Q1 2025 Moderna Inc Earnings Call
The first quarter of 2025 marks the fifth consecutive quarter, where we'll use combined R&D and <unk>.
<unk> expenses by double digits year over year with that let me turn to achievement.
Thanks, Sharon and welcome everyone today I'll cover our first quarter financial results, our full year outlook and an updated operating cost framework as we look ahead to 2026 and 2027.
Let's start with our first quarter financial results shown on slide seven.
Net product sales were $86 million driven.
Driven primarily by Covid vaccine sales.
The U S accounted for about one third of total sales with the remainder from international markets.
This result was in line with expectations, given the seasonal nature of respiratory vaccines with most sales anticipated in the second half of the year.
We observed lower vaccination rates compared to Q1 last year, reflecting the continued transition of COVID-19 into routine seasonal vaccination patterns.
In addition to product sales, we recorded $22 million of other revenue, bringing total revenue for the quarter to $108 million, a decrease of 35% year over year, but in line with expectations.
Cost of sales for the quarter was $90 million compared to the first quarter of 2020 for cost of sales decreased $6 million.
Primarily due to lower sales volume.
While total cost of sales decline year over year. It represented a 104% of net product sales this quarter.
Up from 58% in the prior year.
Driven by lower volume and revenue mix.
R&D expenses were $856 million, a 19% decrease year over year.
The decline was mainly driven by lower clinical development spend across our respiratory programs, reflecting the timing of trial activity and the wind down of certain stones.
This was partially offset by continued investment in our norovirus program and oncology.
SG&A expenses were $212 million down 23% year over year.
The decrease was driven by broad based cost reductions. These reductions reflect our continued focus on streamlining operations and managing costs across the organization.
We recognized an income tax provision of $7 million in the first quarter similar to the prior year, a provision was not material due to the continued valuation allowance on our global deferred tax assets, which limits our ability to recognize tax benefits from the loss.
Net loss for the quarter was $1 billion or $204 million improvement compared to a $1 2 billion loss in the first quarter of 2024.
Loss per share was $2 52, an improvement from a loss of $3 seven in the prior year period.
We ended the quarter with cash cash equivalents and investments totaling $8 4 billion compared.
Compared to $9 4 billion $9 $5 billion at the end of Q4.
The decrease was primarily driven by the operating loss for the quarter.
Now, let's turn to our financial framework for 2025 on slide eight.
Our expectations for the full year 2025 remain unchanged from our initial guidance in February we.
We still expect total revenue in 2025 to be in the range of one five to $2 5 billion.
With first half sales of approximately zero point $2 billion, reflecting the seasonality of our respiratory vaccine business.
As a reminder, the wide range of our guidance reflects the uncertainties and vaccination rates the competitive market environment.
<unk> of the RSV market and timing of licensure of our factories and product approvals in Australia, Canada and the U K.
As previously shared while we filed three products with the FDA in 2024 since we don't know the timing of potential approvals, we are not including any new product revenue in our guidance range.
Cost of sales is projected to be approximately $1 2 billion, reflecting continued improvements in manufacturing efficiency and lower expected inventory write offs.
Julia, in Taiwan, and in the UK, and most recently, in Switzerland [inaudible]
Offset by increased costs associated with the go live of our new manufacturing sites in Australia, Canada, and the U K.
This is in addition to a performance we will receive in 2024 in the US, EU and Canada.
Ocelot Priority, and a single pipeline to direct sales growth and diversification. I'm excited to announce the expansion of our oncology portfolio with Checkpoint Medicine which Stephen will review later.
I'll now provide some perspective on the newly introduced global tariffs.
Those inaction as of today have not had a significant direct impact on Madonna.
All of our drug substance for the U S market is manufactured at our facilities in Massachusetts.
For Phase 3, Food Programme, where we have exceeded the required number of cases, crews, to run an interim vaccine efficacy analysis.
Our commercial drug substance has been shipped overseas for fill finish operations before shipment to the final customers.
We also presented encouraging data from all the key programs including RSV, CMV, and INC as we set medical conferences.
Internationally, our new plants in Australia, Canada, and the U K are expected to be online in 2025 to supply local markets.
We are pleased to share that I can see we will now be known by the I.N. for International Non-Property Name of E.T.'s Miran Autogenes. This exhibition reflects a growing maturity of a product development program, a more than important milestone as we continue other things towards potential regulatory approvals.
Finally materials source from China are not material to our total cost base.
Okay.
R&D expenses are anticipated to be approximately $4 $1 billion as we continued to invest in our late stage pipeline, while maintaining financial discipline.
SG&A expenses are expected to be approximately $1 $1 billion, reflecting our continued focus on efficiency, while supporting our commercial execution.
While we are pleased with the cost reductions that we achieved in both R&D and SG&A during the first quarter of 2025. It is still early in the year and we are not updating our full year expense guidance at this time.
That being said it is a strong start to the year and we are looking to accelerate additional cost reductions in 2025.
We expect taxes to be negligible in 2025 and capital expenditures are projected to be approximately $400 million.
And we still expect to end 2025, with approximately $6 billion in cash and investments.
Beyond 2025, we are announcing today, our plan to drive an additional one four to $1 $7 billion of cost reductions by 2027.
