Q2 2023 Moderna Inc Earnings Call
Good day, and thank you for standing by welcome to but during the second quarter 2023 conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one on your telephone you I Didnt hear an automated message advising your hand is raised to withdraw your question.
Please press Star one again, please be advised today's conference is being recorded I would now like to hand, the comps over to your speaker today living in it to look at our head of Investor Relations. Please go ahead.
Thank you Kevin Good morning, everyone and thank you for joining us on today's call to discuss <unk> second quarter 2023 financial results and business update.
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.
Today's call are Stefan <unk>, our Chief Executive Officer, Stephen Hoge, our President ARPA Gray, our chief commercial officer, and Jamey mock our Chief Financial Officer.
Before we begin please note that this conference call will include forward looking statements made pursuant to the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Please 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 lavina, good morning, I'll get that for them.
Today, I will start with a business review of our second quarter.
Stephen will then review our clinical programs before APA gives an update on that.
Commercial progress and plans.
Jamie will present, our financial results.
We'll come back to share some final thoughts.
In Q2, we reported revenues of approximately $300 million, reflecting the seasonal nature of <unk>.
Respiratory vaccines.
You may now investments for pictures use vaccine programs, which are in phase III and.
Quarterly programmers Wayne first free.
Obviously on the quality of service.
GAAP net loss of $1 4 billion gap.
GAAP diluted loss per share of <unk>.
Your line is <unk>.
We ended the quarter with a cash and investment balance of $14 6 billion barrels.
We continue to execute on our capital allocation strategy.
<unk> organic growth of our platform with investments in our business.
In Q2, we invested $1 1 billion, allowing the R&D.
Continued investments in late stage clinical programs.
What we're seeing our pipeline.
G&A costs were approximately $400 million.
Capital investments were approximately $200 million.
Yes.
So many investments were all strategic collaborations with the exception of <unk> in Japan, which was an acquisition.
<unk> was renamed modern antibiotics and is being integrated into Madonna manufacturing process development organization.
From a capital return perspective, we repurchased four 4 million shares in Q2 for a total of 600 with JP Morgan.
Now turning to commercial and late stage clinical updates in the quarter.
We have a submission of our <unk> updated COVID-19 vaccine applications to regulators globally.
Now awaiting approval to start for <unk>.
As you will hear from Alpha shortly.
<unk> for COVID-19 sales expectation for 2020 free to a range between six and 8 billion barrels.
This range reflects additional contracts in the U S commercial market and over our countries.
This range is wide given the uncertainty on the U S vaccination rates.
Our commercial team is also preparing for the 2024 logs of RSV or respiratory commercial product.
Regrettably, we applications have been submitted in major markets around the world.
We've also started to manufacture and on this company 45 preparation for the launch.
As a reminder at launch these products.
We'll be in a pre filled syringe presentation, which combined.
Strong efficacy profile, we are positioned very well product toilet care professionals.
In oncology.
41 67.
Visualizing the Orthogenic therapy.
We are continuing to scale up manufacturing with tissue, both clinical development and commercial markets.
We're very pleased to report our phase III study in adjuvant melanoma has begun enrolling patients in July .
We plan on slide six.
The company profile there.
The breadth of our late stage pipeline means we could see Mickey prolonged season in 'twenty four 'twenty five 'twenty six.
Turning now to slide seven.
I am proud to share that the model that has been named one of the world's most innovative companies in <unk> IV free for partnering AIG prevent innovation by the Boston Consulting group.
As many of you know <unk>.
South of the foundation of modern as research and development programs for several years.
We have built our own AIG Dennis for propane in the mall and engineering.
Many of these regulatory interactions and many more use cases.
As we continue to be a leader in.
Pharma.
One of our key months and our mindset is that with these ties everything across the board.
As we work on that is that this will be central to the impact that we have with AI.
Yes.
Training is required for all more than that team members and we facilitate these training at the culprit in Nevada for AI or how do you mean.
We are challenged everyone across all of our business functions.
To incorporate AI into their everyday workflow.
I'm happy to share.
Thanks, Sharon is accelerating frost and Madonna.
Our secure larger language model is called <unk>.
As you can see on the graph volume SaaS usage is growing rapidly amongst our employees since its introduction on may 18th.
Around 50% of my employees use it already only 60 days after launch.
With that I would note Steve a component based on development programs.
Thank you Stefan.
Good afternoon, everyone.
I will review the progress of our key clinical programs and Madonna and I'll start with our respiratory vaccines.
On the left hand side of the slide we have a commercial and late stage clinical pipeline program against three important respiratory viruses, COVID-19 flu and RSV.
