Q2 2023 BioNTech SE Earnings Call
Welcome to buy on tax second quarter 'twenty to 'twenty three update call I would like to turn the call over to talk to Victoria myself, Vice President of strategy and Investor Relations. Please go ahead.
Thank you. Good morning. Good afternoon. Thank you for joining us today for <unk> second quarter 'twenty to 'twenty three earnings call.
Brief reminder, that slides to accompany this call in the second quarter 2023 press release that was issued this morning can be found in investors section of our website is outlined on slide two you can see our forward looking statements disclaimer.
Information about these statements and other risks are described in our filings made with the U S Securities and Exchange Commission forward looking statements on the call are subject to substantial risks and uncertainties.
Speak only as of the call. The original date and we undertake no obligation to update or revise any of these statements.
On slide three you can find the agenda for today's call.
I'm joined by the following members of management team, our CEO and co founder we saw him.
I'd Love to Ritchie, our Chief Medical Officer, and cofounder young.
And hartstein, our Chief Financial Officer.
And Brian Richardson, our Chief strategy Officer.
I would like to turn the call over to Umberto.
Thank you Victoria around I'll come to all the call participants. We appreciate your continued support.
Some of US our second quarter 2023 highlights and priorities before I pass the call over to my team to provide.
Further details.
That's fine.
Let me start reiterating our 2023 strategic priorities that we set at the beginning of the year and highlight our recent progress executing against them.
We pursue our priority to expense.
It's been our COVID-19 Vita ship described that we're advancing our next generation and combination vaccine candidates.
By advancing key commonality features.
During this quarter, we receive recommendations from regulatory authorities and the broadcast organization on the composition of the adaptive COVID-19 vaccine for the 'twenty to 'twenty three 'twenty 'twenty four for us.
You bet.
Based on these recommendations, we together with our partner Pfizer.
They go out to the packages for Army <unk> Xb 1.5 adapted monovalent COVID-19 vaccine to the U S FDA EMA and other regulatory agencies.
Also kick off commercial launch activities for the Army Corps SBB 1.5, adapted Moreover, vaden COVID-19 vaccine.
Or second 2023 strategic priority is to accelerate our oncology pipeline and initiate market because that's the biggest personal potential.
Our new collaborations that duality bio and coffee for complement our pipeline with multiple mid to late stage clinical programs that will help us to achieve this goal in the near term.
In the second quarter at a school and you need to be in.
Our respective collaboration partners presented three new clinical data sets.
The cover later.
Further jointly with our partner of course before we began our pure water phase III trial evaluating the next generation anti <unk> four antibody candidate Bmt's driven fixed cost just to back.
Second line treatment for patients with.
Non small cell lung cancer.
Our first strategic goal is to initiate an extra day with clinical programs with high medical need in infectious diseases.
We are expecting multiple data read outs for our mrna based vaccine candidates in the <unk>.
Second half of this year.
In summary, we continued our focused execution against our strategic priorities in the second quarter and look forward to additional progress in all three of these areas.
The remainder of this year.
Six.
Starting with COVID-19, but the variance of concern have imagined or seasons in the past few years, we expect that in the fall and winter in line with other common respiratory diseases, such as influenza RSV also task of hospitalization will increase.
Seven.
2023 four years after the start of the COVID-19 pandemic.
That were prevalent in the global population is the site of explanation and or infection.
Profiles of immune responses against Sars Cov, two are highly heterogeneous as individuals have been infected with different area and are vaccinated using a variety of vaccine platform.
Substantial genetic antigenic evolution of desktops, too and it spiked 40 continuous the divergence of the evolutionary trajectory from the origin of our biocatalyst.
Despite increasing gaps in the genomics surveillance globally debatable sequencing data indicates that the original diovan and other early value such as Alpha beta Gamma Delta no.
Loma detected in humans.
As of July 2023, the SBB run the centers.
Dominate globally and they have further antigenic distance from previous variants.
Clinical data have shown that currently approved COVID-19 vaccines provide a level of protection against this new variant however.
However, the antigenic drift of current evidence of concern science of draining protection have been upset starting two to four months. After boosted this last season before besides adapted vaccine including against severe COVID-19.
Due to the greater antigenic distance of this variance of concern and deferred immune escape.
Vaccine effectiveness against hospitalization due to COVID-19 is reduced as time passes between vaccination and subsequent infection. In summary, this data support our out of our COVID-19 vaccine adapted to the most recent variance of consultants. This fall we plan to.
Launch and Omicron SBB bank contract adapted monovalent, COVID-19 vaccine, thus far subject to approval by regulatory authorities.
Our goal is to maintain protection against severe COVID-19 disease, hospitalizations and death, but providing a vaccine that is better matched to the current is circulating strains and that is designed to be more closely aligned to them.
Evolving villages.
Slide eight let me remind you of the core principles of our.
Over arching strategy.
We pursue our multi technology driven approach with it in deep fundamental understanding of biology, and immuno biology.
We leverage the power of computational science and AI.
Our acquisition of <unk> has expanded our capabilities in that regard.
Together, we aim to become the global leader in applying cutting edge artificial intelligence and machine learning technology and research to discover design and develop next generation Immunotherapies at scale.
The bird novel platforms is there, but it is produce multiple product candidates for a clinical pipeline.
Including our pool chassis that enable and accelerate individualization of treatment.
To leverage synergistic mode of action.
Explore opportunities combining modalities, both developed internally and access via collaboration partnerships last quarter, we announced that we initiated a collaboration with <unk> biologics to access two of their next generation anti body drug conjugates. This quarter, we enter reality share clinical data.
None of this program and expanded our collaboration to effect encouraging program from Diadochy Biologics pipeline.
Slide nine Atc's consist of three main components.
