitor the market landscape and we believe that current global vaccination trends in the upcoming winter respiratory season present, an ongoing near term opportunity to drive uptake of our vaccine.
In the U S. According to recent CDC data around 39% of adolescents have yet to complete their primary vaccination series. Additionally.
Additionally, around 47% of vaccinated adults have yet to receive a first booster dose.
Additionally, in the UK.
Germany, France, Italy, and Spain around 48% of adolescence have yet to complete their primary vaccination series and around 20% of vaccinated adults, aged 18 to 59 have yet to receive a booster.
With authorization now received for primary vaccination in adolescence, and the U S EU and U K and for a booster dose.
In adults in the U S and EU are recent label expansion aligns with this market need.
Outside of the U S and Europe , but we see similar dynamics that present additional near term opportunity to expand the portfolio of vaccine options and appeal to those not yet vaccinated or not yet boosted.
In fact, we have already begun to see encouraging evidence of healthcare providers and consumers utilizing or a vaccine as a booster dose.
Based upon available data through October around 60% of new vaccine doses administered globally has been used as a booster.
Please turn to slide 28.
Our key focus to capture the near term and long term market opportunity is to expand our label to include adolescent boosting based upon the compelling data phillippe discussed today and in the U S. To also include additional booster doses in adults.
Alongside this we will also focus as always on gaining supportive policy recommendations. These efforts will build upon our label expansion to date, which includes authorizations for primary vaccination in adults over 40 in over 40 countries authorizations for primary vaccination in adults in the U S.
EU and 11 additional countries.
Authorizations for boosting in adults in the U S EU and six additional countries.
Please turn to slide 29.
Looking to the long term COVID-19 market opportunity, we expect to see a transition to a commercial market in the U S and other key regions in 2023 with clear evidence that the virus is not going away. We expect an ongoing need for annual seasonal vaccination resulted.
In a recurrent named COVID-19 booster market and we believe this opportunity will be larger than the annual influenza market due to COVID-19, greater burden of disease and higher infectivity rate.
In the U S. We believe an annual booster market in 2023 and beyond can include around 225 million individuals, which is significantly larger than your annual U S flu market in recent years of 170 to 190 million individuals.
In the U K and the other key markets in the EU. We believe this could be around 250 million individuals.
This potential recurring opportunity includes individuals' that have already received their first booster dose as well as individuals that had been fully vaccinated and are eligible to receive a booster.
Importantly, beyond these geographies, we believe that a similar sizable and recurring booster opportunity will also take shape and other key markets, including Asia Pacific.
Please turn to slide 30.
As we look towards this long term market, we believe our competitive product profile will differentiate our vaccine among health care providers and drive adoption among consumers as phillippe discussed today, we continue to build on our existing body of clinical evidence with additional data.
They demonstrate our vaccines key benefits such as its high efficacy.
Strong durability of immune responses protection against infection favorable safety and reacted unisys profile and importantly, its breadth of immune responses against a broad range of variance.
We believe these key benefits coupled with our vaccines, well established technology platform and favorable transportation and storage profile create a competitive product offering.
Based upon our data generated to date, including initial results announced today for our AUM or crime variant vaccine program. Our commercial strategy is to continue deployment of our prototype vaccine with that being said as Philip mentioned, we will continue to generate additional data and be prepared to supply our various specific vaccine.
They are supported by data or requested by our customers.
Regarding commercial strategy, please turn to slide 31.
With strong foundational elements in place we are executing a robust commercial strategy.
I'd like to highlight a few of our key commercial priorities that we believe will drive success in 2023 and beyond.
First we are expanding our commercial footprint in priority markets. We have established our EU regional office in Switzerland are expanding our commercial structure in the Americas, including U S, Canada, and Mexico and building our commercial presence in Asia Pacific.
In parallel we will continue to partner with local policymaking bodies to advance supportive policy recommendations. This will be critical to ensuring widespread access and capturing a significant share of the anticipated recurring market outlined today.
We are also building brand awareness among health care professionals and consumers through a comprehensive marketing strategy to communicate our vaccine strong data and key benefits.
In an effort to position <unk> as a key player in the commercial market. We are also developing our commercial network and building relationships with key stay home. So.