I'll share some updates on these programs in a moment.
Our next generation programs have made substantial progress over the first half of this year, including mrna 12, 83, which is enrolling participants in a phase III study and our next generation influenza vaccines, which are both in phase II.
We currently have six combination vaccine programs addressing adult and pediatric populations.
A combination vaccines are designed to address the largest health care burdens caused by respiratory infections while.
While providing multiple advantages such as increasing compliance and reducing administration costs.
Turning to our Covid program, we have submitted our application for approval and authorization of mrna $12 70, 315 are updated monovalent COVID-19 vaccine targeting the <unk> dot one dot five variant.
Recall that the June <unk> meeting the committee recommended an XP be targeted monovalent vaccine with a preference for the SBB dot one dot five strain.
This recommendation was adopted by the FDA and is in concordance with the EMA and <unk> guidance.
In the U S. The CDC ACI team is expected to published recommendations and guidelines for the use of updated COVID-19 vaccines following approval and authorization. This fall.
On slide 11 are the clinical data our team presented during the June <unk> meeting.
Data from a subset of our phase III study with mrna 12, 73% at 815 demonstrated potent neutralization against <unk> Dot one dot five and other variants of the SPV lineage.
We're proud that <unk> was the only company that presented clinical data with an Expedia dot one dot five candidates in advance of the season, which we believe may help uptake of this important vaccine.
Moving to RSV as Stefan mentioned earlier, we are pleased to be on track for regulatory approvals in 2024.
Earlier this month, we announced a rolling submission to the FDA FDA and we plan to use a priority voucher to accelerate that review.
We also filed additional regulatory applications in Europe , Switzerland, Australia, and the UK.
Incredibly encouraged by the profile of that morning, $13 45, and look forward to the expected commercial launch next year.
Next on the seasonal influenza program I'm pleased to announce that our Petri of three study is fully enrolled and we look forward to sharing an update this quarter.
<unk> hundred three as testing an update to mrna 10 10 is designed to increase the Hai neutralizing titers against the B antigens Theres a say.
Safety and Immunogenicity Phase III study that we believe will support accelerated approval of the updated mrna 10 10 candidates.
Now turning to our late in vaccines on slide 14, our phase III CMV vaccine study in women of Childbearing age is ongoing and I am pleased to share that the trial has enrolled more than 80% of participants we look forward to full enrollment of that study soon.
In our early clinical programs EBV HIV and these EBV vaccine trials are ongoing and our HSV program is in preclinical.
Now, let's look at our mrna therapeutics portfolio on the next slide and I'll highlight a few programs.
We are excited to announce that our phase III melanoma study with IMT is now enrolling and I'll share the phase III design in a moment.
Our rare disease programs addressing major unmet medical needs and propionic acid EMEA methyl Milan, I guess at EMEA and GSD <unk> are ongoing and we will look forward to sharing updates when the data are mature.
Indeed during the quarter, we presented an update on some of our <unk> program data at <unk> the dose confirmation part at the appropriate <unk> study is currently ongoing.
And lastly, our collaborators at vertex are continuing to enroll and dose cystic fibrosis patients in the single ascending dose portion of that phase one study.
Now on my last slide today, I wanted to take a moment to share the exciting phase III trial design for our individualized neo antigen therapy, our IMT.
This phase III study is a randomized double blind placebo controlled study of the combination of <unk> plus keytruda against placebo plus keytruda in patients with resected melanoma at high risk of recurrence.
The study will enroll approximately 1089 resected melanoma patients stage <unk> through four with a one to one randomization.
Each patient will receive up to nine doses of IMT every three weeks and Keytruda every six weeks and the active arm or nine doses of placebo every three weeks and Keytruda every six weeks and the comparator arm.
The primary endpoint is recurrence free survival and secondary endpoints include distant metastasis free survival and overall survival.
Incredibly impressed with the collaboration between the Mcdonough and Merck's scientific and clinical teams to rapidly standup and begin enrolling this phase III study.
That I will turn it over to ARPA.
Twenty-three primarily from mrna 12, 73 Dot 815.
Turning now to the 2023 cover itself outlook.
We are updating our COVID-19 self expectation for 2023 to be in the range of $6 billion to $8 billion with the key variable being vaccination rates in the United States.
R 2000 twenty-three sales mix consists of $2.1 billion in sales already recorded in the first half of this year.
Another $2 billion in sales from previously signed advanced purchase agreements for the second half delivery from several countries, including those listed in the middle column on this slide.
Recent discussions with customers around the world have resulted in confirms contracts of $2 billion for delivery in the second half of this year updated from the originally expected $3 billion.
