Q3 2023 BioNTech SE Earnings Call
[music].
Okay.
Welcome to the bio Tech third quarter 2023 update call.
Like to hand, the call over to stop to Victoria Master, Vice President of strategy and Investor Relations.
Please go ahead.
Thank you good morning, good afternoon.
For joining us today probiotics third quarter 2023 earnings call.
As a reminder, the slides that accompany this call and the press release issued this morning.
All in the Investor section of our website.
On the next slide you can see all forward looking statements disclaimer.
Additional information about other risks are described in our filings made with the U S.
Securities and Exchange Commission.
Or looking statements on the call are subject to the potential risks and uncertainties.
Like all the other the other cold original date, and we undertake no obligation to update or revise any of the state.
On slide three you can find the agenda for today's call.
Today I'm joined by the following members about the management team.
Our CEO and co founder overtime.
It doesn't have to Ritchie, our chief Medical Officer and co founder.
Young lifestyle, our Chief Financial Officer, and Brian Richardson, our Chief strategy Officer.
I would like to turn the call over there over time.
Thank you Victoria.
That comes to all those joining us today.
I will summarize our third quarter highlights before turning to my colleagues Hubei probiotics side of it.
Slide five.
Let me start by providing an overview of our strategic priorities and latest achievement.
This quarter, we continued to build on our global COVID-19 vaccine leadership.
This first to market Omicron Xb, one part adaptive vaccine launches across multiple regions.
I think our team and collaborators for their tireless efforts to make this accomplishment possible.
Again in such a short period of time.
Our COVID-19 into enter combination program.
In partnership with Pfizer, leveraging our pocket.
Archie has also reported positive top line results.
The phase one two study evaluating the safety Tolerability and Immunogenicity of <unk>.
Co administered mrna based vaccine candidates.
And influenza among healthy adults 18 to 64 years of age when compared to a LIFO influenza vaccine demand created almost immune responses to implant the eight influenza b and Zaslav two sprint at that as a safety profile consistent with the <unk>.
Safety profile of the company's COVID-19 vaccine.
But pivotal phase III study will be initiated in the coming months.
Our second priority is to advance our oncology platform by initiating multiple registrational potential.
<unk> be with our partner bio <unk>.
Initiating a pivotal phase three car to about is our next generation anti body on your P. S. T N T. Two three in patients with hormone receptor positive how to lower breast cancer, who progressed on previous standard of care, but as a monotherapy in the east.
Furthermore, during this quarter and our respective collaboration partners published original scientific data and presented new clinical data across several programs international scientific congresses, including more than 60 that will inform our development strategy as a next step for these programs.
Based on the successful results, we have expanded existing collaborations at MIT newer tiers with specialized developer, which add to our product with a toolkit of technologies.
And our.
Our counterparty product candidate portfolio.
This cover the in licensing of our <unk> targeted antibody drug conjugate for Medidata cannot politics, and as announced today our plan to bring forward.
Anti VEGF.
PDI run by specific anti body in collaboration with our partner <unk>.
Our third strategic priority is to initiate an excellent clinical programs that target in searches diseases of unmet medical need.
The third quarter, we initiated our first in human car in infectious disease. This year a program aimed at advancing mrna based vaccine candidate for the prevention of <unk>.
In partnership as the coalition for epidemic preparedness innovations.
And suddenly we continued our focused execution against our strategic priorities in the third quarter and look forward to additional progress in all of this area for the remainder of the year and into 2024.
We will share more detail on our oncology infectious.
Infectious disease program at our innovation day in Boston Tomorrow, and event that I invite you all to attend in person on that Scott.
Slide six focusing on our marketed COVID-19 vaccine coming out we continue to build on our global COVID-19 vaccine leadership with first to market Omicron SBB franchise adaptive vaccine not just.
This was preceded by a robust and successful regulatory process in.
In late August the RPM limit seamless agency recommended for marketing authorization for our moral weight on HBV, one spot adaptive X gene.
This was followed in September by the U S food and drug administration authorizing the adaptive experience for individuals aged six months to 11, yet under emergency use authorization and photos.
Above.
The vaccines have been approved and the supplemental biologics license application.
Second other national have regulators across the globe, including the UK, Japan, Canada, and South Korea have also approved our monovalent adaptive exit.
Within two months, we went from the first regulatory recommendations by the XP.
<unk> adaptive X gene two our first shipments of the respect of fixing the ability to execute the such speed was enabled by our continued surveillance and analysis there is a concern.
Strength of our on a technology, which allows for scalable production.
Rapid detection and adaptation and our expertise at navigating the evolving regulatory landscape.
Sure.
Historically, we have seen an increase in COVID-19, hospitalizations in the winter in line with other cardiovascular diseases.
On slide seven you can see independent Farnborough projections, our cost scenarios, assuming different explanation recommendation and immune escape levels.
On India. It is expected that the hospitalizations are likely to increase this winter and has a hacker impact similar to last year.
COVID-19 burden is lower than in previous years, However, the absolute number of hospitalizations and deaths.
Still high in certain regions with thousands of hospitalization and hundreds of deaths each week.
The emergence of new variance Capex, we're still dealing with both vaccine and infection induced immunity.
Indicates that.
The ability to infection remains a concern.
May increase over time.
Moreover, the data shown here suggest that providing center stable recommendations by updated doses could contribute to improved X gene coverage over time mitigating the risks associated with evolving COVID-19 values.
On slide eight long cobalt has a significant societal and healthcare system impact the studies, indicating that 10% to 20% of Sars cov two infected individuals may develop symptoms.
Not as long corvid.
It is estimated that 36 million people across Europe may have experienced complication.
Rising from COVID-19 weeks.
Weeks after infection common be defined as non covered funds.
Start of the pandemic to date.
So I just showed that amount of explanation.