Key stakeholders, such as pharmacies and purchasing groups, we will be transitioning to single dose vials and expect to make available pre filled syringes in 2023 in order to enable easier administration and lower waste of doses, serving as a competitive advantage for our product.
We believe ongoing execution of this global commercial strategy, coupled with our vaccines competitive product profile will support our long term success and solidify our role in the recurring COVID-19 market I.
I will now hand, it over to Jim to discuss our financial results for the third quarter.
Alright, Thank you John .
Afternoon, we announced our financial results for the third quarter of 2022.
Details of our results can be found in our press release issued today and our 10-Q filing.
I will begin by providing an overview of our third quarter 2022 total revenue performance net income and cash position, then I will discuss our quarterly results in additional detail as well as provide commentary on our refined full year 2022 revenue guidance.
In the third quarter of 2022, we recorded $735 million in total revenue compared to $179 million in the prior year.
Total revenue for the third quarter included $626 million in product sales based on 35 million doses sold by Novavax.
Grant revenue of $106 million in the third quarter of 2022 includes revenue on the delivery of 3 million doses to the U S government and compares to $135 million in the prior year.
Additionally, we recorded royalty and other revenue in the third quarter of 2022 of $2 million.
Our cost of sales for the third quarter of 2022 were $435 million I'll discuss this in a bit more detail on the next slide.
R&D expense for the third quarter of 2022.
$304 million compared to $408 million for the comparable period in 2021 the.
The decrease was primarily the result of a $98 million benefit from the settlement of a manufacturing agreement.
Additionally, we recorded selling general and administrative expenses of 123 million in the third quarter of 2022 compared to $78 million in the third quarter of 2021.
The increase in the period was primarily the result of activities in support of the commercialization of <unk> of it.
For the third quarter of 2022, we recorded a net loss of $169 million compared to a net loss of $322 million in the third quarter of 2021.
And finally, we continue to maintain a full tax valuation allowance and we ended the third quarter of 2022 with one 3 billion in cash.
Please turn to slide 35.
Cost of sales for the third quarter of 2022 were 435 million. This amount includes $249 million related to excess obsolete or expired inventory and losses on firm purchase commitments.
The recognition of these costs was driven by our efforts to align our supply and third party future purchase commitments with anticipated demand for <unk>.
If inventory sold for the third quarter was valued at expected standard cost adjusted cost of sales for the period would have been approximately $444 million, an increase of $9 million as compared to cost of sales recognized.
<unk> gross margins on sales to high income countries are expected to be between 70 and 85% of product sales.
As noted earlier, we are refining our full year 2022 total revenue guidance to approximately 2 billion. The low end of the previous guidance range of two to $2 3 billion.
As a reminder, total revenue and reflects all sources, including product sales and have activated by Novavax grant revenue royalties and other revenue.
We look forward to sharing additional updates as we progress in the upcoming quarters.
With that I'd like to turn it over to Stan to discuss our upcoming strategic priorities.
Okay.
Thanks Chip.
Turning to slide please with a strong third quarter reported today, we are pleased with the momentum regenerating across our business moving into the end of the year, we were focused on executing against our key strategic priorities.
These include delivering doses globally to achieve our revenue guidance ongoing expansions to our label and supportive policy recommendations for an accident.
And initiating a phase II trial for COVID-19, influenza combination vaccine and Standalone influenza vaccine by the end of this year, which will enable a phase III efficacy trial expected to start in 2023.
So as we prepare for the upcoming winter Covid season, as well as 2023 and beyond we believe we are well positioned to be a leading provider of COVID-19 vaccines and.
As you've heard today through our data generated to date, we are confident in our prototype vaccines competitive profile, including its durability of immune responses its ability to address a broad range of variance its protection against infection and storage and handling benefits. We believe these differentiating factors.
Along with our ongoing label expansion.
Manufacturing and supply network will allow us to capture a meaningful share of the recurring COVID-19 market.
So thanks for your attention and I'll now turn it over to the operator for Q&A.
Thank you. Thank you we will now begin the question the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Using a speakerphone please pick up your handset before pressing the key.
A question. Please press Star then two.
And our first question today will come from Roger song with Jefferies. Please go ahead.