Approximately $1 billion of the original three are now expected to be deferred to 2024.
Also now included in the total expect in 2000 twenty-three Covid sales range of $6 billion to $8 billion is an additional $2 billion to $4 billion in sales expected from signed and anticipated commercial contracts and the U S as well as other markets, such as Japan and the E U.
The U S commercial contracts are a sizeable portion of additional new sales expected in the second half of this year. So let me provide some color on that market in particular.
As you were aware the COVID-19 vaccine market in the U S has shifted to a commercial market with the transition from the pandemic to the endemic phase.
And the U S. The commercial vaccines market is made up of many different customer segments, including retail pharmacies wholesalers group purchasing organizations integrated delivery networks health systems government entities employers and other providers.
Today I am happy to report that we have signed contracts in each of these customer segments and continue to work on additional contracts.
We are ready with ample supply to be shipped upon regulatory approval.
Are signed contracts give us visibility into the expected U S launch in the coming weeks and confidence in the additional sales we expect in the second half of 2023, it from new orders.
Let me now turn to 521 to help frame the fall of 2023 U S Covid market.
As I mentioned earlier, a key determinant for the market size in the U S will be vaccine uptake or shots and arms during the upcoming September to December timeframe.
As I've mentioned before are expected 2023 sales range of $6 billion to $8 billion will be primarily driven by vaccination rates from the U S market.
Earlier in the year, we provided parameters and informed R. U S full volume forecast for 2023, which included.
The roughly 50 million doses administered in the U S and the fall of 2022.
82 million Americans in the high risk category. So those who are over 50 with a comorbidity or those over the age of 65.
And an average of 150 million doses of flu vaccines given in the U S. Every year for the last nine years, which we believe is a reasonable proxy for a seasonal respiratory vaccine, especially given a higher burden of disease with COVID-19.
These parameters supported a volume forecast of 100 million doses for the U S market for fall 2023.
But the fact of the matter is in this first transitioning to a commercial endemic market. It is difficult to accurately predict market volumes and predict how many Americans will come in this fall for their shots.
As such we look to southern hemisphere countries for the Covid season occurs during their fall winter months to inform potential vaccination uptake in the U S as well.
Specifically in Australia, where they're just completing their 2023 coven season, the vaccination rate was 19% and populations, where the booster vaccine was recommended.
The Australian data combined with prior year comparisons indicate U S market volumes for fall 2023 to be in the range of 50 to 100 million doses.
This supports R. U S sales expectations for the second half of the year.
Moving to 522 I'm excited to share the fall vaccination campaigns for the updated Covid vaccine launch.
Madonna's fall vaccine campaigns are two pronged and our focus on first increasing the market five through disease awareness programs.
And secondly on solidifying Madonna's market share with branded promotion.
With our disease awareness campaigns, we're aiming to educate on disease burden clarify the latest recommendations from a C. I P and connects COVID-19, with seasonal flu vaccines with the goal to drive consumers to get vaccinated. This fall.
Brandon promotion campaigns will focus on driving brand preference from enduring this vaccine running direct to consumer campaigns across major media channels and conducting promotions with health care providers.
The commercial team is highly energized for the launch of the updated Covid vaccine.
Moving on to slide twenty-three, we are continuing to prepare for potential 2024 launch of our RSV vaccine and are excited about the opportunity in front of us.
We believe our vaccine has the best in class profile.
This includes consistent high efficacy across vulnerable in older populations as shown in the strong clinical data that we have shared.
Additionally, our safety profile is well established we now have administered more than 1 billion COVID-19 vaccine doses using the same mrna technology as our RSV vaccine.
And our phase III study, most solicited adverse events were mild to moderate.
And mrna 13, 45, and our phase three RSV trial has not had any reported cases of G. B S events as of the April 30th cut off date.
And finally, one important differentiator for us and for our customers at launch will be the presentation of the product, which will be exclusively and ready to use prefilled syringe of.
This packaging allows health care professionals to conveniently dose consumers with a ready to use formulation we.
We believe this will save time and reduce errors in comparison to the reconstituted drug products on the market.
We continued to invest in prelaunch activities and are prepared for next year as potential launch our.
Commercial team is active globally, and our manufacturing organization is well prepared to deliver the vaccine.
With that I will turn it over to Jamie.
And so our boats and Hello, everyone.
This morning, I will cover a second quarter financial performance and provide a framework for a full year financial outlook.
Starting on slide 25.
Total product sales were $293 million down 94% year over year, mainly driven by lower sales volume.
We continue to expect 2023 to be a transitional year as we move from a pandemic to an endemic commercial market with significant seasonality.
In line with our expectations sales in the second quarter were relatively low while we came in at the high end of our communicated range.