The second impact in reducing the development of Covid by 10% to 45% depending on the Coupe I used to define symptoms.
The protective effect of amount of explanation is largely attributed to its ability to reduce susceptibility to infections.
We continue to look closely at the role of M&A of explanation.
I think the unmet need of long corvid.
Studies have demonstrated that natural immunity acquired bypass cough to inflationary as valuable across individuals and the protection. It offers.
<unk> overtime explanation can restore and enhanced infection acquired immune protection and further reduce the risk of the infection.
The rest are severe COVID-19 disease remains high and vulnerable populations and explanations to us to not only reduce the risks, but can also mitigate the risk of lung cohort.
And preclinical data demonstrate that explanation that ex VB one defendant in each containing candidate elected higher neutralizing anti body. Two con is circulating variant of concern compared to responses elicited by.
Previously approved COVID-19 vaccines.
Given all of this and our current understanding of COVID-19 seasonality.
On healthcare systems billing autumn and winter season, we anticipate the need for annual adaptive X gene two and long term future of COVID-19 as explanation practices.
With that I would like to thank you all for your confidence in our success and your continued support.
I will now turn the call over to Ed.
Thank you glad to be speaking with everyone. Today, we will provide a high level pipeline update we will advance into her hasan programs in greater detail.
Innovation serious day event tomorrow.
Starting with an overview of our infectious disease pipeline on slide 11. In addition to our marketed product <unk>, we continue to pursue our multi pronged innovation strategy to improve upon our vaccine with next generation approaches aimed at generating Rota <unk>.
Europe in your energy. This includes our stabilized spike vaccine approach being studied in the phase two trial and Archie said enhancing vaccine candidate in an ongoing phase one trial, we believe that our COVID-19 vaccine has the potential to be combined with the seasonal flu vaccine across.
Many parts of the World people are currently receiving the omicron adapted.
Adapter texting boost us at the same time as natural shops.
Combination product has the potential to provide seamless protection from both viruses with this initiative, we are working together with our <unk>.
Not trying to.
To develop and implement a combination vaccine, which leverage our R&D technology.
We recently reported phase two results, where our combination candidate showed robust immune responses to influenza a.
Once a day and that cost two strains.
Great.
Safety profile consistent with the safety profile of <unk>.
Companies, Covid, 19 vaccine, which met the criteria for advancement to phase III trial.
In addition to the previously mentioned COVID-19, and influenza vaccine program with.
Got it multiple first in human trials of our mrna vaccine candidate.
Last year that address Chinas, HSBC <unk> and embark.
On slide 12.
Expected SaaS cost to continue to evolve the omni chronic ceb's happening not just currently account for the majority of COVID-19 cases globally, including the EP defendant EG types, one whose dominance is growing.
Slide 14.
We and our partner Pfizer tested for potential effectiveness, often omicron XP, one five adapted monovalent vaccine as a primary serious and boost that in preclinical models.
You can see here the neutralizing antibody responses in mice immunized with Omnicom. The April five adapted bivalent vaccine.
After two doses of the origin or BMT 162, B two vaccine one group of mines again, we cease to be a four five attempted bivalent COVID-19 vaccine as a fourth dose and the other group receives the Nu X P. P. One five adapted monovalent COVID-19.
As.
You can see four to five fold increase of neutralization of <unk>.
<unk> related variance when dose for <unk> five decade, monovalent vaccine compared to last season's P 845 adept at.
This preclinical data indicate that <unk> be one time Baron deducted monovalent vaccine.
The pre vaccinated setting has the potential to induce broad cross neutralizing antibody titers against market Pb's update niches. We can also see an increase in geometric mean titers of neutralizing antibodies.
Speed initiatives, including <unk>, 5.1, and eight to 18, 6% when compared to the previous bi valent VA 456 in contrary to us.
Slide 14 shows the design of our ongoing phase two three clinical study testing the safety Tolerability and Immunogenicity of our chronic <unk> one five adapted monovalent vaccine and 700 vaccine that you can fix inexperienced participants.
Data from this study will be reported in 2024, that's already clinical rework data as shown on slide 15, demonstrating that our X P. P. One five adapter to vaccine elicited significantly higher neutralizing antibody responses against <unk> one five.
<unk> 2.3, EG 5.1 N P equaled 86 compared to pre vaccination debits.
Moving now to our oncology pipeline on slide 16, which is grounded in our marching modality toolbox.
Advancing through focused execution, we now have one phase III study is ongoing and the second phase III expected to dose the first patient soon consistent.
<unk>, our anti <unk> monoclonal antibody, which we believe offers a differentiated safety profile. The phase three clinical trial, then youre hitting its efficacy and safety is one of European metastatic non small cell lung cancer patients who have progressed on previous I O therapy has started.
In June this year and will enroll 600 patients.
PMT free 23, or anti <unk> two antibody drug conjugate also being studied in a phase three clinical trial.
Assessing the efficacy, whereas this investigator's choice of chemotherapy in patients with hormone receptor positive virtual no chemotherapy nave net east breast cancer patients, whose disease has progressed on at least two lines of prior endocrine therapy, all within six months of <unk>.
Klein endocrine therapy, plus CDK inhibitor. We've also recently initiated two new phase two trials one in partnership with Genentech.
Evaluating our individualized cancer vaccine candidate <unk> 122, excellent setting for patients with pancreatic cancer.
In partnership with Genmab.
Our PMT free nothing Bispecific conditionally P D. A one for one BP agonistic antibody.
Second line treatment for patients with endometrial cancer also as part of our collaboration with Genmab be antifreeze <unk>, a bi specific antibody designed to boost anti tumor immune response, that's really dependent for one P. B agonistic activity.
Ready to move from preclinical to phase one clinical testing with the first patient dosed expected.
Next few months within our specific portfolio I'm excited about our expanded collaboration with Biofuels announced today with partners to develop and commercialize <unk>.