Ty body linker payload each of these components has an impact on adcs.
Collagic and clinical properties. It is our precision medicines, allowing for targeted drug delivery, particularly to tumor cells. This high specific and potent induced cell death.
The benefit of reduce off target events.
And the monoclonal antibody binds to the tax expressed on the tumor cell. The ADC is internalized, allowing for the release of the cytotoxin, which leads to cell death.
To broaden our access to adcs because they believe this technology has the potential to replace highly toxic chemotherapy regimens to become a new combination backbone for cancer immunotherapy.
Advances in this technology have resulted in an extended used for the treatment of solid tumors. Adcs can also then addresses various immunotherapy modalities, including those in our current immunotherapy pipeline.
Our ADC pipeline now includes adcs directed against three distinct targets and is of interest for a broad range of cancer types.
In the future we plan to combine these adcs as are appropriate ethane pipeline programs to maximize the patient impact of this exciting modality with that I would now.
Like to thank you all for your confidence in our success and your continued support.
Now I'll turn the call over to Epsilon.
Thank you God I'm delighted to speak with everyone today and to provide a pipeline update.
Slide 11.
Talking with our COVID-19 vaccine.
Expect that edge, that's close to continue to evolve and the risk of severe COVID-19 disease and deaths continues there will be persisting demand for vaccine boosting and vaccination.
Especially for at risk and immuno compromised scoop.
Omicron SBB chop the nutshell currently account for the majority of COVID-19 cases globally and entered genetically distant from prior saturating SaaS opportunity.
Including omicron be a four five and the origin of that cost to stream.
Though omicron da for size adapted by the island vaccines provide some protection against a range of outcomes from SBB related COVID-19.
Evidence suggests that vaccine that Tom Mitch to currently circulating tapped the nature.
Ken had slava improved protection against symptomatic disease.
Severe COVID-19.
<unk> niche viruses have reduced neutralization in comparison to earlier omicron, Lina jet, but have similar neutralization profiles to each other despite sequent optics PD, one five and <unk> 116 different in only two mutation highlighted to you.
In may the EMA and about half of our <unk> provided guidance highlighting that updated vaccine targeting omicron <unk> niches may help to maintain protection against COVID-19 during the upcoming fall and then tax season than Covid.
19 case rates and hospitalizations.
To increase also the SDA is vaccines and related biological products Advisory Committee.
Buck issued guidance recommending menu picture, often omicron <unk> 1.5 adapted monovalent COVID-19 vaccine for the 2023 and 2020 for fall and winter seasons, we and Pfizer submitted regulatory applications to the EMA.
And to the FDA for Omicron DB, one five adapted monovalent COVID-19 vaccine for individualized six months of age and OTA.
Following guidance from regulatory authorities on the requirements for strain changes. The applications include data, suggesting that omicron SPV. One five adapted monovalent COVID-19 vaccine may generate improved responses against circulating <unk>.
PBS up niches compared to the current Omicron P. Four five adapted bivalent COVID-19 vaccine.
Moving to slide 12, we and our partner <unk> that tested the potential effectiveness often omicron <unk> one five adapted monovalent vaccine as the primary series and will stay in line, you'll see the neutralizing antibody response in mice.
Just with the Army Crombie four five adapted bivalent vaccine.
Booster after two tours. This offer original vaccine one group of mice again received <unk> hundred five adapted <unk> COVID-19 vaccine as a fourth dose and the other group received the new <unk> one five adapted monovalent COVID-19 vaccines as a foster.
You can see the four to five fold increase of neutralization of several ex PPA related variance Wendell swap.
<unk> one point in time.
<unk> adapted monovalent vaccine as compared to last season.
And sexy, indicating that <unk> won fanfare into adapted monovalent vaccine in the pre vaccinated setting has the potential to induce broad cross neutralizing antibody titers against multiple <unk> subscriptions.
We made significant progress towards mono vaden, COVID-19 vaccine against Omicron PD, one five with regulatory submissions to the U S. FDA EMA and other regulatory authorities and we are well prepared to launch an adapted COVID-19 vaccine is approved in early.
For us this year.
Moving to our oncology pipeline, let me put our second quarter pipeline advancement into the broader context of our clinical stage pipeline, which is depicted on slide 13.
The second quarter, the initiation of our pivotal phase III trial in non small cell lung cancer marks the first landmark in our strategic collaboration with Encore Sichuan the randomized phase III trial is evaluating <unk> hundred 16.
Each sensitive anti <unk> four antibody with distinctive mode of action and is expected to enroll approximately 600 patients with metastatic immunotherapy or resistant non small cell lung cancer. The trial initiation follows the FDA fast track designation granted to <unk>.
<unk> 22, and just based on phase one two safety and efficacy data. Following one of your peak in metastatic immune checkpoint inhibitor resistant non small cell lung cancer.
We expanded our collaboration with <unk> and edit absorbed ADC to our oncology pipeline <unk> is currently in a phase one two clinical trial first started two months then I ask Neil from P&G won 16 hour lung cancer antigen based <unk> candidate.
The second trial <unk> 16 has dosed its first patient end of July together with our partner Regeneron, we will evaluate <unk> in combination with selected them up further selected them up one of your peak.
One in treatment naive patients with stage III stage III or.
Stage, four squamous or non squamous non small cell lung cancer patients.
With at least 50% PDL one expression in a randomized multi center open label Phase II study.
The phase one clinical trial is ongoing with TNT 116 to evaluate the safety Tolerability and preliminary efficacy of <unk> thousand 16 alone and in combination with <unk> in patients who have progressed on prior PD one inhibitor treatment.
Not eligible for chemotherapy and in combination with Texas and patients who have received prior PD, one inhibitor therapy and platinum based chemotherapy.
We are planning to start several trials with our partners imminently.