As part of our commitment to achieve our 2028 breakeven target on a cash cost basis.
Did that and we are reducing our 2026 GAAP operating expense forecast from $5 $9 billion to a range of $5 four to $5 7 billion.
This guidance includes zero point $9 billion of non cash charges from stock based compensation depreciation and amortization.
Excluding these items, we now projected 2026 cash cost of approximately $4 $7 billion at the midpoint of the range.
We are also planning to reduce 2027 GAAP expenses to between four 7% and $5 billion with a 2027 cash cost of approximately $4 $2 billion at the midpoint of the range, excluding stock based compensation depreciation and amortization.
Stepping back from 2023 to 2027, we are planning a total reduction in annual GAAP expenses of over $6 billion, which represents a 55% reduction over four years from $11 billion annually in 2000 $23 billion to $5 billion or less in 2027.
The first $4 billion of GAAP expense reductions were realized in 2024 with the largest driver coming from reductions in our cost of sales.
When we undertook a strategic initiative in the second half of 2023 to restructure our manufacturing footprint footprint to better optimize brand demick level demand of our Covid vaccine.
We also reduced SG&A by 24% from 2023 to 2024 through.
Through a variety of cost out initiatives throughout the company.
And R&D declined 6% year over year to $4 $5 billion in 2024.
While we are continuing to drive additional cost reductions and efficiency gains in both cost of sales and SG&A. The largest future source of cost reductions will come from R&D, which currently represents nearly two thirds of our expense base.
This projected decline in R&D expense will come from the completion and wind down of our ongoing phase III trials.
Chairman savings from contract renegotiations and other process efficiencies.
In summary, we are encouraged by the progress we've made in our cost out initiatives today as Stefan mentioned, we now have had three consecutive quarters of double digit year over year declines in combined R&D and SG&A expenses.
Our teams continue to identify and act on new savings opportunities, which gives us the confidence in meeting our new 2026, and 2027 cost targets.
With that I will now call turn the call over to Steven.
Steven: Thank you Jamie good morning, or good afternoon, everyone. Today, I will review progress across our pipeline.
Steven: Slide 11 is a review of our prioritized pipeline, which was introduced at our R&D day last September.
Steven: We have since filed for regulatory approvals for three of these programs are next generation Covid vaccine mrna 12, 43, our RSV vaccine for high risk adults, aged 18 to 59, good morning $13 45.
Steven: And our Blue plus Covid combination vaccine for individuals, aged 50 and over or more than eight Kennedy tree.
Steven: As part of our ongoing portfolio optimization, we've made a strategic decision to de prioritize the flu Kobe combination vaccine for younger adults age 18 to 49.
Steven: While we remain committed to the long term potential combination respiratory vaccines, we are going to be focusing our efforts on combination vaccine in the older adult population for now.
Steven: At the same time, we are excited to announce the advancement of our oncology pipeline with the addition of the checkpoint program.
Steven: The prioritization phase II program is based on early but encouraging data and.
Steven: And is consistent with our strategy to build our therapeutics pipeline, particularly in oncology.
Steven: We are targeting filings for checkpoint and the other six programs in the right hand side of this slide by 2028.
Steven: Subject as always to data and regulatory consultations.
Steven: Moving to slide 13, which outlines the latest development in our late stage respiratory portfolio.
Steven: As I just mentioned, we submitted regulatory filings late last year for three programs.
Steven: Our next Gen. Covid vaccine has a <unk> date of May 31.
Steven: The age group expansion for our RSV vaccine has at Paducah date of June 12, and we look forward to decisions on both products in the coming months.
Steven: For our Blue Covid combination vaccine we received in November 2025, producing eight however, following feedback from the FDA during the review the flu the flu vaccine efficacy data, we will now be needed to support the application.
Steven: As a result, we now expect the review timeline to be extended into 2026 and be dependent upon the car.
Steven: Positive phase III efficacy results from our ongoing flu vaccine trial too.
Steven: And the addition of these data to the submission.
Steven: And on that point, our Standalone flu vaccine candidate mrna 10 10 is in its phase III efficacy study and due to the intensity of the current flu season has now exceeded the required number of cases to support the interim efficacy analysis, which we expect to complete now by this summer.
Steven: Now turning to our non respiratory vaccine and rare disease portfolio.
Steven: Our for our CMV vaccine, we recently presented durability data from our phase II study at the estimate comment conference demonstrating that mrna 16, 47 continues to elicit robust antibody responses for three years post vaccination showing very strong durability.
Steven: We also had the opportunity to share these findings along with an overview of our CMV program at the inaugural CMV vaccines work group is a part of the broker CIP meetings, where.
Steven: We're encouraged by the establishment of this work group, which reflects the growing recognition of CMV is a significant public health concern and a commitment to reducing the disease burden of CMV.
Steven: Our phase III <unk> study for <unk> 16, 47 continues to accrue cases, we remain blinded to the study results at this time and expect the final efficacy analysis to come later this year.
Steven: For norovirus.
Steven: We are pleased to note that the FDA clinical hold for our phase III trial was lifted during the quarter.
Steven: <unk> is fully enrolled in the northern hemisphere, and we are continuing to enroll in the southern hemisphere.
Steven: The phase III readout for norovirus is dependent upon keith's accruals and given the uncertainty of that timing.