Cost of sales for the second quarter of 2023 with $731 million.
In addition to unit driven manufacturing costs. This includes the following charges.
$464 million for inventory write downs related to excess and obsolete COVID-19 product.
On utilized manufacturing capacity of $135 million.
And bosses on firm purchase commitments of $75 million.
These charges other than royalties were primarily driven by a shift in product immune to our latest model viewing SBB dot one dog five COVID-19 vaccine candidates and an overall lower market size compared to our expectations at the beginning of the year.
In order to have ample supply at the beginning of 2023 full season, we prepared for various outcomes of the strange selection, resulting in additional costs to the piano.
The fact that <unk> was chosen also been that we were not able to use previously manufactured semi finished goods.
R&D expenses were $1.1 billion, which increased.
The increase in R&D continues to be driven by clinical trial related expenses, particularly with our phase III studies for RSV seasonal flu ncnb.
The increase in our own views also attributable to increases in personnel costs due to increase headcount to support our research and late stage development efforts.
SG&A expenses were $332 million, reflecting an increase of 57% year over year.
The growth in spending was primarily driven by continued investments and personnel and outside services in support of our digital initiatives marketed products related commercially when.
Commercialization activities as well as our company expansion.
Income tax was a benefit of $369 million for the second quarter, mainly due to a loss from operations.
No loss for the period was $1.4 billion compared to net income of $2.2 billion last year in.
And diluted loss per share was $3.62 compared to diluted earnings per share of $5.24 in 2022.
We ended Q2 with cash and investments of $14.6 million compared to $16.4 billion at the end of the first quarter.
The decrease was driven by our net loss in the period and approximately $600 million a share buybacks.
Cash deposits for future products supplies declined during the quarter by approximately $100 million to $1.7 billion by the end of the second quarter, which was in line with our expectations.
Now turning to slide 27.
I wanted to give an update on the progress we've made on our capital allocation priorities are.
Top investment priority has been and will continue to be reinvesting in the base business.
R&D spending in the first half of 2023 increased 80% year over year to $2.3 billion.
And we remain on track to invest $4 $5 billion in R&D for the full year.
We are also investing in our digital capabilities, the commercial build out of the organization as well as expanding our manufacturing footprint.
We've accelerated our capital expenditures in 2023, as we expand both our international and U S manufacturing footprint.
Our second investment priority is to seek attractive external investment and collaboration opportunities that will enable and compliments our platform.
We remain disciplined in our approach and are in multiple active discussions.
After evaluating internal and external investment opportunities we've done assess additional uses of cash.
And the first half of 2023, we repurchase 8 million shares for approximately $1.2 billion and we had $1.7 billion a share repurchase authorization on meeting as of June 30th 2023.
Now, let's turn to our updated 2023 financial framework on slide 28.
We would like to share thinking beyond the advanced purchase agreements.
As ARPA mentioned earlier, we now expect product sales for 2023, and the range of $6 billion to $8 billion.
Comprised of approximately $4 million from existing Apa's at approximately $2 billion to $4 billion from additional sales to the U S, Japan Du and other countries.
As a result of recent discussions with customers around the world. We now expect approximately $1 billion of the original total $5 billion in a period to be deferred to 2024.
Second half sales timing will be dependent on timing of regulatory approvals across the world.
And the number of days available in the third quarter to ship.
We currently expect a sales slip from 30% in Q3 and 70% in Q4.
We noticed that cost of sales for the full year in the range of $3.5 billion to $4 billion at this point of the year. Our production costs are largely fixed and only a smaller portion is driven by the sales elko.
Therefore, we thought it would be more helpful to provide you with absolute dollar range for your modeling purposes.
For R&D and SG&A, we continue to expect full year expenses to be approximately $6 billion with approximately $4.5 billion in research and development.
We know anticipate a full year tax benefit in the range of 0.7% to $1 billion driven by an assumed operating loss R&D credits international provisions and non-recurring items.
And finally, we continue to expect capital expenditures of approximately $1 billion that.
That concludes my prepared remarks, and he'll turn the call back over to Stefan.
Thank you Jamie offerings to your room.
While they're not as important as being commercial outlook.
With Kobe.
Whether it's important to be investing the same rights as we <unk> market.
Or a P. As in U S. Commercial contract numbers are expected 2000 free copies of revenue in the range of 6 billion.
We believe discussed and they make here will provide visibility recurring revenue stream.
I believe we would be sending COVID-19 vaccines for a very long time, and we are working to combat Kobe Truicko single vaccine.
<unk>.