Firstly building on compelling phase one data in patients with <unk> <unk> in the adjuvant setting that we recently reported in nature. The phase two trial with order trends of Wuhan <unk> 'twenty tool, our individualized cancer vaccine candidate.
This trend with our partner Genentech.
<unk>, the efficacy and safety of origin server moron in combination with additional leased them up and modified Fars here enough compared to modified Fars urine as standard of care alone.
Second another trial is planned to start with our second ADC developed <unk> BMT free 24 is a humanized antibody conjugated to another DNA total is onerous one inhibitor, yes oxy for building.
The phase one part of the study will evaluate the safety in all comers and determined the recommended phase two dose in the phase two dose expansion part.
Aim to evaluate safety and efficacy in small cell and non small cell lung cancer esophageal cancer prostate cancer melanoma and other solid tumors.
And the next couple of slides I want to summarize the recently presented data from three of our programs.
And UN meeting on slide 14, starting with <unk> hundred 16 <unk> two.
392 anti body targeting of seat Cts is for works, primarily by depleting regulatory T cells and that's that's the pressure of tumor specific immunity physiologically <unk> for recycled continuously between the surface and the underground into.
Our option of this process by a binding antibody that's associated with the development of auto immunity.
Auto immunity and immune related adverse events.
Major limitation of approved anti <unk> anti bodies that disrupt cta for recycling by promoting lysosomal degradation of this important immune checkpoint molecule <unk> hundred 16 in contrast, dissociate from the Cta.
In the end also allows normally recycling of both the antibody and the city in April a molecule that is designed for strong a cancer therapeutic effect and less immune related adverse effects preliminary data showed that <unk> hundred 16 is way tolerated with no dose limiting toxicities.
The single agent recruitment at Phase two dose was determined to be 10, Meg per kg without MTBE being reached.
Yet immune related grade three adverse event rate in the combo dose escalation with temporarily from what was 23% which is constant at lower than what was reported for comparison I O. I O combination very commended phase two dose for a combination is six.
Perfect.
Where are the antifreeze 16, dosed as mone of European and in combination was well tolerated and the safety profile appears to allow higher dosing for longer duration of treatment as compared for example to Italy.
Early efficacy data as one of European patent on the resistant ovarian cancer patients and in combination with pinball leased them up in multiple solid tumors where upfront.
Slide 15, with our colleagues from <unk>, we presented data from the phase one two study investigating the antifreeze 16, and 35 non small cell lung cancer patients with metastatic lesions that progressed on immune checkpoint inhibition in previous clients.
The majority of patients pet Coke stages of one the objective response rate was about 30% and disease control rate was 70% patients responded to <unk> hundred 16 had previously failed multiple lines of treatment, including several.
Our immune checkpoint inhibitors.
In this cohort <unk> hundred 16 has shown manager of the safety and Tolerability when dosed at 10 Mig per kick twice and follow it with six MC per kick every three weeks.
Immune related adverse event of grade three four were observed in 34% of patients and included immune mediated colitis.
<unk> increased and immune hepatitis.
The findings support the further development of <unk> hundred 16 in non small cell lung cancer and the phase III study preserve all three.
Slide 16, our second presentation at school was together with our colleagues from duality bio and load our first clinical data for PMT free 23, or next generation of our tool targeting ADC.
<unk> hundred 23 is comprised of over two targeting anti body covalently linked to the proprietary DNA.
Alright, one inhibitor <unk>, we're building costs.
<unk> Adcs have shown anti tumor activity and clinical benefit.
In March of the types of cancer, and we believe set midterm ADC as a modality, where it become a broadly used backbone for combos in oncology.
<unk> and safer and tie her two ADC for example regarding potential lung toxicity may.
Perfection nickel benefit preclinical data for PMT pre 20 feet distracted significantly improved therapeutic window as compared to the U S.
82, or one <unk> or tdm, one analogues to the approved her two ADC trastuzumab to stick on and customers to <unk> and <unk> respectively.
<unk> hundred 23 has a high drug to antibody ratio and when incubated with rep monkey and human plasma demonstrated outstanding plasma stability in.
In her two positive and her two negative mixed cell culture, <unk> hundred 23 inhibited the proliferation of both cell types demonstrating its bystander effect.
Michael kinetic and Pharmacodynamic analysis of <unk> hundred 23 incentives mouse models, so targeted delivery of the toxin into tumor tissue.
<unk> studies in monkeys showed a superior stability.
<unk> hundred 20 fleet and rapid systemic clearance of the toxin altogether. These properties result in maintenance of efficacy and reduction of systemic toxicity.
And the main markets.
Slide 17. The program has received fast track designation from the FDA and is being evaluated in a phase one two clinical trial.
The study is enrolling pre treated patients with advanced or metastatic her two targeting solid tumors.
Two stages as identified by our IHT.
S H for expression data.
Engie S for her two amplification all her tumor mutation the majority of patients had their her two expression by IHT of two plus of Rita we showed preliminary anti tumor activity in heavily pre treated her two expressing patients with a median of seven prior to <unk>.
<unk> treatment.
Including other anti her two adcs and tie her to anti body for ERP.
And tie her to take care.
In.
Her two positive breast cancer patients while objective response rate is 50% the disease control rate is 96%.
And her two low breast cancer patients. The objective response rate is 38% disease control rate is 84%.
<unk> activity of <unk> hundred 23 was also observed in non breast cancer tumor types, such as colorectal cancer ovarian cancer.
And endometrial cancer risk.
Responses were observed in patients treated with different dose levels and <unk> two expression status.
<unk> hundred 23 was well tolerated and all adverse events were manageable so far interstitial lung disease of great. One occurred in two patients out of 85 patients.
<unk> cohorts are ongoing in selected tumor patients treated.