Steven: <unk> approval could be in 2026 or 2027, depending upon that readout.
Steven: We expect to have more clarity on the pace of case accrual and potential readout timing later this year.
Steven: In rare diseases, our propionic acid, India or P. A program is currently in a Registrational study, we've made good progress with regulators and with enrollment.
Steven: Following review of program timeline and other aspects of the launch we now anticipate a 2027 approval.
Steven: Similarly for <unk>, <unk> or MMA, we finalize the Registrational study design with the FDA and we plan to initiate that trial in 2025, we expect the potential for approval for M&A in 2028.
Steven: We continue to advance our oncology portfolio with significant progress across our individualized neo antigen dairy program.
Steven: Kitzman are checkpoint program and our early stage oncology programs.
Steven: In collaboration with Merck, we have several late stage studies underway for <unk>.
Steven: As a reminder, the phase III trial in adjuvant melanoma is now fully enrolled.
Steven: We also have two phase III studies in non small cell lung cancer, both evaluating <unk> in combination with keytruda in patients with and without prior new adjuvant treatment.
Steven: Additionally, we're conducting randomized phase II trials in adjuvant high risk muscle invasive bladder cancer and adjuvant renal cell carcinoma.
Steven: I'm happy to announce that the phase III adjuvant renal cell carcinoma study is now also fully enrolled.
Steven: We're also expanding the scope of our interests marine program into earlier stages of disease with the addition of a new phase II study that moves beyond the adjuvant setting.
Steven: This study evaluates <unk> as monotherapy or in combination with BCG the standard of care in high risk non muscle invasive bladder cancer and will help us exploring <unk> potential in earlier disease settings beyond the adjuvant landscape.
Steven: As I mentioned, a moment ago, we are prioritize advancement of our checkpoint program based on encouraging early clinical results.
Steven: The program is currently being evaluated in a phase II study for both first line metastatic melanoma and first line metastatic non small cell lung cancer, who will review the details of that program on the next slide.
Steven: We're also advancing two novel cancer estrogen therapies to the clinic.
Steven: And 840 106 is a tumor targeted antigen therapy designed to direct the immune system against multiple shared tumor antigens.
Steven: The first patient has been dosed in a phase one study in solid tumors that is assessing safety pharmacodynamics immunogenicity and preliminary efficacy of the program.
Steven: And we have an open IND for mrna 42, or three which is designed to boost the activity of an engineered T cell therapy to improve persistence and effectiveness.
Steven: This program is being developed in collaboration with <unk>.
Steven: These cancer antigen therapies checkpoint mrna 41 on six and mrna 42 or three are off the shelf therapies. In contrast, with <unk>, which is an individualized cancer treatment.
Steven: These programs reflect our growing oncology pipeline with more coming soon.
Steven: Now, let me provide an overview of the checkpoint program mrna $43 59, starting with its mechanism of action.
Steven: Checkpoint is designed to help a patients immune system recognized and attack tumor cells by encoding mrna based cancer antigens for PDL, one and ideal.
Steven: The therapy trained the immune system to recognize upregulation of PD lone and ideal by cancer cells and immunosuppressive regulatory T cells.
Steven: By combining this targeted immune activation therapy with checkpoint inhibition with traditional antibodies such as Keytruda, we aim to enhance the anti tumor response, overcoming an innovation and improving the depth and durability of responses.
Steven: Checkpoint is being evaluated in a phase one two clinical study, which is now moving and then moving forward in enrolling the phase II portion.
Steven: This study is designed to assess the safety and Tolerability of checkpoint, both as a monotherapy and in combination with Keytruda in first line metastatic non small cell lung cancer and first line metastatic melanoma.
Steven: Key efficacy endpoints will include objective response rate disease control rate duration of response and progression free survival is an open label study.
Steven: In addition to clinical outcomes, we are evaluating T cell profile changes both in the peripheral blood and within the tumor microenvironment to better understand mrna $43 59 mechanism of action.
Steven: We shared early phase one data at the ESMO Medical Congress in late 2024, and we're excited and looking forward to sharing the data from the phase <unk> portion of this study at a medical conference later this year.
Steven: Based on the early encouraging results, we plan to expand checkpoint into multiple additional cancer indications.
Steven: With that review I will now hand, it over to Stephane.
Stephane: Thank you Steven and Jamie.
Stephane: We are focused on three priorities priority one to drive sales of approved products.
Stephane: Rocket two to focus on our late stage pipeline to drive sales growth and diversification.
Stephane: Royalty free to deliver cost efficiencies across the entire business.
Stephane: Our first priority is to drive users buybacks and then most of your vaccines.
Stephane: We have till 2025 with two approved products, which puts us in a better competitive position compared to the beginning of 'twenty 'twenty four.
Stephane: We've all ability to now for hours vivo pool season, we expect to better compete in the respiratory vaccine market.
Stephane: So we said international airport should add through savings this year.
Stephane: Rocket two.
Stephane: We're focused on bringing up with Tampa programs, which we believe will drive sales growth.
Stephane: <unk> is anticipated product target, that's what's known as a separate bucket.
Stephane: <unk>.
David: As David discussed earlier.
David: Some of our priority programs.
David: So the combination of purpose Kobe in age 50, and although we expect the addition of several pullbacks in efficacy data coming soon.