The vaccine is a strong product profile and to differentiate Susan <unk> presentation, absolutely walk through our homepage and debated 2024 logs.
<unk>, we are scaling or inq manufacturing capacity to be ready for commercialization.
Based on data are very strong and we are now in phase III indications.
We will pass no milk, we are working to prioritize indications beyond those already announced retailmenot nomo and non small cell lung cancer.
And looking at the portfolio.
I'm very excited that roughly with a high case scenario of Mcgaugh reported physical based that you think should use vaccine.
<unk>.
Well the next <unk> from 24 25 26.
We anticipate multiple product long season across the vaccine and property portfolio.
Position the company for strong <unk>.
He's an incredibly exciting climates mobile now as we enter a new era diversified revenue stream and they're all gross pipeline.
But for me working.
And the results will be an unprecedented number of <unk> in a very short time.
We look forward to seeing you Provo.
Argued days of appropriate.
The events would be live in New York City and of course also available online.
On December 7th would be a single second annual ESV. These events would be online.
The mission of our company is the delivery of the greatness placebo inbox to people who are among the medicine.
This mission is especially relevant now as we approach the launch of multiple new medicine that should extend human lives and there'll be a patient suffering.
Oracle Pickle barrels are poised to benefit continues to deliver on its potential.
This is equivalent to all of us to be part of this company.
We know that questions a break hall.
Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered you wish to move yourself from the queue. Please superstar one one again, we will pause for a moment, while we can polar Q&A roster.
Our first question comes from solving Richter Goldman Sachs. Your line is open.
Good morning, Thanks for taking my question with regard to the expected additional sales for for a second half timber. Please can you speak to the spectrum of factors. In addition to the U S vaccination rates that might impact, reaching the higher end of that range and can you discuss.
Didn't spend additional contracts wouldn't be pushed to 2024 at the fall season plays out. Thank you.
Thank you for the cash.
So in terms of the additional sales $2 billion to $4 billion.
As you mentioned the key factor of landing when they open at $6 billion to $8 billion is really around how many Americans of fall come in to get their shots. So vaccination rate is the biggest swing factor within that range. We are confident in our market share on and the progress that we've been may.
<unk> commercial contracts as far in the U S.
Additionally, outside of the U S <unk> additional contracts potentially being deferred we have met with all of the different countries, where we have advanced purchase agreements and have already confirmed delivery for the second half of this year other than the $1 billion, which was pushed into 2024 so are <unk>.
Confident in saying that.
$2 million range.
Thank you.
One of them or for next question.
Our next question comes from tolerant Ambeer with C. D tower in your line is open.
At the start of the year from prior years, if not what proportion of the 4 billion of Apa's would you consider to annual booster demand, perhaps is it the 2 billion expected in the second half.
That'll be helpful.
Free time.
Thank you for the question so in terms of how we're thinking about 2024.
I would look at the first half of 2023, where we have recently reported in $2.1 billion of sales a portion of that volume is volume that we do not anticipate as a recurring sale in the outer years, given most countries are going towards fall vaccination campaigns.
Annual shots.
For the remainder of the 4% to $6 billion, we do believe that.
That vaccine.
Mandible remain in overtime eventually increase as we think about the flu volumes that we believe the COVID-19 vaccination rates will start trending tail.
Soon as I mentioned earlier for example in the United States. There are about $150 million flu vaccines. Given every fall what we've models for 2023, if the range of $50 million to $100 million.
And we think over time, given the high disease burden and also as we think about future combinations, we will start trending closer to that of $150 million.
One moment for our next question.
Our next question comes from Gina wearing with Barclays. Your line is open.
Thank you two very quick questions regarding the Covid U S commercial contract this fine with you.
Any definitive initial stocking order and a second regarding the Orange C. A vaccine given that Pfizer and the GST label language and a slow initial launch any learning you could have for your approval and the launch pad.
Thank you so I'll take the first question around him and did you ask contracts first.
In our contracting progress, we do have a minimum volume commitments across many of our commercial.
Contracts.
But most of our contracts are looking at minimum commitments and depending on vaccination uptake that we will be monitoring closely with our customers that volume could.
Could could go up over time.
In terms of the recent RSV <unk>.
We thank thee Asap recommendation for a shared clinical decision, making will mean <unk> uptake for the first day vaccines that have been approved.
As we there is more data from both are clinical program as well as armchairs campfires clinical programs, we do believe there's opportunity to potentially update that recommendation.
Which would over time lead to a broader uptake of the RSV vaccines.
Yeah.
One moment for our next question.
Our next question comes from Michael You would just freeze your line is open.