Recombinant phase two dose and we expect further data this year.
Slide 18, finally, we presented data on our cell therapy product candidate BMT TUI that we developed a highly sensitive second generation car packaging coating six with high specificity. The cochenour embryonic antigen called <unk> six is an ideal target for safe Europeans.
It just absent in healthy tissues, but highly expressed in many high end medical need cancer.
To improve car T cell and grassman and persistence, we co develop the car T cell amplifying RNA vaccine.
Kovack for short.
Goal is to keep car T says, if you're a party CLIA relevant levels.
The animal studies, we have shown that persistence.
Effector function of car T cells can be further enhanced by repeated administration of cosmic <unk>.
None of particulate RNA vaccine that encodes clouded carver.
<unk> is based on our European nuclear that mrna like OPEC vaccine technology, and mediates body wide RNA delivery to lymphoid compartment resident antigen presenting cells in multiple preclinical models. The display of the translated natively forwarded cod target protein on antigen.
Resenting says mediated in vivo stimulation and controlled expansion of car T cells induced memory T cell phenotype, along with higher target sensitivity.
And Eva tumor control, even if you're a pure tech car T cell doses were administered.
We are testing the safety Tolerability and activity also combination of clothing, <unk> car T cell and Kovack.
Bifurcated dose escalation study with increasing dose levels of car T cells and to fixed kovack scheduled in patients with various cancer types that are Claude <unk> six positive defined as more than 50% of tumor cells.
With two to three plus intensity.
Dose escalation has been completed for car T cells derived from a menu and manufacturing process and we have presented data was highly encouraging.
<unk> of clinical activity and manager of its safety at various conferences in the past.
Slide 19.
<unk> cohort of 19 patients have been treated with a car T product manufactured with.
Scalable automated version of our process <unk> has been observed so far and Claude and six car T cells.
Topic, where where the total rated reflecting the safety profile detected in the first dose escalation level.
Objective response rate was 41% for our 17, evaluable patients and 75% four eight patients treated at dose level, two namely one times 10 to the car T cells.
We are expecting an additional data readout later this year.
Once we have determined.
Recommended phase two dose for PMT to 11, we plan to initiate a pivotal trial and jumped at two months, which has already received prime designation by the EMA.
The one thing our pipeline remains a key strategic priority for the year. This and next year, we plan to transform our pipeline as we advance multiple programs towards the pivotal stage.
I will now pass the presentation to our CFO <unk> <unk>.
Okay.
Thank you Ed and a warm welcome to everyone, who dialed into today's call.
Before we go into the financial details for the second quarter and the first half of 2023, I will start with giving you an overview on some key financial figures, which you can find on the next slide.
Our total revenues reached $1 4 billion euros for the first half of 2023.
Aligned with our expectations with Q2 being the expected weakest quarter and the year.
Our COVID-19 vaccine revenues as stated is expected before.
Really influenced by seasonal effects, especially now as we have some in our biggest markets in the northern hemisphere.
As we have outlined in earlier earnings calls the revenue development for COVID-19 vaccine is expected to mimic a few like setting.
I will go into more details concerning our financial guidance in the course of the call, but want to emphasize already know that acknowledging the uncertainties related to the seasonal effect.
Reiterate our 2023, COVID-19 vaccine revenue guidance of around 5 billion for the full 2023 financial year.
With $1 4 billion in revenues. We ended the first six months of 2023 with an operating result of $91 1 million euros and generated earnings per share on a fully diluted basis of 128.
With respect to the company's financial position. We ended the second quarter of 2023 was $16 8 billion euros, comprising approximately $14 2 billion euros cash and cash equivalents as well as approximately $2 7 billion euros public third party non current security investments, which are part of our investment strategy.
<unk>.
Subsequent to the end of the quarter and July 2023, we received $1 1 billion euros in cash from our collaboration partner Pfizer settling our gross profit share for the first quarter of 2023 alongside with <unk> 4 billion received until early August in connection with the Amendment COVID-19 vaccine purchase agreement with <unk>.
European Commission.
In connection with our acquisition of <unk>, which closed on July 31.
Approximately $450 million were invested in form of cash and shares not including potential future milestones.
Overall with this strong cash position in the background. We are on track to launch our new variant the depth of COVID-19 vaccine and intend to start multiple clinical trials across our oncology and infectious disease pipeline.
Such as the ones with accuracy for and do other biologics that Luca just mentioned earlier.
I'll be moving to our financial results for the second quarter of 2023 as shown on the next slide.
Our total revenues reported reached $166 4 million euros for the second quarter compared to $3 2 billion for the comparative prior year period and decreased with the corresponding lower COVID-19 vaccine market demand.
Write offs by our collaboration partner <unk> significantly reduced our gross profit share in the second quarter and hence negatively influenced our revenues for the three months ended June 2023.
Let me move to cost of sales, which amounted to $162 9 million in the second quarter of 2023.
Compared to $764 6 million euros for the comparative prior year period.
For the first six months of 2023, the cost of sales reached $258 9 million.
Compared to $2 1 billion euros for the comparative prior year period.
The changes align with decreasing COVID-19 vaccine sales.
Research and development expenses reached $373 4 million for the second quarter of 2023 compared to $399 6 million.
For the comparative prior year period.
For the first six months of 2023 research and development expenses amounted to $707 4 million euros compared to $685 4 million euros for the comparative prior year period.
Our R&D expenses are mainly influenced by progressing clinical studies for pipeline candidates in development a variant depth as well as next generation COVID-19 vaccines and the expansion of our R&D head count.
General and administrative expenses amounted to $122 7 million for the second quarter of 2023 compared to $130 million for the comparative prior year period.
For the first six months of 2023, G&A expenses reached $242 1 million euros compared to $220 8 million for the comparative prior year period.