David: Finally, we will extend the review and approval timeline through 2026.
David: While norovirus.
David: Timing is dependent on accrual, which would mean the panache workplace 26, all the way.
David: 27 approval.
David: We're very pleased with the addition of checkpoint AMC colonial pipeline and Miami.
David: Right.
David: Finally for PNM.
David: The cohorts in 2027 and 28, respectively.
David: Proxy free drive cost efficiency across the entire business.
David: It will strengthen our commitment to cost discipline for reduction achieved in 2024 and.
David: 295, two days.
David: We remain confident in our ability to progress streamlined operating structure for the remaining of 2020 a product through 2027.
David: We are pleased to announce today or equivalent cash cost target of $12 2 billion.
David: Giving us additional confidence in achieving a cash breakeven targets gateway 40 gig.
David: So I'll kind of broad based program, we expect to important milestones.
David: We fight for every product at 244, while Nexsan Kobe ammonia is wondering if at.
David: I'll argue vaccine for Paris, eight integrate Danielle.
We look forward to a regulatory decision on this.
David: For preclinical with combination vaccine.
David: An extended timeline pending positive as federal terrific assay data submission.
David: We're targeting a 26 support.
David: For CMV, we look forward to having the final result, basically back to the efficacy study.
David: 25.
David: We are excited to get that Roe goals.
David: Calls or through efficacy study is expected without by December.
David: Although members vaccines going to phase III and the timing of.
David: They thought we thought it would be subject to case accrual.
David: Okay.
David: All right.
Basically after investment in the my product, we'd be subject to events of course, we.
David: We expect to put that off base, so fabienne through equity data investment or the amount next year.
David: As mentioned before we are very excited by the addition of a checkpoint empty so our product portfolio and we look forward to sharing data at a medical meeting later this year.
David: For the year, we are already generating data for Registrational study and we expect to start with structural study for this year.
David: I am <unk>.
Speaker Change: The progress achieved so far across the commercial organization or less Fischbeck line.
David: Great cost reduction efforts across the company.
David: We'd be happy to take your questions.
Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Richter: Our first question comes from <unk> Richter with Goldman Sachs. Your line is open.
Richter: Thank you good morning.
Speaker Change: Based on FDA feedback.
David: Need for phase <unk> efficacy data now expect an extended review timeline, you're targeting an approval in 2026 could you comment any further on your interactions with the FDA and why they decided to require that and more broadly.
David: Just to the potential risks or the vaccine business outlook under the New administration. Thank you.
David: Well, thank you solving for the question so.
David: First on the narrow question of the flu study.
David: Yes.
David: We have moved forward very quickly and enrolling cases as the FDA and everybody is nowhere and actually in that <unk> study, which we originally thought might be a two season efficacy study.
David: We now know that Youre very shortly here, we will have a readout with a very large number of cases and a 40000 person study and since that will speak to the potential value of our flu component.
David: It makes good scientific sense that that would be a part of the review.
David: That's going on for our flu Covid combination I'll remind you we had already demonstrated efficacy for the Covid component component and really now where we're almost sitting on top of that production component. So.
David: For a whole bunch of I think quite reasonable scientific reasons. It makes sense that we review that as a part of the combination vaccine study. The implication of that is we will have to complete that review, obviously hopefully see a positive result, and then submit it to the current BLA for the mrna chain III program that will inevitably lead to some form of clock stop an extension of.
David: The review timeline.
David: And so we're.
David: We're excited to see those results in flu, we think they will we hope that they will be constructive for the flu Covid program and look forward to submitting them sharing those results first and then to make them once we have them.
David: As far as more broadly a question about.
David: Our interactions with the FDA across multiple submissions those continue business as usual from our side. We continue to have productive exchanges across all of our ongoing final reviews that includes our 12 83 program the RSV program.
David: We continue to be engaged in anticipating seasonal program seasonal composition update for for this coming fall and then obviously I've just spoken to what's happening in the fluid Covid combination space. So.
David: From our perspective, we are grateful for the ongoing collaboration work and will continue to make sure that we provide all the data required to conduct a diligent review of all of our products in our portfolio.
David: More broadly I guess the question to the outlook.
David: And I invite others to sort of add if I Miss anything but.
David: We continue to see an opportunity a real need for Covid vaccination, particularly this coming fall.
David: And.
David: We'll remind that.
David: Through this winter season, we still saw.
David: Thousands of deaths in the United States actually about a thousand deaths a week during the peak winter months from COVID-19, the overwhelming majority of which were from folks who had not been vaccinated, but world of Americans and had risk factors. We do believe that vaccines have a unique opportunity to prevent those desk at those hospitals.
David: Elevations and there was actually a.
David: Publication out there.
David: Denmark, just this week showing that this past year are our updated vaccine composition.
David: 96% of 96% effective at preventing death, 85% effective at preventing hospitalization.
David: This year and so we do believe that there is a need and we believe there is an opportunity with vaccines to play an important role in public health ultimately people need to make their own decisions about that so our focus right now is making sure that those products are products are available for Americans and for in markets around the world for the coming fall season.
Speaker Change: Thank you one moment for our next question.
David: Our next question comes from the line Tomorrow with UBS. Your line is open.
Jasmine: Hi, this is jasmine.