Hi, This is dina on for Mike. Thanks for taking the question just a quick question on the flu updates. So I saw that you guys are doing accused me update for this second Immunogenicity community <unk> study and then going on to have data in queue to me with that but how about the efficacy study for that second.
Infection.
Or that yeah that previous infection study what are your timelines without how 'bout shifted are you going to share that and also on P. C. B.
Are you going to be sharing any additional updates on the regulatory path moving forward or are you.
Sharing any other updates on long et cetera. Thank you so much.
For thinking you know for the question.
Our questions. So so.
So first on the on the 10 10 flu program as you as you reference we have two ongoing we have is actually three ongoing phase III studies, but two that are continuing to accrue data.
We will be providing updates on the efficacy study the Patriot to study you referenced in this week as you as you know in our vaccines day, we talked about it.
End of season update.
And we will also be sharing where we are in the pivotal P 303 Immunogenicity study.
And as I said, we'll be doing that this quarter.
We're excited to continue the update on the progress of influenza.
As it relates to Int are now <unk> P. C V that program we had a.
Great opportunity to provide an update to you all on everyone at <unk>, just just a month ago to go.
And we're going to be of course that are R&D day, reprising that and also talking to some of the other progress happening in the IMT program.
We are obviously working hard to get up and running in our non small cell lung cancer, but we're really.
<unk> studies, but we're really excited by the by the start of the first phase III.
With melanoma study now and and we will be providing further updates in a month in New York.
Great. Thank you so much.
One moment for our next question.
The next question comes from early Merle with you B S. Your line is open.
Hi, This is Sarah on for Alley. Thanks, So much for taking my question just a follow up on Tyler's earlier question thinking about Covid volumes going forward can you give more color on how you're thinking about first half versus second half, particularly any color on your expectation for first half of next year.
And then on C. M V any expectation on when y'all complete enrollment and how we should think about when we could get data and maybe anything you're seeing on a blinded basis on me a bad right. Thanks, so much.
So I I'm I'm happy to take the first question and then while handed over to Stephen on Sam V.
In terms of how we're thinking about the first half a second half going forward.
I'm in the first half of the year sales that we expect will come from the southern Hemisphere, where it is their fall and winter season.
Additionally, in some countries and the higher risk populations, there continue to be spring campaigns, and boosters, particularly for immuno compromised utterly and highest transportation. So we do anticipate some sales coming in for the high risk spring boost for the southern hemisphere as well as any.
Carryover from late winter if this theory into January .
A majority of our sales will continue to be expected in the second half of the year, though.
The majority of our sales will be anticipated from the northern hemisphere in the fall vaccine campaign.
And Ah My question CMV enrollment, yes, we're really excited by the recent acceleration towards completion of enrollment there were passed 80%.
We do hope to complete enrollment shortly we've made good progress in the first half of this year.
So we haven't specifically set a target on that but we would hope to enrolling for sure this year.
The then we will be occurring cases, and I think that's where it gets very interesting and tracking the CMV phase III program. We've already started to accrue Jason So we talked about and the vaccines day and as we get to fall enrollment we will have more participants who can contribute cases to our first interim analysis of efficacy, which will be an event.
An analysis and so not something we can predict with happiness.
One moment.
Much.
Our next question comes from Lucchese with RBC capital Your line is open.
Oh, great. Thanks, so much for taking my question, maybe one Jamie if I can circle back on margin I think your prior guidance implied 60% to 65% gross margin pursue new guidance today by 47% gross margin as bitcoin you just need to expand a little more what's driving that change today, and then may be Stephen <unk>.
I think <unk> are you the the lower Immunogenicity beech tree could actually be a class effects. So it'd be difficult for any of the mrna player do actual has strongly can just be sure to be strange wondering what are your thoughts there. Thanks so much.
Yeah. Thanks for the kind of take the first question. So are margins yeah, you're right. We were planning for 60% to 65% I would say, it's largely volume driven a $1 billion VBA for pushing it onto 2024 as an example, we still have the cost for those.
Fixed into our three and a half to $4 billion. In addition to other markets as well so I think our volume expectation prior to this quarter was a little higher some due to push out some just do the overall volume that we anticipate coming through here.
And I'm aware of the argument that 70 made about a class effect.
I'm not sure I see it the same way.
We'll look to the data to answer that question rather than conjecture will look forward to sharing where we are in the P. 303 phase III study in the next quarter and I'll I'll leave it at that.
Okay. Thanks, so much guidance.
One moment for our next question.
Our next question comes from Edward turned off the 5% of your line is open.
Thank you. Good morning can you hear me okay.
Loud and clear.
So thanks for all the details you update my question is kind of a little bit of a longer term strategic one.