Great. Thank you and congrats for the <unk>.
A quarter or a couple of from US the first one is.
The various doses of vaccines so.
Given the data you presented today.
The bivalent.
Hum.
D against.
So just curious what is the plan for the bearings protective vaccine in moving forward.
Makes sense.
And what kind of bearing you plan to do moving forward given you're now so we are having a numeric almost every once in a while.
I'll have a couple of follow up.
Thanks This is phillippe.
I mean, Stan and John both mentioned that we do plan to develop a varian vaccine as well as the bivalent too to realize service market as needed, but your observation is right I mean, what we saw is that our responses against the a five well very good.
And.
Transmission or are they the the amount of infections caused by <unk> five is plummeting. So it's less of a relevant a stir.
Strain for us to pursue so we're actually shifting plans a little bit and we're pushing forward with a b Q1 be Q1 dash, one varian and we're going to develop that and take that into the clinic and also formulary that is the bivalent product whether you know time will tell whether that's required or their customers one such a vaccine but.
The timelines will allow us to bring that are really too to the market at a time when the southern hemisphere should be searching and you know in the second quarter of next year.
Great. Thank you okay.
Alright.
Question underneath.
The financial.
Just curious.
What is the.
Sure.
Yeah for me.
The guidance for second half two I didn't hear you yet for two 2 billion just.
Just curious that in for Q so far.
D C.
The preorder looking like.
And how did that compare to that in Q.
To your point.
Yeah, Hi, Joshua Zeno.
We're confident with our order book at this point through the end of the year and I think that we're being conservatively.
Cost is about what deliveries, we think we'll be able to make towards the end of the year as we get into the <unk>.
Holiday season, and in product being shipped out and received in during that period of time. So I think you know the guidance is still strong and Oh, just adjusting and refining a bit down to the low end of the range.
Awesome, Okay, maybe just last one from us.
Just looking ahead at 14 times three and four.
Four.
Calculate this right you probably have.
Understood.
Okay.
If it.
The doses.
For <unk>, so just curious.
How should we think about that.
The rest of the HCA and when they will start to.
The coming years.
Yeah, it's really difficult to predict what 2023 is going to look like in plywood hesitate to even whisper at guidance.
At the moment I think you know with the transition to more of a commercial market.
Looking at our variant strains, where bivalent strains as a possibility.
And then thinking about the what those markets will look like in policy recommendations.
As I think you've even heard from some of the other manufacturers, it's a little bit challenging to assess at the moment I think what will happen as we come through the next couple of months.
Look at what are our book of business looks like and still remains strong I think we'll have a determination about.
Whether it's existing apa's or incremental business coming into 2023.
I think we the messages that I make should be reinforced which is that the virus is not going away.
We still have variant strains emerging.
It looks like we're gonna have a southern hemisphere boosting season, as well as northern hemisphere, and the fall again.
And I think this overall market size is going to be larger than the existing flu market. So.
While well, where we'd rather not be thinking about the downside of the virus, we have to be prepared and that's what the purpose of the vaccine is and Ah I think more will come in the next few months.
Okay I look forward to that thank you for taking the question and that telephonics.
And our next question will come from Georgia.
Please go ahead.
Hello, everyone congratulations on the progress.
A few on our end the first one I guess I'm still.
Not sure if I missed that but one of the most crucial pieces of data.
Thought was nothing from this morning's release.
That fold increase in near term <unk> titers.
For <unk>.
Three different products that you looked at this as being basically kind of like the main.
Yeah.
Factors that regulators and the community has been looking at.
We thought that that would be.
It seems you have and then we have a couple of follow ups.
And I guess the question is can you provide that.
On the call or if not when can we expect just yet.
Yeah, we havent prepare that data poor disclosure today and I'm not sure. We have specific plans of when we would disclose that I mean, the the fold increase certainly it's interesting that shows the ability of a product to boost but in my mind, what's actually more relevant is the absolute tires achieved doctor you boost because that that's going to translate directly into protection.
Actually if you think about that.
<unk> that we demonstrated today I have a lot of confidence that we havent had now is relevant to the currently circulating strains I would point that Greg My my boss likes to make as well.
We're not claiming is universal vaccine.