While in Q2, some cost savings have been achieved G&A expenses for the first six months were mainly influenced by increased expenses for IP services as well as expanding the G&A head count.
Due to a loss, making second quarter of 2023, and the tax effect of a reorganization of the intellectual property rights within the group income taxes with an amount of $221 8 million euros, but realized compared to tax expenses of $647 3 million Europe accrued for the comparative prior year period.
In total for the first six months of 2020 free income taxes were realized with an amount of $16 3 million euros tax income compared to 2 billion euros tax expenses accrued for the comparative prior year period.
The derived effective income tax rate for the first six months of 2023 were approximately minus five 5%, which is expected to change over the 2023 financial year to be in line with the updated estimated annual cash effective income tax rate of somewhere around 21% for the <unk> and appropriate.
Then I will elaborate on in a minute.
As mentioned at the beginning due to mainly seasonal effects of our Covid business. We recognized a loss during the second quarter of 2023 amounted to $119 4 million euros.
<unk> to $1 7 billion euros net profit for the comparative prior year period.
For the first six months of 2023 net profit reached $311 8 million compared to $5 4 billion euros for the comparative prior year period.
Our loss per share for the second quarter of 2023 amounted to 17, nine euro cents compared to a diluted earnings per share of six euros and 44.
The comparative prior year period.
For the first six months of 2023, our diluted earnings per share was $1 28, compared to 20 euros 65, you have a sense for the comparative prior year period.
Now turning to the next slide I would like to emphasize that we are updating the company's financial outlook for the 2023 financial year with respect to our planned full year, R&D and SG&A expenses as well as our planned expenses and growth and maintenance capex for operating activities, excluding effect caused by or driven.
Some in licensing arrangements collaborations or M&A transactions.
Please note that the following numbers reflect current base case projections and are calculated based on constant currency rate and do not include further transactions that could occur in the second half of 2023.
As stated before we reiterate our estimated COVID-19 vaccine revenues of around 5 billion euros for the full 2023 financial year.
Our guidance is based on the expectation that the demand in our vaccine will pick up in this year's third and fourth quarter, along with our rollout of the adaptive COVID-19 vaccine against <unk> five.
During the second quarter of 2023, the COVID-19 vaccine supply agreement with the European Commission has been amended.
The agreed re phasing of deliveries annually through 2026 will play an important role in the future as revenues will be recognized over the extended term.
With the EPC contract, giving us a level of clarity in terms of revenue expectations, the demand and mix in Asian rates in other territories. For example, the U S market remain uncertain regarding these metrics.
Our collaboration partner Pfizer confirmed its plan to achieve its goals for their market given their detailed plans to support an increase in vaccination rates in the U S. We expect to achieve our revenue guidance range I previously mentioned.
However, substantial uncertainties underlie the demand for COVID-19 vaccines in general as well as for all exceed.
The timing of its approval would have an impact on its demand.
There have been no precedent on how COVID-19 vaccine rates will evolve fourth of the use of a pandemic what people have been vaccinated multiple times.
We expect to learn from this for future years, but we assume that 2023 will be a very special one given the mentioned circumstances.
It is our aim to move our clinical programs forward as quickly and cost efficiently as possible towards becoming a multi product company.
To do so we have implemented further measures to increase cost consciousness, which led to a companywide cost optimization and hence reduction of our expected 2023, R&D SG&A spend and capital expenditures the increased flexibility expenditure levels will help us navigate through the just described uncertainties.
While remaining focused on the development of the next wave of innovation in various fields and indications.
As summarized for you on this slide we update our R&D spending for the rest of 2023 from between $2 4 billion and $2 6 billion euros to between 2 billion and $2 2 billion euros, including the R&D development costs identified from our latest publicly announced M&A activities.
We also update our SG&A expenses from between 650 million to 750 million euros now to between 600 million 700 million euros, and reduce our spending for growth and maintenance capex for operating activities.
<unk> 500 million $600 million to between $350 million and 450 million euros.
Before we have updated our group estimated annual cash effective income tax rate from around 27% to around 21% excluding potential effects from share based payments settlements in the course of 2023.
Following our reorganization of the intellectual property rights within the group, we recognized deferred tax effects in Germany, and the U S. Previously unrecognized U S federal and state deferred tax assets, including unused tax losses and unused tax credits have been re evaluated and not recognized.
The recognition of these deferred tax assets lead to a decrease in the effective tax rate for the fiscal year 2023.
And with that I would now like to turn the call over to our Chief strategy Officer, Ryan <unk>.
Date on our strategic outlook for 2023, and concluding remarks. Thank you.
Thank you, yes, I will now provide a brief summary of the commercial outlook for our updated COVID-19 vaccine launch and provide an update on our acquisition of Institute before concluding with our strategic outlook for the remainder of the year and beyond.
I would like to touch on our key readiness activities that have put us in a strong position to execute on our planned launch this fall on.
On the back of the regulatory recommendation for an extra GBP one five adopted monovalent vaccine, we and Pfizer have made more than 40 regulatory submissions in key geographies around the world.
We are on track to begin vaccine distribution once regulatory approval is received with first shipments expected from September onwards.
We believe Coronado is positioned to maintained its leading position in multiple key geographies.
Most of the World will continue to be supplied under existing pandemic booster contracts.
This includes our contract with the European Union, our largest contract, which was recently renegotiated to extent to a period over four years and.
In the United States, we expect our first major commercial market opening where we will leverage pfizer's commercial capabilities.
Turning to the next slide this week, we announced that our acquisition of <unk> is closed following receipt of all required approvals.
With the acquisition, we add World class AI and machine learning technologies, and research capabilities to accelerate and enhance our broader strategic vision.