Covid continues to evolve in his shoe ultimately seek approval of 10 10.
Even of course fee.
What is the plan.
For combining these from a regulatory standpoint, and then also commercials points or how do we get from where we are today was.
One approved maybe two three approved vaccines next year to one combo approved or multiple combo approved vaccines. Thanks for answering that.
Great. Thanks for the question Sir So as you know we've had as I said, we have six combo vaccine.
The clinical data out there and we continue to look at new combinations and if we're in a situation.
We expect to be in where we have a.
Flu RSV and Covid approved as well as a second generation come and move forward. You can be you can rest assured we'll be looking at multiple different combinations of those trying to bring forward options that provide the greatest public health and flexibility. Those studies once we have the products approve the mono rail on vaccines. Those studies are really just immune bridging stuff.
Demonstrating that we could do the combination achieve noninferior immunogenicity.
And safety in those studies they can be quite quick and they also don't mean to be run in the season as you know.
And so our goal is going to be as we've said throughout this year is to complete the work to move towards approval filing and eventually hopefully approval of the three monroeville in vaccines.
And quickly progressing into the pivotal phase III for at least one and multiple combos. Our goal again is to be launching those in 25 and beyond for the obvious reasons, they will improve compliance deliver more value and actually decrease the administration cost of healthcare.
So the path is is actually pretty pretty clear from here, particularly given the strength of the RSV data and where where we are in COVID-19 and we hope to be providing enough to be very shortly on flu that also forbids quick provides a clear path for 24 and the monovalent launches. We've got it and then I think will clarify very quickly that will starting the phase III to.
Allow the combo launches very shortly thereafter.
That's really helpful. Steven and just to clarify 1.5 million when you send the pivotal phase III those would be immuno bridging studies.
Immunogenicity correct their immunity and safety studies are very quick studies.
Just demonstrating.
We do not believe nor is it the norm from a regulatory perspective that you have to do subsequent efficacy studies once you've established the efficacy of the monovalent vaccine.
Awesome. Thank you so much.
One moment for next question.
Our next question comes from mental semester with Deutsche Bank. Your line is open.
Hello, Thank you for taking my question.
Basically I just wanted to ask.
In terms of the cokes guidance.
Does that apply regardless of the revenue range and if not what is the sensitivity range, which could provide.
Yeah. Thanks for the question Mentos, yes, it does apply regardless as I mentioned in my prepared remarks. Most of this cost is fixed at this point, we've already ordered the raw materials. We've already started manufacturing most of our we've got a lot of supply ready to go as soon as we are able to as soon as we get regulatory approval.
To that three and a half to $4 billion does not really dependent too much on the sales outcomes that'll happen either way.
And maybe just to talk to a longer term so.
I think what we're suffering with this year is just an unpredictable market. So back to the final question of the 35 of the 35% to 40% or 60% to 65% gross margin as it becomes more predictable we will be able to afford.
What are the right amount of material you have the right amount of volume commitments that might not have it in 2024 as we work through some of our commitment.
But we feel very confident in the overall <unk> 70, 580% gross margin range in the long term.
One moment for our next question.
Our next question comes from Jeff Mission with Bank of America. Your line is open.
Good morning. Thank you for taking my question. This is Alex on furniture.
Can you talk about all the other potential indications you may proceed to the I T vaccine and how long you decide which indications to pursue first so there'll be based on scientific rationale or an unmet need.
And secondly, what commercial hurdles with a doctor flew an iced tea, giving me entrenched competition and new entrants respectively. Thank you.
Great. Thank you for the questions. So so first time I see so obviously removed four melanomas you know and we're moving forward a non small cell lung cancer.
The opportunity there is the unmet need there is obviously very significant and as we know that's one of the largest opportunities for immune therapies generally and so it's an obvious place for US to go next as you said.
<unk> said before we have not yet publicly guided with our partner Merck on what the other indications will be but we have said that.
That we're going to follow the path of all the places where P. D. One keytruda have been successful, but where we think there is still headroom still opportunity to significantly improve a problem. What's been achieved with the P. D. One antibodies and so you can follow through the adjuvant settings, where as well as perhaps some of the state for settings, where there are those.
Benefits and expect us to be moving there in short order.
Ourselves and Mercury are in the process of finalizing some of those plans and at the appropriate time, obviously will guide you on the start of those studies, but rest assured as we've said and as they said before there was a quite large program of studies that we'll be ramping up here in very short order and melanoma among small cell lung cancer are really just the first two.
And I can take the question on Orange van slow.
We are very excited to be watching RSV next year. So while we will be bringing the third product to market. We're very confident in what we believe is the best in class profile.