We're ever vigilant and we test each of the new variants that come up to our sure ourselves the immune responses that we're inducing a really relevant for that so I think you've got to hold on until we come up with a.
Until we announce a plan of how to.
Announced additional data on this study.
Got it.
Thank you.
Our our issues that basically a lot of our consultants.
He did.
Correlates of antibody protection.
It's quite problematic in the community and just because we haven't had enough data.
That's why it will be important to see that data from your specific consulting.
Consulting fees.
Yes, let me just let me just comment on that because I think you know the phone publication and that wasn't developed by US that was developed by the I mentioned USG and that publication. They founded the better corridor protection for our specific vaccine was actually ITG that's different from what they found for other vaccines, where where they thought that neutralizing antibody was it better.
Protection, what I showed you data today Sudan use four five.
Those were really comparable among the treatment groups and that gives us the confidence to.
Believed that our prototype vaccine, we havent had now is relevant towards circulating.
Got it and then maybe specifically on the FDA label, maybe can you can you walk us through the steps of how can you.
You can kind of like removed at.
<unk> only being used.
First booster I guess, you've presented some of the consistent.
Consistency of data that supports that.
If you can just help us understand the timelines when could we expect that to happen.
That's right I mean this is.
We were asked to develop and we had had been developing and it's what it looks like when they use our booster not only is the first boost but it's the second boost and that's the data I showed you. Both from study 307, and 311 and that data is being really prepared.
Prepared now for a submission to the FDA.
Just kind of a unique position where are in the U S. As you know globally. We don't have a label restrictions on the first versus second or third or subsequent boosts.
Be that as it may I know the data is being pulled together.
It was being prepared for submission.
When a perhaps remind you that some of the studies that the FDA does not like to consider like our one on one study did in fact have multiple boost after four doses and that has been considered by the regulatory agencies.
Got it and then finally a question just on the commercial side.
As we as we kind of start to think about.
Potential commercial commercial market transition in 2023.
Maybe John can you talk about like when when does contracting easily start have you had any initial conversations some of your competitors have mentioned that they are in conversations with.
Uh huh.
<unk> in other markets.
And specifically for the U S sorry to be too U S centric, but.
Our understanding is in order to be covered by a commercial insurer you would have to get full approval by the FDA.
Update us on you believe you can get there in time for dos contract negotiations.
And where do you stand.
For BLA submission.
Yeah. Those are great questions. Thank you so listen each one of those contract negotiations is kind of different around the globe right now we're still under EU Commission discussions and it could be that through 'twenty three that's the basis for the existing apa's and any reordering that would come.
Similarly in other countries like Australia, and Canada will have found a unique contract and we likely expect that those countries will stay under the existing kind of structure with the opportunity for incremental purchases as well. So we're we're in constant communication around the globe, where we're already.
<unk> engaged in talking to those procurement authorities about what that's going to what that's going to look like.
And in the U S in particular.
We will not have any restrictions with the private payers or the the government payers with the EUA.
In place those are conversations that we've already had and <unk> are confident in our positioning while we're under the EUA. So the EUA we'll have.
Hum.
Some very minor implications to us we will ultimately we will be filing for the BLA.
During the course of next year, but not having the BLA fully approved will not restrict us in the fall booster campaign.
Got it thank you so much.
And our next question will come from Tommy with B Riley Securities go ahead.
Good afternoon, and thanks for taking my question. So maybe just following up on <unk>.
Blow off question.
John .
Batesville delivered.
Hi, Scott.
Yes.
Is there an absolute minimum that you have with that as well.
Hello.
You've kind of the world.
No problem.
Commercial board.
Something has to happen as part of the NDA before will go.
Bye.
I've seen in the market and then I have a couple of follow ups.
Okay.
I don't think I quite caught all that Miami, but are you referring to the ex U S or the EUA in the U S.
Excuse me I was referring to the U S. A.
The current 110 million doses contract that you have is there some sort of a minimum you have to satisfy.
Before her.
We can sort of think of private market.
And Duane and waiting to see and beyond.
Yeah, No I mean, well that contract is still in place I think likely we're going to see a movement to traditional procurement and again, it's really hard to say when but if we're if we're keying off of what happened this year you.