The acquisition will bring over 290 data scientists engineers and tech professionals to our team positioning us to lead in this disruptive new field.
And combining entities.
Ml expertise with our own research and development capabilities, we aim to develop novel therapeutic and vaccine product candidates with increased speed and efficiency.
We also see opportunities to leverage these AI and ml capabilities outside of R&D across other functions of biotech. This.
This makes us a highly strategic acquisition with significant long term transformational potential across our firm.
We will operate in cities as an independent technology subsidiary of bond tack.
On the next slide we showed the three pillars of value creation that we expect from this transaction.
The first is to apply cutting edge AI and machine learning technologies across our therapeutic and vaccine platforms.
We plan to connect these AI enabled discovery capabilities.
With automated lab infrastructure to enable high throughput drug discovery.
While we do expect our overall AI investments to increase in the coming years, we do expect some midterm cost efficiencies from the acquisition by internalizing, our largest AI technology and services provider.
Finally, we will continue to operate in cities third party business, which delivers technology solutions and services to external customers and the technology sector and other industries.
We are excited to kick off the next phase of our collaboration with the leadership and bright minds that <unk> studied and believe that together, we can become a global leader in applying cutting edge artificial intelligence and machine learning technologies to discover design and develop next generation Immunotherapies at scale. The next slide provides an overview of our expected pipeline news flow.
For 2023 and 2024.
Some of these points have been covered so I won't go through them all in detail here with the collective efforts and dedication from our teams we've achieved remarkable progress for several of our product candidates at this year's Astro Congress, we presented data for three of our pipeline candidates.
We're on track to share additional data updates across a range of technologies later this year.
In June we initiated our first phase III trial in oncology.
Additionally, we started the phase II trial for one of our fixed our candidates in collaboration with Regeneron focusing on first line and our CLC.
As awesome as elaborated we anticipate initiating several further trials in the near future on the next slide I'll summarize the strategic outlook for the remainder of the year. We are on track to rollout our new Varian adopted COVID-19 vaccine in the coming months.
We also plan to initiate multiple registrational oncology clinical trials, while expanding our infectious disease pipeline.
With the <unk> acquisition now closed we intend to rapidly scale up our activity in AI enabled drug discovery.
And we will continue to execute transactions to expand our innovation ecosystem.
And execute on our corporate development strategy to in license complementary assets.
Before concluding and opening up the floor for questions I'd like to reiterate that we will hold our innovation series event on November seven.
We will provide further details on the event in the coming weeks.
With that I would like to thank our shareholders for their continued support and I'll conclude our prepared remarks and open the floor for questions.
Thank you.
To ask a question you will need to press star one on one on your telephone and wait for your name to be announced.
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We will now go to your first question.
One moment please.
And your first question comes from the line of Dana Gray Bosch from Leerink partners. Please go ahead.
Yeah. Thank you for the question I have one on all $3 92.
The phase III that you.
Have started.
The name of it is is different and designed from the phase two.
Some of the inclusion exclusion criteria.
Wonder if you could talk about why the differences and why you decided to go forward now in a phase III with single agent <unk> four rather than gathering more data and doing a combination study.
With PD, one or any other agents and that's pretty hard to treat and difficult to do trial setting.
Dana Hi, this is <unk>.
Thank you for the question.
So as you know them.
Yeah.
On to study collected data in different combinations and we have seen we have seen in Singapore.
Senior compounds activity in non small cell lung cancer in patients who had received.
We have ceased and cold pressed on the first one.
Checkpoint blockade treatments.
This.
Encouraging.
Objective response rate of around 35% and do not see an added benefit in combining.
The current status quo, which is similar to therapy, and therefore decided decided.
In Uh Huh.
I'll also say doubling.
As a clean safety profile to go with a single component alone.
And the patient population that has been selected for the study.
Flex historical patient populations with regard to the.
So the inclusion and exclusion could tell you.
Okay, perhaps a follow up I think the difference and tell me if I'm wrong was the linked for which the patients could have received prior checkpoint.
That it's a lot you're requiring a longer prior checkpoint in phase III than you did in the phase two.
And some phase II patients wouldn't be eligible for phase III do you expect any negative impact from <unk>.
Yes Dana.
The cost of coal has also emerged based on discussions with FDA and FDA request.
Got it thanks.
Yes.
Thank you.
We will now go to your next question.
And your next question.
Comes from the line of <unk> Ahmad from Bank of America. Please go ahead.
Hi, good morning, and thanks, so much for taking my question.
Just a point of clarification as you think about the rest of the year for Covid vaccine sales I know you talked about the difficulties involved in really getting a sense for the trends, but when you decided to maintain guidance at least for now.
What key factors or are you taking into account that gives you confidence that that sales will be a revenues rather will be at least close to if not at the 5 billion Euro market and I think that's probably the best question for Ryan to answer.
Yes.
Start to zain in the yen.
So chime in here. So I think the starting point here was that we are expecting the total volume.
Covid vaccines in the fall to be down you may remember that last year, we had distributed more than 500 million doses of art before besides bearing adapted vaccine globally.
And for the full year last year, we hit the market in the United States was about 144 million doses, we are expecting those numbers to come down both in the United States and globally. So we factor that in however, we also expect that.
In the United States that we're going to see a commercial market opening so a higher price point with.
With along with Pfizer have talked about a gross price of 110 to $130 range, that's our expectation and so a higher price point in the U S and much of the rest of the world We're still expecting.
Contracts that have already been signed to be the primary.
Sort of contractual mode.
Governing the second half deliveries, but demand will still matter. So on the rest of the world. We are still expecting effectively continuation of the booster contracts.
That's factored in as well.
Yes, maybe Susan just just to add I mean.
Ryan basically describe the situation.
I think we made some statements in our speeches as well in that respect and of course, a situation like we currently see hasn't been seen before for any product so far.