Are consistently high effectiveness across high risk groups thinking about are well established safety profile and the only mrna platform for RSV and lastly, as I mentioned earlier I being the only product with <unk>. So we're feeling really good about the RSV launch preparations and we're ready to.
Execute in 2024 from a flu perspective, we do think one of the advantages of 10, 10 am which would be our first generation flu vaccine.
Is our speed to market could give us an opportunity for better stream matching in the future and as we get them enhanced profiles for flu as.
As Stephen mentioned earlier from a commercial perspective, we see a tremendous amount of interest in our combination vaccines.
Both from patients have fallen healthcare system. So he.
Having RSV and flu cause that's an incredible opportunity for a combination for the future.
Thank you.
One moment for our next question.
Next question comes from Irvine, Wang's Guggenheim Securities. Your line is open.
Hey, guys just wanted some clouds and as we're thinking X U S. Any details we can share in terms of size orders and market positioning and some mortgage market like Japan.
What could change in 2024.
And and Blue you know.
See the pizza Rosemary Aesthetical enrolled you know just want some updated thoughts in terms of confidence on hitting until that'd be strange.
Update.
Yeah, I'll I'll take the first question from an X U S perspective, we have signed a minimum commitment with Japan that has been announced.
The minimum commitment that we signed with Japan is just to get product into the country as soon as August and so we're.
Ready to execute this fall if their vaccine uptake expands we do anticipate additional orders coming in from Japan for the rest of the world. We have advanced purchase agreements that I have outlined on already on that first column as well as ongoing conversations with several other international markets, including those in the European.
In terms of 2024.
Mm changes so what we expect outside the U S. As we expect more and more markets to actually be transitioning from central government pictured tomorrow of an endemic commercial market such as the transition that the U S is going through today. So we do anticipate change of most of those changes will be around <unk>.
Shifting because of the <unk>, where the procurement is happening as well as some changes in pricing and reimbursement going forward.
The flu question so.
Yes, we're fully enrolled in future of three.
Schedule on that and we will provide data shortly on the Petra three study.
This quarter's we said.
As far as the be strange goes.
We we already updated earlier this year that actually an M. P. Three O to study, how we achieve noninferiority and the Beast Trans you remember in the <unk>. One we just we had missed that.
And so we were learning as we went and we actually made a series of changes into the Patriots recently that we were confident and remain very confident will provide a benefit in the beef strains that will improve immunogenicity. There. So I remain quite optimistic that our understanding of science.
Is is really strong we think best in class and then where we will be and when we look at that picture a three day to ensure is in a very strong position as it relates to be strange and continue to be in a very strong position as relates to a strict.
And Kevin we will take our last question.
Okay. Our last question comes from so I'm in big Red burnt one moment.
Your line is open so I'm going to go ahead.
Just a question to me one was how has your view of B R. C O seem to change an iPhone <unk>.
<unk> data and the ice it recommendation and what do you think that you can achieve <unk> profile and the second question was just a little bit more about D. C. M. C M B basically enrollment.
If you think you'll be able to get full enrollment by this quarter. Thank you.
I'll start with the RSV question in light of the Icmp shared decision, making a recommendation of some of the data that was shared this here around re vaccination, we do anticipate a slower vaccine uptake at the start in terms of our <unk>.
Central and that market, we do continue to be very confident that we have a best in class profile and as we get additional data from our own vaccine program. We are hopeful that the icmp recommendation will be broadened and could be and will enable a faster uptake in outer ears.
And the only thing I'd I'd add to that in terms of the development side is we are obviously looking at multiple different persons of RSV combination vaccines and one of the advantages there will obviously be increased convenience and compliance.
And that's where if we can creat healthcare system values I think it will be it'll continue to evolve the recommendations for P. Pauper on them.
As it relates to CMV so.
So we haven't we haven't set out guidance on when we would expect the enrollment to complete but we're actually confidence given the trajectory that we're already passed 80 per cent that we will complete enrollment.
This year I'm, not saying this quarter, but this year and as I said, what really matters is probably not whether we're at 80% or 99% or 100% enrollment as the accrual of cases and events that will drive the first interim analysis from her for now obviously more patients more participants enrolled will increase the number of.
And pace of those events of our time and so we are focused very much on that operationally and we do hope to have that completed this year.
Thank you very much.
And I'd like to turn the call back real Stefan for the closing remarks.
Well. Thank you very much for your questions and we will look forward to seeing menu of you in the next days and weeks.
Especially seeing you that'd be all.
September 5th team.
<unk> have a great day. Thank you.
Ladies and gentlemen does conclude today's presentation. You may now disconnect and have a wonderful day.
Mmm.
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