You would think that there would be a full vaccination campaign.
Well, we're probably early in the year about you know what what that process is going to look like what strains are being expected with vaccine format. The U S government's gonna want.
So I think that's one of the comments I made earlier or you know what.
Stay tuned through the balance of the year and into Q1.
As we see how that unfolds, whether the U S government will fund the purchase of additional vaccine or there will rely on the.
Public private market to take that over during the course of 2023, So I think stay tuned.
But I think likely youre going to see.
Procurement, taking place in the commercial market in 'twenty three.
Okay. Thank you for satisfying that and then on the fourth quarter.
Delivery.
Estimates that you have it looks like you only need.
Didn't get Incrementals 15 million doses to get to.
<unk>.
You'll find guidance.
Can you confirm that.
What countries.
You could get that from us that is that basically EU U K in Australia, and New Zealand.
Essentially the.
The countries and customize that.
Just can you just clarify that.
Well I think the guidance is.
Is it kind of is.
Clarifying that I don't think we're going to give specific doses by country.
But it will likely be across all of our Apis and varying dose amounts, but you know, we're not going to disclose what those specifics or a country by country.
Understood and then on the <unk>.
R&D expenses this quickly.
It looks like it did come down quarter over quarter, but it was a result of.
Manufacturing agreement.
Can you speak to what leverage you may have going forward.
As you think about fourth quarter, but also next year and are recognizing that.
You are being very strategic about investing behind.
Trials and scaling up for the put up for debate and specific vaccine.
Okay.
Certainly.
When you when you look at our R&D expenses this quarter Youre correct. It was about a $98 million benefit. So of course that was taking up to about $400 million hump, we do expect.
Some continued decrease in R&D as we bring more of our manufacturing capabilities online capitalized in the inventory, including our <unk> plant. So you'll see some trending down there over over time.
Would say that in this period as well.
We had a bit of an offset of some ins and outs of the benefit from capitalizing our <unk> plant and then we also had some I'm going to call. It R&D related manufacturing activities that we wrote off.
That I wouldn't expect in future periods. So.
You'd be correct to see a trending down R&D and some future periods.
Thanks for taking our question.
And our next question will come from Eric Joseph with JP Morgan. Please go ahead.
Hi.
Sure Eric Thanks for taking the question.
Okay. So just wondering if you talk about the impact.
Bob can occur from migrating your basket.
All administration.
And Relatedly, what would you need to do.
Neil.
In terms of additional supplemental approval.
So getting that product.
Product out and then also just on the RSV.
Yes.
Okay.
But as it relates to <unk>.
Thanks.
Okay.
Susan.
Okay.
You are really hard to hear on the first part of that question would you mind just kind of repeating please.
Oh.
First part of your question on Tech related Cogs.
French product.
And then also what.
In terms of.
Limiting unprovoked.
They are getting.
Okay.
Cool.
Yes, so we would expect for those.
Pre filled syringe impact that we would we would see that happening later in the second half of the year.
Specifically in those markets in the northern hemisphere. So.
I think we would.
Expect to see some reduction in vial size total amount of doses in a vial and southern hemisphere, but certainly moving towards pre filled syringe or a unit dose vials.
In the second half of the year.
And then on.
I'm sorry, Chris.
Okay.
Our RSV, yeah, well I think look it.
Something that are particularly keen interest to us.
We've mentioned before that that technology platform for for our recombinant protein nanoparticle as well as adjuvant.
As robust and beneficial as we're seeing it in.
Our COVID-19 vaccine, we've learned significant lessons over the course of the last couple of years.
How to leverage that technology platform and and while there's good data from competition and RSV.
I think we have an opportunity to have even better data given our technology platform.
In the context of multiple doses and the use of our adjuvant.
So stay tuned for more details relative to RSV in our pipeline.
Okay great.
Yes.
And our next question will come from Alec Stranahan with Bank of America go ahead.
Hey, guys. Thanks for taking our questions just a couple from US first on VA five could you help us draw a line between the pseudo virus GMT response.
That you said with the prototyping of exited for five to what you saw and prevent 19, just wondering if GMT is declining on an absolute basis and how this may.