Patients have received in the.
People have received multiple vaccinations in the last two years and of course, there is some level of tie up Minnesota stay on on getting vaccinated.
But we see the need for further vaccinations in I think.
Specifically for the U S you've heard probably.
Some of the appliance that Pfizer and as well as our competitor Modelo has an answer.
And how the expectations will be going up.
For for the rest of the year to pick up with the vaccination rates. So in that respect. The next couple of months. The next two or three months will give us a good sign.
All of the year will end there is some uncertainty we just wanted to make that clear.
And.
We see 2023 is a very special year, though too I have to say so.
Our perspective.
That situation that people have received multiple vaccinations and now maybe a little bit tired has to grow into a market, where you have annual vaccinations and.
I think it gives 23 it gives us some indication, but we also believe there will be a further increase potential from our perspective for 24 and the other is just given the specific situation that we that we now have in this year.
With two years of multiple vaccinations for people.
Okay. Thank you.
Thank you.
Well now go to your next question.
And your next question comes from the line of our cash to Ari from Jefferies. Please go ahead.
Everyone. Thanks, so much for taking our question. This is Amy on for cash.
So Pfizer has alluded to an enterprise wide cost cutting program, particularly around Covid, it's long term vaccine demand ends up being modest.
Pfizer's cost cut change your long term opex on your Covid programs has been more broadly and on a related note can you go over what's changed in your new 2023, Opex and Capex Guide, we're seeing that P&G won 41 isn't on your pipeline slide this quarter are there any other components that may be driving these cost cuts.
Thanks, so much.
Yes. Thank you for the question, so I'll speak to the Opex pointing them to opine on what's driving the cost lines.
In our guidance, but on the Opex side. The short answer is no and actually one of the unique features of our.
Of our economic model for COVID-19 is that our Opex is very late so.
As you May recall, we get to a gross profit share on every COVID-19 vaccine dose produced and delivered through the Pfizer partnership and only in Germany, and Turkey, we booked topline product sales and actually have significant opex only in those two countries. So that does translate into a very differentiated profile across our piano.
And I think youll see some of that Leanness reflected in the numbers that we've.
<unk> disclosed today, Vince do you want to speak to the drivers of the cost.
I mean from from for Us.
First can only talk fast we cannot talk about Pfizer in their cost cutting plans that they have announced in the earnings call. So far from our perspective, we see a little bit less spend.
For the collaboration with Pfizer in the course of 2023, but we also have a close look on our own spending in the areas of oncology for example, or in one building up production capacities. So those have been.
Specific areas, where we when we just look at controlling our costs going forward to have more flexibility.
Great. Thanks, so much.
Thank you.
We will now take your next question.
And the question comes from the line of Chris <unk> from Goldman Sachs. Please go ahead.
Yes, two questions if I can one on the pipeline and the other more financially related on the pipeline.
<unk> hundred 22 first line metastatic melanoma seemed a bit conspicuous in terms of the absence of mentioned in the press release and in prepared comments I do see it in the pipeline table.
Have your expectations for this trial changed I believe we should still be expecting updates in the balance of this year.
And then I'll have a follow up on on financials.
Yes, Thanks, Chris Let me start on the <unk> and <unk>.
We've been also can also chime in here.
So we've reiterated our.
Our guidance for an update later this year.
We still intend to provide that I.
I think on a previous call. We had also mentioned that the.
The PFS analysis would be triggered on an event basis.
Because we still haven't met that event trigger reached that had been trigger which does.
Which does mean that we're not in a position right now to be specific about the full that's the data that we're likely to bring out later this year. So we do intend to provide an update.
For year end, but I think it's likely that there won't be a full data update so more to come on that.
I can just echo what.
What why Orion set.
Gathering these events is not entirely under our control.
Therefore, we at this point cannot cannot forecast when we will be able to report.
The data.
From analysis data point.
Got it and then on the financial follow up very healthy cash balance obviously post COVID-19.
We are watching the decisions, you're making on the capital allocation front the into the deep as an example of that and Brian you mentioned during the call you look to intend to continue to in license assets can you give us a sense for potentially any areas that you feel either disease area modality size a lot of these.
Smaller and instead deep with a little bit more kind of adjacent as opposed to immediately obvious just be helpful to get a sense for what this mosaic as that youre, creating given your capacity.
Yeah, absolutely absolutely Chris So as you see from the deals we've announced so far this year that.
We've allocated a little bit less than $1 billion.
And in terms of upfront payments across the entity transaction and then several in licensing deals for several assets that we've talked about today.
So I think in that sense.
Instead, it was a sort of strategic exception, we thought that was a very unique opportunity I wouldnt expect that that would be one that would be replicated.
As such but I think the licensing deals and small scale M&A I think you can expect us to continue to operate along the same the same lines as what you've seen so far in the first half of the year so relatively.
Small deals.
That's our sweet spot under $1 billion is our sweet spot, we will look at and consider larger deals, but thats I think you'd have to be a very very good strategic fit for us to make us a larger move we do see opportunities in that sub sub $1 billion range to further bolster the pipeline and in terms of focus areas.
As you've seen so far in the first half Io differentiated Io assets are going to continue to be an area of focus.
Great well look for more insights on your innovation day. Thank you. Thank.
Thank you.
Thank you.
Well now go to the next question.
And your next question comes from the line of Jan Weber from TD Cowen. Please go ahead.
Alright. Thank you very much for taking the questions. This is brendan on for your own just really quickly wanted to also ask.
Maybe about the potential flu COVID-19 Pablo approach here.
First I guess when when do you think we might see data.
From that study, but also maybe a little bit more broadly kind of what the path forward is for the combo.