Eight of our bi specific antibody candidate targeting PD, one and VEGF eight in various cancer indications.
P M. H O. Two is currently being tested in the phase two three study to evaluate the efficacy and safety of attendee data one of European or in combination with chemotherapy in patients with non small cell lung cancer.
P M eight or two maybe to reduce systemic toxicity by enriching anti VEGF activity in the tumor like <unk>.
Environment.
Now moving onto our anti body drug conjugate portfolio during the quarter one of our <unk> ADC.
In Q3, 24, and touch a phase <unk> basket trial.
So I've got more on the ADC front I would like to note. Our latest addition, why add to our tool candidate being developed in partnership with me dealing.
We continue to broaden our access to ADC is because we believe this technology has the potential to replace highly toxic chemotherapy regimens to become a new modern tire combination backbone of cancer treatment in summary, we can see a diversified clinical oncology pipeline and solid tumor.
<unk> of high unmet medical need and more than 30 clinical studies.
On slide 17, I would like to highlight five across.
Might open platforms that have disclosed clinical data in recent medical conferences. This autumn and September clinical data from the on going phase one two clinical trial.
Or are you waiting the antifreeze 23 in patients with advanced Unresectable recurrent or metastatic or two expressing solid tumors were presented at the ESG annual meeting be antifreeze <unk> was shown to have a manageable safety profile and no new safety signals were up.
Served.
It also demonstrated promising antitumor activity in patients with advanced recurrent or metastatic kept her two expressing endometrial cancer with an objective response rate confronting unconfirmed of 58, 8% and disease control rate of 94.
0.1%.
Data at ESMO, we presented alongside our partner whether to bio clinical data from the ongoing phase one two trial evaluating our trop two targeted ADC candidate in patients with advanced solid tumors.
The data suggests that manage a good safety profile.
Seven and encouraging efficacy signals were observed in non small cell lung cancer patients with unconfirmed objective response rate of 46, 2% in six out of 14, Evaluable patients and an unconfirmed D. C. R O 92, 3% in travel.
Out of 14 patients.
We also reported data from the ongoing phase one two clinical trial with P&G two election detailing the new dose escalation of Gordon <unk> car T cells with and without the Claude and six including mrna vaccine for the treatment of quoting six positive relapsed refractory solid tumors using an alternate.
That manufacturing process.
PMT to 11 demonstrated encouraging anti tumor activity and 10 patients treated at the higher dose level. The addition of Kovack improved car T cell persistence the rate of treatment dependent the tourists events was dose dependent.
After determination of the recommended phase two dose Biogen plans to initiate a pivotal trial and Jonathan.
Also at ESMO, we presented initial data from our first in human phase one dose escalation trial evaluating <unk> hundred 21.
Auto lockers fully personalized T cell therapy directed against select set of individualized neo antigens, using our proprietary new technology on the patient's peripheral blood cells and memory T cells and induce in the east to west.
With the aim of generating the strong polyclonal immune response to overcome antigen escape.
The initial results showed a manageable safety profile and tumor regression in several patients with anti PD, one and anti <unk> four pretreated advanced or metastatic melanoma. This past weekend.
<unk> clinical data was shown from the ongoing phase one clinical trial evaluating <unk> hundred 16 or off the shelf mrna based cancer vaccine candidate for non small cell lung cancer patients.
But trying to evaluate the anti 116 alone and in combination with to meet him up on the taxi across multiple settings. BMT 116 was generally well tolerated with an expected safety profile as monotherapy and in combination with to meet demand and have any pre.
Treated non small cell lung cancer patients treatment with PMT 116, with an optional addition of sleep them upfront cycle three onwards showed early clinical activity.
These updates show the momentum across our cancer pipeline. This year next year, we plan to advance our key programs into late stage development, including multiple programs toward the pivotal stage with the aim to deliver the next generation of oncology medicines.
And with that I'll now pass the presentation to ICF OEM touched on.
Thank you Adam and a warm welcome to everyone, who dialed in today's call before we go into the financial details for the third quarter and the first nine months of 2023, I will start by giving you an overview on some key financial highlights, which you can find on the next slide our total revenues reached $2 3 billion euros for the.
First nine months of 2023, and we're significantly derived from sales of our recently approved omicron HPV one five adapted monovalent vaccine.
It started to pick up at the end of the third quarter of 2023 and are expected to accelerate for the remainder of the year.
Our revenues during the first nine months of 2023 were negatively influenced in the amount of approximately $1 6 billion euros triggered by write downs and other charges reported.
Our collaboration partner Pfizer.
As a reminder, as part of our gross profit share arrangement that Pfizer write downs and similar charges by Pfizer reduced gross profit, which both parties generally shared equally.
And this ultimately impacts biotech revenue figure as.
As part of this contraction model, we only commercialized coming out in Germany, and Turkey, and commercialization costs remain with a party being responsible for its respective market.
While we have impacted by such write downs on the topline our sales and marketing expenses remained low.
As we have outlined in earlier earnings calls the revenue development for COVID-19 vaccines is expected to amendment of flu like Citic.
I will go into more details concerning our financial guidance in the course of the call, but want to emphasize now that's taking the Pfizer announcement and its implications onto the 2023 revenues into account we have updated our 2023 COVID-19 vaccine revenue guidance of around 5 billion euros to somewhere around 4 billion.
For the full financial year 2023.
During the first nine months of 2023, we generated a profit before tax of <unk> 5 billion euros, which on top of our operating results demonstrates our positive financial results generated from our strong financial position overall, resulting in earnings per share on a fully diluted basis of 194 years.
We started into the financial year 2023, with a total amount of $13 9 billion euros in cash and cash equivalents.
Which we significantly increased due to our steady cash collection.
Hence we have now ended the third quarter of 2023 17 billion euros.
This amount comprises approximately $13 5 billion euros reflected as cash and cash equivalents and our financial statements.