Jasmine: Thanks, so much for taking our question.
Jasmine: Latest thinking and whether it's <unk> <unk> phase III data in 2026.
Jasmine: And reasonable expectation.
Jasmine: Wondering what your plans are for new trials expansions in other indications for both I N T N Amelia prioritize checkpoint and chemo.
Speaker Change: Sure. Thank you for the question.
Speaker Change: So first I'll remind you that the phase III melanoma study it reached its target enrollment September of 2024 of last year, we announced that.
Speaker Change: Given the historical event rates.
Speaker Change: That would lead us to expect that we would have accrued enough events for at least the first analysis of efficacy.
Speaker Change: In 2026, and so we are still ultimately waiting for events and it will be event driven out of the analysis happens.
Speaker Change: But based on our prior experiences both in phase II B and the other expectations.
Speaker Change: We still believe that 26 readout.
Speaker Change: It is possible if not likely.
Speaker Change: For other indications we haven't provided updates obviously for the non small cell lung cancer study, we're really pleased with that enrollment, but we haven't provided a specific update on timeline there.
Speaker Change: And for the Phase III studies.
Speaker Change: We did as you as you noted.
Speaker Change: Recognize that we've now fully enrolled the randomized study in renal cell carcinoma, which is exciting because that randomized study has a chance.
Speaker Change: We have not with our partner Merck guided on when we expect that will be but I will note that events to accrue relatively quickly in that indication in that population.
Speaker Change: So we'll look forward to that we will continue to look to expand perhaps into monotherapy spaces, both ourselves and Merck have indicated that and we have an instance of that that we're bringing forward today.
Speaker Change: There will hopefully be others, but I will defer from commenting on that until we and Merck are ready to announce that we've started those efforts.
Speaker Change: On the question of checkpoint.
Speaker Change: We are obviously encouraged.
Speaker Change: We would we would like we look forward to sharing the data and that's the basis of that encouragement at an upcoming medical meeting.
Speaker Change: Because we've been looking at that program very carefully in its phase one b.
Speaker Change: A portion of the study, which I'll remind you as combination with antibody checkpoints.
Speaker Change: To see whether or not we can see a synergistic effect.
Speaker Change: And we're currently moving forward in at least used to the <unk> that we've talked about today. So that's the first line non small cell lung cancer in the first line metastatic indication. Obviously, we have also been looking at it in second line indication as a part of that Phase one program and we'll continue to do so we will add additional histology in the future, but we are.
Speaker Change: Not ready to announce any today.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Tyler Van Buren with TD Cowen Your line is open.
Speaker Change: Hey, guys. Thanks, very much for all the updates.
At the risk of being repetitive here and just to be clear a more specific given how close we are to the bupa it's business as usual for the 12 months 83 review can.
Speaker Change: Can you talk about just how interactions are going for that program and what the competences in approval given the new leadership.
Speaker Change: Recent denial the Novavax program.
Speaker Change: Yeah, I mean, obviously I can't comment on others programs, because I'm not familiar with what's going on there.
Speaker Change: And in those continental exchanges, but I can speak to ours, which is it really has been business as usual.
Speaker Change: There are you know.
Speaker Change: Lots of exchanges of scientific information, we really view it as our responsibility to provide high quality data to all of our regulators, including the FDA. So that they can conduct their assessments to.
Speaker Change: To date those assessments have we believe been constructive and positive and we have.
Speaker Change: I have seen no sign that we're in that Theres any question about our ability to make the existing produce a day now again reviews ongoing and we have to defer to our questions may come from or from the FDA or others as we move forward, but it really has felt like business as usual.
Speaker Change: Thank you wouldn't want before our next question.
Michael Yee: Our next question comes from Michael Yee with Jefferies. Your line is open.
Neena: Hi, Thanks, This is neena on for Mike.
Speaker Change: Just a quick question about a recent media article that came out yesterday regarding how vaccine trials would be Ryan that they would now required to be line against the placebo just wanted to get your thoughts about that what do you think.
Neena: That will do to enrolment will it be harder enroll easier.
Speaker Change: And is that going to be required do you think for <unk>.
Speaker Change: All respiratory vaccines, specifically called out for you guys or just newer vaccines, such as CMV or any others that you're working on in the product line. Thanks.
Speaker Change: Thank you for the question so yes.
Speaker Change: We're.
Speaker Change: Obviously.
Speaker Change: Can't comment on a policy change that either havent happened or that we you know, we havent hasn't been communicated directly to us.
Speaker Change: I will note that as you did our COVID-19 vaccine, our RSV vaccine, our CMV vaccine. Our norovirus vaccine. These are all conducted is placebo controlled studies and for many of the other products in our pipeline. There are portions of their development that happened in placebo controlled studies, usually earlier clinical.
Speaker Change: It meant or in certain populations for instance, our COVID-19 vaccine was studied in children.
Speaker Change: In a placebo controlled context so.
Speaker Change: It it will really depend upon ultimately what.
Speaker Change: The FDA and HHS feel as appropriate in their guidance at a program by program level of what that will require.
Speaker Change: Our responsibility as a manufacturer and a drug developer is to make sure that we provide the data that regulators and public health officials feel like they need so that they can stand behind our products and so we will.