We're late with protection and similarly, I believe there will also be a specific vaccine and bivalent in the phase III study that you presented today, so any guidance on when you could update the markets on that data would be helpful.
And secondly, maybe maybe one for Jim.
At your debt commitments.
Cepheid in the convertible note as well as <unk>.
Potential for repayments to the UK and Gabby, which cumulatively is not an insignificant amount of cash potentially down the line could you just speak to your view on the liquidity heading into next year I know youre roughly at.
One 3 billion barrels now thanks.
Alright, Alex well listen thanks for your question, we ended the quarter with.
One 3 billion.
We are looking forward to.
February of next year is the time when of course, our convert the 325 million comes due.
We feel like we have ample cash flow to either retire that converts for cash or we will monitor market conditions, considering where you might do there.
When it comes to guide it because you mentioned that one and I think that's an important one for clarification.
We received 700 million.
From Garvey Kovacs.
<unk> initially for an upfront for our commitment of 350 million doses and then of course, the other $3 50 upon approval by the World Health organization.
We do not believe coffee has any.
Right two to a return of that capital so.
For that reason, we would put that off to the side.
And then with respect to.
Some of the other puts and takes of call.
Call it potential returns of capitals.
We will continue to provide updates on our on our cash flow as we guide into into next year, but we go into this with great confidence.
Our commercial launch in the backs of it and what that means for operating cash flow.
And maybe just a bit commentary by the pseudo needs I mean, the data presented to date preliminary data.
That's being confirmed and validated assay and we'll have those results soon and there'll be more able to compare between.
Between the soon to be a five versus the other sub variants in the prototype.
Bio SA and there's a there's a lot of variability in the results that you can get from that but it's still we were quite pleased to see the levels. We got it was within.
We like the levels that are thought to be protected at least bye bye.
By the NIH, because our protection analysis.
Yes.
And our next question will come from Vernon Bernardino with H.
Wainwright.
Go ahead.
Hi, everyone. Thanks for taking my question and congrats on a.
Fantastic revenue quarter.
Just.
Perhaps a question for John You had mentioned one thing that still remains underappreciated in my opinion is the advantages that you have for novak's of it as far as.
Storage and distribution.
Thinking down the road.
That probably is going to continue to.
B there.
Are you seeing as far as competitors and their storage capability than what they are.
<unk> and what the market may be.
Thinking as far as down the road.
And the storage of the mrna vaccines and <unk>.
After that how do you think.
Their capabilities as far as manufacturing, which they had initially.
Interested in wrapping up and these are.
Territories that are lower income might be.
That's.
It helps them up but the commercial viability of mrna vaccines as changing any insights you can provide would be helpful. Thank you.
Yes, Brian good question.
As I briefly mentioned in the presentation.
We indeed still have a significant advantage in the refrigerator stability of our product and then of course, we would be moving to a smaller dose presentation and ultimately to pre filled syringes, which is you had a significant advancement.
It's unclear where the competition is going and we'll remain to see what theyre doing but at least for the moment, we know that theres still shipping.
Frozen multi dose vials.
That requires storage up and while its still before it's used are falling and then a fairly short.
Oh durability.
I'm, sorry stability of product.
After its after its thought so.
We'll continue to see that advantage, we think for some period into the future.
Certainly.
Into.
For our other partners into low and upper middle income markets, where freezer capabilities are limited.
As an advantage for us as well so thanks for pointing that out and we'll we'll have to keep an eye on what happens with whatever they are able or unable to do.
With mrna vaccines.
And as far as the <unk>.
Market dynamics concern or are you seeing any difference or changes.
The end user as far as.
Their thinking and storage and perhaps future needs.
Four.
Mrna vaccines versus yours.
Yes, I think that's where our interest in getting to the commercial markets I think youll see the health care providers than having some more optionality to access and easier to use presentation.
And so that's certainly one aspect that we're gonna be pursuing.
In the U S and EU markets.
Okay.
Thank you.
And this will conclude our question and answer session I would like to turn the conference back over to Stan for any closing remarks.
Okay.
Thank you operator I appreciate the time everybody has spent taking this call it's been a very big and important quarter for us. We've made a lot of advantage every front and look forward to showing you more of the same coming quarters. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
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