As well as the problem with approximately $3 5 billion euros pocket, Karen that partly non current security investments.
Subsequent to the end of the quarter in October 2023, we received 565 million euros in cash from our collaboration partner <unk>.
Our gross profit share for the second quarter of 2023.
Our strong financial position of strategic advantage.
These days with financial stability is key for companies in this industry a cash surplus is a tremendous asset.
Our cash position offers us opportunities to invest in capabilities and assets to build highly innovative late stage R&D pipeline.
I'll be moving to our financial results for the third quarter of 2023 as shown on the next slide.
Our total revenues reported reached <unk> 9 billion rose for the third quarter compared to $3 5 billion loss for the comparable prior year period.
Decreased corresponding with the lower COVID-19 vaccine market demand.
The already mentioned write downs by Pfizer reduced our gross profit share in the third quarter by approximately <unk> 5 billion euros.
Let me move to cost of sales, which amounted to $161 8 million in the third quarter of 2023 compared to $752 8 million euros for the comparative prior year period.
For the first nine months of 2023, the cost of sales reached 427 million euros compared to $2 8 billion euros for the comparative prior year period.
The changes align with decreasing COVID-19 vaccine revenues.
Research and development expenses reached 497 9 million for the third quarter of 2023 compared to $341 8 million for the comparative prior year period.
For the first nine months of 2023 research and development expenses amounted to $1 2 billion euros compared to 1 billion euros for the comparative prior year period.
Our R&D expenses are mainly influenced by progressing clinical studies for pipeline candidates. The development of various adapted as well as next generation COVID-19 vaccines and the expansion of our R&D headcount.
General and administrative expenses amounted to $144 5 million for the third quarter of 2023 compared to 141 million euros for the comparative prior year period.
For the first nine months of 2023, G&A expenses reached $386 6 million euros.
Compared to 361 $8 million for the comparative prior year period.
G&A expenses for the first nine months were mainly influenced by increased expense for it services as well as expanding the G&A head count.
Our profit before tax amounted to $227 4 million for the third quarter of 2023 compared to $2 4 billion euros for the comparative prior year period.
As mentioned this reflects the performance in our financial results derived from our strong financial position.
Income taxes were accrued with newmont of $66 8 million for the third quarter of 2023 compared to <unk> 7 billion euros for the comparative prior year period.
In total for the first nine months of 2023 income taxes were accrued with Newmont, a 55 million euros compared to $2 6 billion euros for the comparative prior year period.
The derived effective income tax rate for the first nine months of 2023 were approximately nine 7%, which is expected to change over the 2023 financial year to be in line with the estimated annual cash effective income tax rate of somewhere around 21% for the biotech.
We recognized a net profit in the third quarter of 2023 amounting to 166 million euros compared to $1 8 billion euros for the comparative prior year period.
For the first nine months of 2023 net profit reached <unk> 5 billion euros compared to $7 2 billion euros for the comparative prior year period.
Our earnings per share on a fully diluted basis for the third quarter of 2023 amounted to 67 euro cents compared to a diluted earnings per share of six euros and 98 euro cents for the comparative prior year period.
For the first nine months of 2023, our diluted earnings per share was one euro 94 euro cents compared to 27 euros and 70 euro cents for the comparative prior year period.
As mentioned in the beginning please allow me now to address the inventory write downs and other charges related to come in that you recently announced by our collaboration partner Pfizer in more detail.
Please note those charges will mainly triggered when the world moves from the pandemic environment into an endemic flu like setting.
In this context, we announced in October the 16th and estimated impact of up to $1 9 billion euros.
We have assessed the initially announced estimate further particularly to address the question whether those inventory write downs and other charges indicated buffet that have already been reflected in our accounts. The good news is the charters, which originated biotechs and have largely already been reflected in our 2022 financial results.
And to a smaller extent will continue to be reflected during 2023.
Ultimately the impact from our collaborations partners charges onto our revenues have been identified to be roughly <unk> 6 billion for the first nine months of 2023 and <unk>.
5 billion for the third quarter of 2023.
To explain the partnership mechanism in respect of write downs and comparable charges. Please remember that the risks are borne by both partners equally.
As part of our shared responsibilities both partners are responsible for manufacturing activities and.
Faiza is responsible for a certain level of inventories and so are we.
If for example, Pfizer Whitestone inventories under its control those charges reduced our gross profit that is shared with us as a result, we are affected by half of those charges. Those charges led to a decrease in our revenues according to <unk> accounting rules.
In cases, where we have to book charges for write downs.
And those charges lower the gross profit that we share with Pfizer.
Let me now turn to the next slide.
As stated before based on what we know of the expected market development and our partners' guidance for their markets. We update our estimated COVID-19 vaccine revenues from previously around 5 billion euros to somewhere around 4 billion euros for the full 2023 financial year.
Our guidance is influenced by the mentioned write downs in charges on the fiber side in the amount of $4 6 billion euros as well as our partners reduced expectation on 2023, COVID-19 vaccine sales.
We had <unk> reacted on the volatility around the COVID-19 vaccine market and adapted our cost base in the course of 2023.
Our strategic collaboration model with Big Pharma support struck development and delivery at scale, but it also provides us additional financial flexibility by leveraging the global clinical trial network of our partners as well as the commercial network and their internal resources.
In comparison to other models. This collaborations setup allows us to accelerate our development initiatives, while having a lower level of expenditures.
Our updated financial outlook for the 2023 financial year excludes effects caused by but not limited to events like in licensing arrangements collaborations or M&A transactions that might take place.
Until the year end.
As summarized for you on this slide we reduced the initial 2023 R&D expense guidance range from initially between $2 4 billion euros and $2 6 billion of us between $1 8 billion and 2 billion euros, including the R&D costs identified from our latest publicly announced M&A activities.