Speaker Change: We will absolutely engage constructively and making sure we understand what those needs are and then we fulfill them.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from Terence Flynn with Morgan Stanley. Your line is open.
Chris: Good morning, this is Chris on for Terence.
Speaker Change: Just one quick question on the coffee strange selection. So given the regulatory uncertainties can you. Please elaborate on the process for E. Coli strain selection moving moving forward. Thank you.
Speaker Change: Sure I will ancillary entered from a global perspective.
Speaker Change: I will start by saying in every instance, it is up to our regulators and how all of these countries to tell us as manufacturers what updates they may or may not want for the coming year.
Speaker Change: I will note that some years flu does not update all of its strange.
Speaker Change: Sure in some years and so far with Covid, we've had an updates every year.
Speaker Change: There are continuing evolving strains that we're tracking that we think might justify an update this year, but that decision will really lie with a set of regulatory.
Speaker Change: Regulatory bodies first we will probably based on timing here from W. H O and EMA and other international regulators and then we would expect to also hear probably at the same time.
Speaker Change: From the U S F D a.
Speaker Change: Process is really up to them.
Speaker Change: How they choose to to ultimately conduct.
Speaker Change: Their selection process on whether or not they wanted to do a strained update for this year and what the composition will be all.
Speaker Change: I'll defer to each of those individual regulators, but we would expect within the next months. If we follow the same process that we have in prior years to hear from all of them about what they'd like to see us deliver for the fall for their respective countries.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Ken Moss with Evercore ISI. Your line is a long time.
Ken Moss: Hey, good morning, guys. Thanks for taking the question wanted to ask you about the fluid Covid combination and the updated timing you have there.
Ken Moss: You may not know yet but is your is it your expectation that you would need to re file that with the updated flu efficacy data or could you just submit that data as a I guess it would be considered a major amendment.
Speaker Change: In other words potentially delaying this by just three months and enabling a potential.
Speaker Change: FDA decision in early 2026 as opposed to later in the year. Thank you.
Speaker Change: And thank you for the question.
Speaker Change: And I think the short answer will be we don't know it will ultimately depend upon consultation with the FDA of what they would prefer the approach to be.
Speaker Change: It is.
Speaker Change: It is.
Speaker Change: Totally appropriate to submit that data as an amendment to the BLA.
Speaker Change: It could also be from a pragmatic perspective, it makes sense to update more broadly the BLA submission with it.
Speaker Change: Which could result in a resubmission.
Speaker Change: We'll just go forward with whatever feels like the most pragmatic approach.
Speaker Change: And ultimately the one that the FDA guides us to do I will say that absent that there is a lot of other information in the current file including the performance of the Covid component, obviously things on manufacturing the broader Immunogenicity and safety dataset from the pivotal phase III for the flu Covid combo and the review of all that <unk>.
Speaker Change: Formation is progressing and so there are reasons why amending with the with the full efficacy data may be the most pragmatic approach, but again it will depend upon consultations with the FDA, which will only be appropriate to do after we have that flew efficacy data in hand.
Speaker Change: Okay helpful. Thank you.
Speaker Change: Number four in the questions.
Speaker Change: Our next question comes from Courtney bring with Bernstein. Your line is open.
Courtney: Alright, thanks for the question today.
Speaker Change: Got it.
Speaker Change: In Maine.
Speaker Change: For us is really on kind of some of the new cost cutting that you guys have announced today.
Speaker Change: What we would really like to understand is kind of what particular milestones or expectation changes drove you to increase the cost cutting program I think you've been quite explicit in the past that you'll be looking for top line signals to drive new changes and then.
Speaker Change: Second question is what components would you point to as being kind of you've been able to flex to enable kind of some of that cost cutting that we're now anticipate additional cost cutting that we're now anticipating in 2026 and 2027 from last expectations. Thank you.
Speaker Change: Yeah. Thanks for the question coordinate as to the first piece in terms of what are the milestones or what's changed a.
Speaker Change: A lot of this is nothing has changed so we were expecting and we've been indicating that we are right now going through a lot of phase III large phase III trials.
Speaker Change: And our S E C M D norovirus, our combination vaccine flu and many of those just ramped down and are completed by 2027, and we had never really given guidance for 2027, and so much of that was just extending our guidance out a year and indicating just what that R&D level will be.
Speaker Change: The second thing is is to a milestone I mean, yes, it's an uncertain environment. So there's nothing from a revenue perspective that we have seen that would indicate that we need to do this but we need to focus on what we can control and that is our cost base and as we look out to 2027 and 2028, we felt that it was appropriate to get our cash cost to about 4 billion.
Speaker Change: To make sure that we fulfill our commitment to breakeven by 2028.
Speaker Change: Now after the how I already mentioned the large majority of it which is the phase III trials, but we have been on a cost efficiency program for the last couple of years as I mentioned in my prepared remarks, so theres much to do and the teams continue to identify additional opportunities in procurement, we're using digital tools.
Speaker Change: Or are we looking how we get work done and so we just think that there's a lot that we can go do and our that's why we came out with a new 2027 guidance just as we look out some of this is it.
Speaker Change: As expected some of this is the continued improvements at our TNC.
Speaker Change: And we look forward to executing on it and fulfilling our commitment to break even by 2028.
Thank you one moment for our next question.