And really I guess trying to understand with each updated booster. How this would kind of play out here just kind of trying to get at.
Y'know Cfe kind of cast some.
A little bit on the whole mrna approach, obviously from your own perspective, but really how youre kind of thinking about mrna fitting into the call code flu combo space from what Youre seeing at this point. Thanks.
Yeah sure I'll start.
As you know Pfizer currently has an ongoing phase one study of our flu Covid combo vaccine.
And they also have a phase III study ongoing up their flu <unk> vaccine, which we've licensed the technology to them, we still retain some economics on the program, but they are they are in control and driving that program for Tomorrow program. So.
We do see opportunity for combination vaccine I think in terms of timelines.
Pfizer has guided to a potential phase one data update this year for the combination and we've also guided to near term.
Phase III data.
Blue mono both of which I think will be relevant data points here to help inform the next stage of development. The last point I would add is just that Pfizer has indicated I think just the last couple of days or they've reiterated that they see a flu book of fluid mono and also through Copa com will be starting to become relevant from 2024 onwards, so not.
Not something to to look at this year, although I think positive data could obviously be be a helpful catalyst for us as well.
Okay.
Thank you.
We will now go to our next question.
Well, maybe then please.
And your next question comes from the line of Terence Flynn from Morgan Stanley . Please go ahead.
Great. Good morning, Thanks for taking the question.
I was wondering if you could elaborate more on the rationale to advance <unk> 116 into the metastatic setting.
I know you've talked more about the potential there in the adjuvant setting. So just wondering if you could kind of compare and contrast, those two approaches. Thank you.
Yes. The question is highly dependent on it.
And the six pack approach.
Based on.
The aftershock of basic lithium after vaccines that means in the metastatic setting.
CES is rapidly progressing we would like to get a cap.
As quickly as possible and immune response initiated.
Yeah.
Personalized vaccine.
Approach it fires around four.
Four to six weeks for cooperations with XP.
And is particularly suited for the adjuvant setting and the person that joins fracking.
Longer timeframe before patients progress.
As the opportunity to bid on.
Bonds that compelling potential progression of disease, Therefore August adjuvant Paris.
Endpoint relapse free survival as an endpoint.
As in.
Metastatic setting endpoints will be.
But santa progression fee survival OIS.
Thank you.
We will now go to our next question.
And your next question comes from the line of Bill Mcgowan from Canaccord. Please go ahead.
Hi, Thank you so <unk>.
I have a question on self amplifying RNA I know that you had been developing a few programs with yourself amplifying RNA and it's kind of.
Not center stage anymore with several other companies that are earlier in their cancer vaccine development are using self amplifying RNA and kind of singing its praises. So I was just wondering if we could expect self amplifying RNA too to occupy some more more of a spotlight maybe be advanced.
And.
In some programs coming up in the future. Thanks.
Yes.
As you know we have.
Two empty.
And on the amplification programs, it's a self amplifying mrna program as well as the tons amplification poker.
We have obsessed.
If you look close down into the data and published data for other calls they have observed that Seth amplifying them on in humans.
Limited in the fall.
Response.
It's a trick.
Click and collect.
Initiation of a Nit response, and hindering the full capacity of set in place.
And we are working on our on our improved approach overcoming this innate in England.
Immune response limitation on our costs.
Sure.
RNA platform, which comes with come back to two.
Advantages advantage of safety.
Replicates itself is not empty spot.
It provides.
Only tons tons.
<unk> activity and the target them on is our amplified, thereby separate target them on that.
Application <unk> and <unk>.
The opportunity to combine multiple targets and this is something that we made a lot of progress in the preclinical setting and we will report end of this year.
Here on this platform, particularly.
We see a suitability in the infectious disease setting, particularly in the in the setting of combination of exits.
Thank you.
Thank you.
We will now go to the next question.
And your next question comes from the line of Ellie Merle from UBS. Please go ahead.
Hi, guys. This is Sarah on for Alex. Thanks, So much for taking our question.
I guess, a quick one on tier one one and the data update later this year and what are the expectations for data there and what are you guys, hoping to see things.
Thank you for the question. So we have an ongoing phase two trial and we have had a couple of data updates.
Yes, yes.
Before.
The trial is ongoing what we expect to report.
This year is additional data on the one hand on safety of different doses and in combination.
With our <unk> vaccine.
Also.
Data on clinical activity in additional clinical indications, we have been very focused on testicular cancer in the previous updates.
Sure.
With a report on durability of these responses we have been focused on objective response rates now that the data is maturing we will provide more insights and towards your ability of those responses and how you.
Also vaccine impacts them.
Thank you.
Thank you.
We will now take our last question for today.
And your last question comes from the line of Simon Baker from Redburn. Please go ahead.
Thank you for taking my question.
Thanks to the preserve our III study, it's a two stage phase.
<unk> phase III study, so I just wanted to get some idea of what.
Data you will be presenting at.
At the conclusion of stage one.
And any timing that.
As indicated based on your expectations for <unk> and <unk>.
Treatment.
And.
I see.
Clinical trials is showing a.
Primary completion in mid 2026 is that a reasonable estimate at this stage for the final data of stage two thanks, so much.
I didn't fully get that Simon was abolished data expectations for ongoing all.
All of them well on three nine to try us.
Yes, it was because.
It's a two stage study so I wonder what data you will disclose when stage one is completed and the doses selected.
So it would be safety data and clinical activity data.
In different tumor indications.
This is I think is lung cancer.
Yes.
We expect.
2025 or <unk>.
Data.
And safety data.
We have started the critical part of the two different doses, we will select one dose to.
To continue.
It's a staged approach based on our data in which the assessment of the clinical.
Clinical pilot continuous cost for us.
For a maturation.
Great. Thanks, so much thank you.
Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
Thank you.
Okay.
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