We also update our SG&A expenses and narrow the initial 2023 guidance range from between $650 million and 760 million years now to between 600 million euros in 650 million euros.
Lastly, we reduced our spending for growth and maintenance Capex for operating activities from the initial 2023 guidance range of between 500 million euros of 600 million to between 200 million 300 million euros.
<unk> initial 2023 guidance to our updated guidance announced today, we are significantly decreasing our spend as we effectively manage our expenditures as part of our ongoing cost review procedures.
Nonetheless, let me clarify here as well that we further intend to invest in our capabilities and our pipeline of product candidates as those fluctuate the value of the company in future.
As noted before we have updated our group estimated annual cash effective income tax rate in Q2 from around 27% to around 21% excluding potential effects from share based payments settlements in the course of 2023.
And with that I would now like to turn the call over to our Chief strategy Officer, Ryan Richardson for the corporate overview and concluding remarks. Thank you very much.
Thank you, yes, I'll now provide.
A brief summary of the outlook for our updated COVID-19 vaccine franchise and an overview of our latest progress in oncology before concluding with our strategic outlook for the remainder of the year.
We're making good progress on our three main strategic objectives regarding our COVID-19 vaccine franchise, we look forward to advancing our COVID-19 influenza combination vaccine into a phase III trial in the coming months.
If successful we believe simplifying immunization practices for health care providers could positively impact compliance and help reduce the burden of these diseases and its impact on health care systems.
In immuno oncology, we are building a unique and powerful portfolio of complementary therapies.
We expect to start multiple trials with registrational potential over the next 12 months to 18 months, while continuing to generate data that inform our go no go development decisions.
And in infectious diseases, we plan to broaden our pipeline with new therapies that target high medical need indications.
Now moving to the next slide on the ongoing global rollout of our adaptive vaccine.
And the two and a half months following regulatory recommendation for an SPV 1.5 adapted monovalent vaccine.
We and Pfizer have shipped vaccine doses to more than 40 geographies around the world.
Across key markets, we continue to benefit from our strong market position.
In some regions such as Europe, and Japan, we have gained considerable share.
In the U S, where we leverage our partner Pfizer is commercial capabilities, we are seeing approximately 50% of vaccines going through the retail channel.
We expect the vaccine uptake will continue to increase through the end of the year.
In a recent national Immunization survey in the U S. By the CDC published last month more than 30% of adults reported to have received or plan to receive an SPV $1 5 billion adapted vaccine.
We believe this data reflects the potential baseline demand for an annual vaccination.
As outlined on the next slide we expect our commodity franchise will be a long term source of revenue.
We expect to enter 2024 with the manufacturing base, which has been reset to serve the future endemic market.
And the next two years, we expect the continuation of several market shifts to play out.
Those include the continued opening of private markets and the shift to commercial pricing globally, along with the continued transition from multi dose vials to single dose vials and pre filled syringes, which could bring upside opportunity to the franchise.
We also expect the combination vaccines is successful in late stage trials could present growth opportunities for the franchise from 2025 onwards.
We see the potential for increased vaccine uptake from a potential combination flu and COVID-19 vaccine by connecting protection from Covid.
We are well accepted paradigm of annual flu vaccination we.
We will continue to invest for the long term and next generation COVID-19 vaccines with the aim of increasing robustness and durability of immune response.
Now turning to the next slide I'd like to wrap up with a snapshot of the progress we're making in accelerating our innovative oncology portfolio toward the market.
So far in 2023, we and our partners have initiated 11 oncology trials, including six phase II or III trials, we plan to continue this trend.
With the initiation of additional late stage trials in the next 12 to 18 months.
We will continue to look for additive bolt on BD and M&A opportunities that fit with our strategy, while we invest in to build world class capabilities and accelerate our growth.
We remain as optimistic as ever on our ability to continue to create long term value for patients our shareholders and society.
Before concluding I would like to remind and invite you all to attend our innovation series event Tomorrow, starting nine a M. Eastern time, where we will provide further details on our pipeline and corporate strategy.
With that I would like to thank everyone for their continued support and open the floor for questions.
Thank you we will now begin the question and answer session.
I would like to ask a question. Please press star one and one on your telephone and wait for your name to be announced until withdraw. Your question you can press star one on one again.
Thank you, we'll now take our first question.
This is from the line of Dana Granite Walsh from Leerink partners. Please go ahead.
Hi, Thank you I have two financial questions.
One you have many programs going into phase III.
And that's certainly going to increase your R&D expenses and I'm wondering if you can give us any guidance on sort of the near to mid term and how much R&D, we should expect in our model.
And the second one is whether you could help us at all with any inventory write down.
Understanding more predictability.
Hi, and how we might see that next year and in future years. After that thank you very much.
Yeah. Thanks, Dana Thanks for the question and let me start with the second one maybe first with the inventory write offs.
As I stated in my speech I think this $600 million that we had to face from Pfizer. This year has been really a reflection of the situation that we moved from the pandemic into an endemic situation.
Going forward of course, we have to with new variants coming up always have.
Some sort of write offs to be reflective being at on Pfizer side on our side.
So there will be something but not at all at that back into that we that we have seen now with the shift in 2020, So I think from our perspective going forward.
Magnitude is a fraction of what we had to announce unfortunately.
2008.
Then in terms of the R&D expenses.
Brian was alluding to additional clinical trials further late stage trials of course that means that our R&D expenses are expected.
To go up.
That's <unk>.
Something that we envisage and one because we believe strongly that we have valuable compounds that we need to invest money in.
So those numbers will go up in terms of the magnitude for the next couple of years.
You've got to bear with us a little bit and we gave our guidance.
But we have and I think we have highlighted that in terms of all our top 23 that we have.
Carefully looking at how much money do we want to spend or do we need to spend.
First and foremost we want to create value with the cash position that will have and that of course goes hand in hand with.