Speaker Change: Our next question comes from Myles Minter with William Blair. Your line is open.
Speaker Change: So Jake on for Myles. Thank you so much for taking our question.
Speaker Change: First.
Speaker Change: For Norovirus have you guys identified the source of the GB.
Speaker Change: GBS case that was originally identified by the FDA and have there been any additional cases of GBS noted in the northern Hemisphere, Southern Hemisphere trials and then second.
Moran: For instance, Moran.
Speaker Change: For the study in which you quantified the number of T cell clones induced.
Speaker Change: We're curious how you're comparing that to <unk> product and whether you use the same.
Speaker Change: Analysis pipeline that Dave.
Speaker Change: Used for their quantification for your sequencing data. Thank you.
Speaker Change: Thanks for both questions. So first yes on the Norovirus study, we're pleased that the clinical hold has been lifted obviously what means we've satisfied any of their questions and importantly updated materials that were.
Speaker Change: But from an informed consent perspective, all that's out there we have not.
Speaker Change: Seen an additional GBS case, obviously, that's encouraging but not necessarily unexpected it.
Speaker Change: It is unfortunately rare event when it does occur as far as causality.
Speaker Change: They never know.
Speaker Change: I'll remind you that there are about GBS cases in the background population, particularly in older adults.
Speaker Change: That happened fairly regularly.
Speaker Change: Several per 100000, and we're enrolling these large 25000, sometimes 50000 person studies over multiple years, we do see occasional GBS cases actually on the placebo arms of these studies and now we've seen one inactive.
Speaker Change: It's possible that it is related to the vaccine it's possible that's not and we are working hard to assess causality, but you can't really ever get a direct links on what you really can do though is characterized the frequency of these things and make sure that people are aware of them and as a part of our ongoing phase III Norovirus I will continue to very actively monitor.
Speaker Change: Additional cases of GBS.
Speaker Change: We certainly hope we don't see any either on the placebo arm on me.
Speaker Change: But all of that pretty we're pretty encouraged again, just can be off clinical hold and moving forward with enrollment and hopefully moving forward with that with that program.
Speaker Change: We anticipate <unk> question, so I can't speak to the way of violin Tech had run their pipelines, obviously, we're not deeply familiar with it we are really important.
Speaker Change: Encouraged by the quality that we're seeing in <unk>.
Speaker Change: Im evidenced that we are really deepening and broadening our swap and that those are matched by what's happening in the vaccine.
Speaker Change: That sorts of translational data that ultimately is supportive of what is really exciting evidence of efficacy that we've already seen from that study and I think that that's ultimately just giving us.
Speaker Change: Some of the wide, but the what was the remarkable hazard ratio improvement that we've reported both at Astro last year and that we'll look to be updating as we continue to follow that phase <unk> study.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Gena Wang: Our next question comes from Gena Wang with Barclays. Your line is open.
Gena Wang: Thank you for taking my questions I have two quick questions. One is when we look at the wholesale revenue this quarter.
Speaker Change: Oh It was only 29 it seems only a fraction of the Pfizer U S. Baskin.
Gena Wang: So any concerns on the future.
Speaker Change: And the second question is on the card.
Gena Wang: Excellent. Thank you so much 25.
Speaker Change: I appreciate you all.
Speaker Change: Total events that you pledged.
Speaker Change: So I'll take the first question I'm not sure if we heard the second question. So we might ask you to repeat that yeah.
Speaker Change: Yeah, I mean, we looked at the Q1 revenue for ourselves and our competitors and all we can point everybody to is the actual script data and the script data through the first part of this year is really pretty similar to last year at 38% market share and even if you go back to last year and you normalize our revenue in the U S. We've talked about in the past one.
Speaker Change: $7 billion take out the gross to net changes, it's really $1 $5 billion.
Speaker Change: Data across that marketplace is a 40% market share and that's exactly what we see I guess, 38% of our scripts data. That's what we see through the first half I would also say that our customers are trying to manage their working capital better. So the inventory levels are down so I can't comment on other companies' revenue, but I can comment.
Speaker Change: On what we see in the actual marketplace from a script perspective.
Speaker Change: And Gina Yeah, we didn't quite hear the second question could you just repeat it please.
Speaker Change: So the second question is regarding the flu vaccine they took data somewhere 25.
Speaker Change: I don't know if you will be able to share regarding the total events.
Speaker Change: Well, thank you plan to achieve.
Speaker Change:
Speaker Change: I don't think we have provided any guidance on it. It is obviously a very large number of cases.
Speaker Change: Because there was a.
Speaker Change: Quite.
Speaker Change: Large because he's guardians here, but at this point I don't think we're going to provide any guidance for ultimately just going to conduct that analysis literally the season is over and we will try and share those results and obviously.
Speaker Change: Blame them once we released that.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Geoff Meacham with Citigroup. Your line is open.
Speaker Change: Hi, Good morning, this is Charlie on for Jeff.
Speaker Change: Broadly thinking about the recent <unk> meeting I was just wondering if you could comment broadly on the common thinking made namely on CMV.
Speaker Change: The need for durability data.
Speaker Change: Some challenges for Covid.
Speaker Change: Perhaps the possibility to move from the University of recommendations and when that sort of space and then separately for the new checkpoint program getting the cost cuts that you guys are not into maintaining could easily share perhaps any potential.