Increased R&D expenses going forward.
And maybe Dan just to add one point to yes. This is rich.
Marks on the R&D line.
It's important to remember as well that on a number of these pivotal stage or near or soon to be pivotal programs. We do expect to share R&D expenses with a partner. So thats. The case from the Pfizer collaboration of course, where we share R&D expenses 50, 50, and we talked we mentioned today that we expect a couple of pivotal trials to start with combination vaccines that could become a mid tier.
Gross driver of successful and similarly on the oncology side, we have a number of programs that are partnered as well where we share expense.
Yes.
Great. Thank you.
We'll now take our next question.
This is from the line of <unk> Ahmad from Bank of America Securities. Please go ahead.
Okay, great guys. Thanks, so much good morning, I have a couple of questions.
It's encouraging to see that the safety profile in general for the cold and flu combo box.
Resembles what you saw just for the regular COVID-19 vaccine, but I'm wondering if you could just provide any additional data, particularly on what Reactogenic city might've looked at and what you found for example, and then secondly, a financial question on R&D can you elaborate on whether at least somewhat.
Your expenses have come from.
Prioritizing certain programs and if so can you talk to us about what programs elsewhere. Thanks.
But where do you want to take the first one were awesome.
Okay.
Yes, we were struggling with on mute. Thank you.
Thank you for testing for the question.
First one was about reactor genista key profile.
For all ovarian to Dr vaccine.
I'm sorry.
That does and friendship.
More or less closed to us.
All right.
Okay.
Todd vaccine, we have to run off towards the a four P. A five adapted version.
And what we see with the Shaw mrna vaccines.
In the respective dose levels.
And Thats supports that.
Safety profile, including a reactive Jim Mr T.
As the platform characteristics so.
Such regard.
Yes, so the combo vaccine.
They got to the safety.
Genesee four five does not differ from the dose dependent at which and the safety profile of <unk>.
After COVID-19.
That's the first.
Okay to answer the second.
Gross to two.
Our task Paul can Noah.
Yeah.
Do you want to say something otherwise shall I jump in.
You can jump in yet.
Yeah I'll jump in so.
There is it's a couple of activities that we undertook during our review of activities, we have priority prioritize the fuel program.
Earlier stuff.
And as well of course, we'll keep you updated in terms of updates if they are of relevance in terms of our later stage program that but there's nothing that I can report at this point in time.
We have also in terms of the collaboration with Pfizer on the on the programs at a very close look as for other other programs.
How much money do we really need to spend to come to their desired outcomes.
So.
That's another part that.
That place around a little bit of shifting from 23% to 24. So as always there were a couple of things, but those costs I Wouldnt call is something where you save money.
Higher amortization as well as maybe being able to run clinical trials.
Cheaper scale is something that we that we.
Hey guess as real cost savings.
And that has been a big chunk of what we have.
Well, if we can explain for the cost reductions.
Okay. Thank you.
Thank you.
We'll take our next question.
Please standby.
This is from the line of Chris Shipper Tani from Goldman Sachs. Please go ahead.
Alright. Thank you very much good morning, and good afternoon, two questions. If I may 1st on the oncology program <unk> two the <unk> cancer vaccine ongoing melanoma study, but we noticed that there was an absence of commentary in the press release, we still expect the study to report top line results by year.
And then perhaps you can comment on what your expectations are for this program and if they've changed my second question is on the covered flu combination data to make sure in terms of Immunogenicity.
The press release mentioned tires generated by lead formulations work compared to concomitant administration of Covid and flu vaccines and <unk>.
Rapid immunogenicity comparison that the FDA will be evaluating in phase III or are they looking for tighter compared to monotherapy vaccination of Covid and flu separately. Thank you.
Yes. Thank you, Chris maybe I'll take the <unk> question first and then turn it over to <unk> for the full COVID-19.
So on BMT wants you to actually on the on our last earnings call. We provided revised guidance that we did not expect data. This year as you remember the trials randomize them and has a PFS threshold to trigger the PFS analysis, which we had not been met in which we didn't anticipate would be met this year.
We do plan to provide a trial update this year, but we're not expecting data this year.
Okay.
And.
The second question Mercury related to there.
To the comparator tumor combo vaccine.
Yes, yes.
This is so we are comparing both compelling compelling.
Our flu.
On a.
On a comparable tests.
Established flu vaccines.
Hi.
Based on this.
Proteins or inactivated through vaccines in both comparisons will be in the study.
And that's what the FDA will be evaluating in the phase III.
At this point.
Thank you.
Well now move to our next question.
This is from the line of our cash to worry from Jefferies. Please go ahead.
Hi, This is Amy umbra cost. Thanks, so much for taking our question. So just two from us a.
Number one we've seen Pfizer with these costs in the face of reducing Covid vaccine demand while at the same time, we're seeing Madonna increased cost when we think about buy on tax plan spend over the next three to four years, how willing are you to eat into the cash generated during COVID-19 should we expect it to decline on an annual basis or will the team aimed.
The sustained R&D solely off as I say drove vaccine demand and then number two on the Covid flu program given the economics between you and Pfizer are 50% right now and they drop to potentially in the 30% range. At this program does become a success of ion Tag do you anticipate it being a net positive net negative or breakeven.
Biotechs cash generation, how should we think about the increased demand potentially being offset by lower economics. Thanks. So much.
Yeah.
Amy can you just clarify the second question you asked was that in reference to a combination vaccine.
Yes, yes, because it's really a combo vaccine okay.
So I'll take the first one and maybe even <unk> can chime in so we see that.
We're in the midst of a transition period right now our Covid vaccine franchise was transitioning from pandemic to endemic market. This is of course happening. This year, but we also expect that transition to continue next year and we're also transitioning to become a commercial stage oncology company. We've outlined some of the programs that we think are going to drive that that transition.
As we go through this transition we think it's an immense asset to the company to have a strong balance sheet and we're very happy with our ability. This year. If we meet revenue guidance to maintain profitability. That's an important point for us as we go into the next couple of years through this transition.
We expect to continue to maintain a very strong balance sheet and that's going to continue to be a priority for us.
Yeah, Ron you phrased that very nicely, it's not much to add.
Going forward of course with the collaborations.
We first and foremost got to invest in these combination trials currently.
Hello, Colgate flu cold with RSV.
Those settings will eat up some cash, but we're very positive in terms of our.
Our expectations on the profitability share that we will get out of that clinical collaborations of those combinations.
Our view of this well.
And that will create new markets.
And we'll secure a quality existing card and business that we have for Covid. So we think.
Economically that should be something of great value for the company going forward.
And to your question to your question on the combination vaccines.
We haven't yet disclosed the full economics with Pfizer on combination vaccines, we plan to do that in the near future.
We have communicated today.
We intend with Pfizer to embark on a pivotal trials phase III trials with those combination vaccines and we do think that there is substantial potential for combination vaccines are successful to improve uptake of our COVID-19 vaccine.
Based on the rates that we're seeing now in terms of uptake. There is a large difference between for example, where flu vaccines are in terms of uptake versus what we're expecting this year for Covid. So we do think the combination vaccines can play an important role in terms of offering convenience an added benefit.
To increase the franchise over time, and we think that from a timeline perspective.
If successful that those vaccines could be starting to have an impact for us from 2025 onwards.
Okay.
Thank you.
We'll now move to our next question.
Please standby.
This is from the line of Yaron Weber from TD Cowen. Please go ahead.
Great. Thanks for taking my question I have I have a couple just on.
10 46.
<unk> combo, you mentioned moving to a second line in the Metrial study in combination with Penn burrow just any update.
I'm not trying to front run tomorrow, but just any update on the checkpoint experience non small cell lung cancer cohort and is that still sort of in the cards and then secondly for $3 23 billion to $3 23, and the her two low side.
How do you define hurt too low is in histology do they have to have any expression at all and why do you think youre confirming activity in a population that sort of felt good solid before thank you.
Yes to your first question $10 46, yes, the lung cancer costs are continuing and Veeva, most likely the product update.
On this cohort in the next year mid next year.
Yes.
It's four four for follow up point of interest to a target of interest in lung cancer for BMT free two three yes.
Low <unk>.
Jim.
Yes.
Yes.
Sure.
Yes.
And two class without any amplification and activity.
ADC compounds in this patient population.
Just clearly.
Better than customer tuneup alone.
Based on the highly potent ADC activity and on the bystander activity, allowing us not only to remove.
Entergy positive tumor cells, but also the tumor cells in the surrounding which are negative.
Thank you.
We will now move to our next question.
This is from the line of Jessica Fye from Jpmorgan. Please go ahead.
Hey, good morning, Thanks for taking the question.
Can you outline what key pipeline updates, we should expect between now and yearend you mentioned an update on the melanoma trial, what else should we be looking forward to whether from the four one they'd be programs or otherwise and then related to I'm asked with the new trials starting in adjuvant pancreatic cancer can you talk about what drove that decision.
Was it based on something you're seeing and then lastly, just a financial question.
The Opex guidance again this quarter, but also suggested that for here R&D will likely grow to support these pipeline investments what about SG&A that guidance didn't change as much is there less flexibility in that line if expenses need to be cut again. Thank you.
Thank you Jess I'll start.
Okay.
Please go ahead.
Please go ahead on the pipeline update I was just I was just going to stay on the pipeline update that we do expect data on <unk> 106.
It sits at just around the corner and of course Tomorrow. We will have we do expect to give a pretty wholesome update across our late stage oncology pipeline as well.
Uh huh.
Yes.
And then.
What about on the U S trial in adjuvant pancreatic can you talk about what drove the decision to start that.
Thanks for the question, but maybe I can take this one was also talk about that trial.
Tomorrow, and our innovation day.
<unk> set up.
I'm done.
An investigator initiated trial, a small one which however showed very promising results in terms of Uh huh.
And Thai baht.
Immune responses and the magnitude of immune responses.
What's in it.
Pancreatic cancer patients, which traditionally always.
Uh huh.
As seen as immune suppressed we also could see.
Uh huh.
The success of inducing immune responses and half of US population was correlated with a.
Pro launch.
Time to recurrence and.
And at this stage has motivated us to now set up a phase II trial, which has already dosed patients.
Yeah.
And then on the on.
On the SG&A question Jessica.
We have reduced the cost here as well of course, we need to support the growth of the business going forward here specifically in the years to come we need to set up the sales and marketing organization for our parts, where we commercialize them all so in that respect we need to invest as well but.
You'll see I mean, the scaled us of course here is relatively small in comparison to what you see at competitive levels.
And therefore, if you look at the basic currently that we're having here.
I think we already relatively lean.
But most important really as to set up our sales and marketing organization. So that will be something where we have to invest going forward somebody.
Okay.
Okay.
Thank you.
Well now move to our next question.
Please standby.
This is from the line of Bill <unk> from Canaccord Genuity. Please go ahead.
Okay Alright. Thank you so looking at the ongoing evolution of Sars Cov two.
Do you expect.
The virus to virus evolution to slow down to the point where.
Annual strain updates arent necessary and if that does happen how strong is the proposition for annual boosters, if a strain update isn't needed and then.
Second question more looking more broadly.
With the broad.
The multiplicity of of platforms that you have how do you think about.
Bringing a specific modality into the clinic against.
Against the tumor target when you have the option of using <unk>.
C or by specific or anything or several different options here. Thank you.
I can take the question so with regard to the to the evolution of SaaS to we have to consider.
Two.
Mutation with patents that we have.
That typically mutation awesome awesome.
Existing valeant.
It is continuing in <unk>.
Changing.
Singer Spike.
Spike protein amino acids in various positions and this is let's say obsessed obsessed.
They are far better variants and are observing for the albumin.
But there is also a second and a personal.
Personal touch on which is.
Our variance that Iraq.
Dozens of additional mutations and <unk> seen that that for the first time.
Matt.
We have also seen it.
Most recently he was a valeant court and be a 286.
<unk>.
<unk> actually cut.
Travelling covering more than 30 additional rotation as compared to the Amit.
Yeah.
Train.
Their court omicron that SP.
Look close that.
Actually actually really a new variant and this is something that we would also expect in future.
So this pattern.
Continue also in future.
Yes.
Sure.
Mutations based on singer.
Singer.
Changes.
They're not they're not a faster.
The generation of a new.
Variant adapted vaccines I expect that the major changes.
Hi.
Variant.
Our vaccines and we have also to consider that.
At the end type of these titles decline overtime. So if we have that too.
Two mechanisms one is the erosion of the immune response itself yes.
Is associated with a higher <unk>.
Rate of infections, and also associated with a higher severity in the second.
Boston.
Broadband <unk> variance so in short, yes, we expect.
That also also in future.
Sure.
We have to.
Okay.
Variance.
And this this.
Patents and under space might differ from season to season like we are seeing that for flu a flu infections.
And the second question was about.
Our interest in in ADC technology.
Combine that with our with our <unk>.
Expertise and target identification and integrity innovation and the answer is.
Yes, yes. This is something we are working on.
Thank you.
Thank you.
We will now take our next question.
Please standby.
Okay.
Joseph from the line of Simon Baker from Redburn Atlantic. Please go ahead.
Thank you very much for taking my question just two very quick ones. If I may I'm, just going back to R&D spend from what I can gather from what you were saying it sounds like you're essentially you're doing the same for less rather than delaying or deferring, but I wonder if you could just give us a little bit more color on capex.
Whether that's savings driven whether the OSM deferrals in that and then secondly on Pam tableau too high.
Highlights the non small cell lung indication.
That molecule is saying nothing about half a dozen other tumor. So I was just wondering what your.
Interest.
In the tune of choice is for Pam <unk>.
I mean, you are looking to develop and do you have rights across Seamus. Thanks, so much.
Yeah.
Yes, let me maybe quickly start with the Capex question. So indeed, we have some savings, but we also have to to some extent some shifts CSO, we're delaying some investments.
Going forward, specifically in terms of the production area, where we anticipated to invest maybe a bit more.
In 2003, given where we stand with.
With Covid.
The activities.
<unk>.
Other other programs in the infection disease area, We said, we watch how and when we actually invest in in that respect we have some.
Lower spend than anticipated but of course also when you go through the cost base you try to figure out if there are some savings here and there.
Can you repeat which average.
You referred in your question.
And the first part.
Yes. It was it was the <unk>.
<unk> P M H zero zero.
Oh, yes, yes.
Biopsy.
Or two is there is a specific anti body rich.
Which combines a neutralizing.
MTV J S.
With this AD blocking PD one.
The anti body has been evaluated in more than 500 patients and.
Shows shows very favorable safety profile and tests shown activity in multiple indications also also combination to have a piece of the shame of choppy and we see this molecule indeed as an opportunity as there are opportunities and new generation.
I O, which combines by specific activity for multiple indications and <unk> and <unk>.
Seeing particularly an opportunity to combine this with our ADC portfolio.
It is well known that.
Empty anti VEGF.
Treatment is synergistic with shame cannot PD by improving improving.
And.
The penetration of <unk>.
A couple of projects in modifying the tumor micro environment, and thereby increasing the efficacy of Shimmer therapy and this is something that we are also expected.
And Asia Pac.
Partner.
Our ADC.
Okay. Thanks, so much.
Thank you.
And we will now take one more question.
Please standby.
Okay.
The last question is from the line of Ellie Merle from UBS. Please go ahead.
Oh, Hey, guys. Thanks, so much for taking the question.
And then just in terms of thinking about the profitability of the Covid vaccine business, just how should we think about the Pfizer.
Covid vaccine crest.
Gross profit margins going forward, just given the pandemic might that.
And the impact that's had on the revenue recognized.
You mentioned the continued shift to single dose vial and pre filled.
Just trying to think about how you're thinking about long term potential margins for that business on the impact on the revenues that you would recognize as part of the profit share. Thanks.
Yes, Thanks Ali I'll start and then yes.
And can come in so I think the short answer is that we expect the COVID-19 vaccine.
Franchise to continue to be highly cash generative and highly profitable on a product basis for us going forward.
We point out the shift to endemic market that we've talked about today.
You have to remember that because we share gross profits 50, 50, with Pfizer and the bulk of our revenue comes in the form of a Pfizer gross profit share from countries outside of Germany, and Turkey, which are our reported revenue reporting regions because of that.
We don't expect the direct shifts to single dose vial and Prefilled syringe is to have a significant effect on our gross margins.
Because it's already most of that revenue is already coming to us net of cost of goods.
It's rather the mix between Germany, Turkey, but relative contribution of Germany, Turkey to the total that would affect the gross margins, yes, yeah, I think I said it basically so.
Everything that comes from Pfizer's, 100%.
<unk> for us so the relation between what we generate revenue in general.
Generates is actually driving.
The story here at the end of the day remember, we have multi dose multi dose contract anyway for the next couple of years.
For the corporate Standalone solution at this point in time so.
Well I made the point.
Does that answer your question, yes, okay. Thank you.
Thank you and that concludes our question and answer session I will now hand back to the speakers for any closing remarks.
Okay. Thank you very much for joining our call and we look forward to speaking with you again tomorrow.
Okay.
Thank you that does conclude the conference for today. Thank you for participating and you may now disconnect.
Okay.
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