Speaker Change: We out license or even partner program in future.
Speaker Change: Sure. Thank you for all of them all.
Brian Cantrell: Brian Cantrell.
Speaker Change: Quickly. So so first on CMV look I think we're we.
Speaker Change: We do recognize for that vaccine will want to see good durability, you know 510 years would be ideal if not longer.
Speaker Change: Because at the end of the day, what you're trying to do with CMV is zero convert people. So they can control prevent really a substantial infection with the virus.
Speaker Change: The durability data we've got to date actually looks really strong. So if you look at the antibody titers through three years now and similar cell mediated immunity, but focusing on the neutralizing titers, they're essentially flat through three years and if you model that forward. It does look like it's going to meet our objectives for <unk>.
Speaker Change: Really durable immune responses.
Speaker Change: That's incredibly encouraging we've seen.
Speaker Change: A related program and EBV real durability and viral suppression, we previously reported on that and so we're we're pretty we're feeling pretty optimistic about the performance of the latent vaccine platform and specifically CMV and our ability to achieve durability.
Speaker Change: As far as the ACP conversation on that we were actually quite encouraged by how constructive people are about the need for a CMV vaccine that any efficacy there will be seen as is valuable because at the end of the day. This virus is a scourge.
Speaker Change: And so you know.
Speaker Change: While well durability was raised we actually I think we've addressed that question and the question of efficacy.
Speaker Change: We feel pretty aligned with that conversation and optimistic that our current results will be positive.
Speaker Change: The question on Covid and changes in recommendation you look at the end of the day. It is for our public health officials to decide how to use our products. Our responsibility is to bring forward. The data that allows them to make that decision.
Speaker Change: Risk based decisions have been applied in other countries.
Speaker Change: Certainly if you look at the types of populations that have been identified those that are older. Adults 65, plus those who had any risk factor in fact, 74% of Americans have a risk factor for severe COVID-19.
Speaker Change: Including under the age of 64.
Speaker Change: There was real support for that and then there was general support for let's let people decide.
Speaker Change: I think that was seen in the pulling of the ACI P. Working groups. So for those even without risk sectors that might want to protect themselves against COVID-19. They should have a right to do it I will note that if you look at death and hospitalization data it tends to be in the older adults it tends to be in the.
Speaker Change: And those with risk factors and so it makes sense that we want to encourage strongly vaccination in those populations again, a thousand Americans a week dying through this past winter is more than dine in traffic accidents per week, it's really something we must address.
Speaker Change: As far as the checkpoint program is concerned.
Speaker Change: We are.
Speaker Change: We have a.
Speaker Change: We're really encouraged by that data we're moving forward at this point.
Speaker Change: One of the re prioritization as you saw in our pipeline is that we decided not to invest in a pivotal study for a younger adult combination vaccines. That's the 18 to 49 year old flu cold and combo vaccine.
Speaker Change: And really what you should interpret with that is that we are re prioritizing that investment into our oncology pipeline based on the emerging data, it's not any dis service to the or any problem with the tenants three program. We're actually really encouraged by what we're going to focus there on older adults and those that are higher risk.
Speaker Change: And we're going to take the opportunity to reinvest that money in checkpoint, which we are encouraged to move forward with ourselves for now.
Speaker Change: Maybe just to add to Stephen's point, because I think it's an important strategic consideration as we have set up several on the days with PREPA is a very important franchise for us that Steven said incredible medical needs for many many years to come Unfortunately, all the patients.
Speaker Change: R&D costs, those phase threes up behind us on the cost spread without coming down that business enjoyed seeing cash flow, we don't need to invest in manufacturing and as Stephen said, well what do you want to be thoughtful about.
Speaker Change: Deploying that capital towards oncology.
Speaker Change: We're very excited about.
Speaker Change: <unk> keeps growing programs of course, because you know Merck is funding alphabet and so that's why when we see opportunities on the clinical data that we're seeing on checkpoints, we're able to pivot very quickly, which we think is William <unk> have a company with a strongest predatory business joining cash in investing in growth on properties, that's where you are with them.
Speaker Change: Alright, thank you.
Speaker Change: One moment for our next question.
Yeah.
Speaker Change: Our next question comes from Luca <unk> with RBC. Your line is open.
Speaker Change: Oh gosh look what savi on for Lee and thanks for taking the question maybe following up on the political landscape.
Speaker Change: I'll close on record, arguing there is no evidence that a single antigen vaccine for respiratory diseases.
Speaker Change: It also claims he is working on multiple antigen vaccine.
Speaker Change: Do you know what he means by that.
Speaker Change: And also maybe bigger picture how confident are you that your upcoming putting five will be reviewed based on the risk benefit profiles of the molecule and not political agenda any.
Speaker Change: Any thoughts much appreciate it.
Speaker Change: Thanks for the question.
Speaker Change: As far as the secretary.
Speaker Change: I think you'd have to refer those questions to him I can't.
Speaker Change: I can't comment because that ultimately depend upon his perspective I will note that we have products that have been approved that have demonstrated efficacy and so we'll continue to provide data hopefully in support of that because we do ourselves believe that the clinical trials, we run really do support the benefits of our products.
Speaker Change: Including those that are single antigen and we have some multi antigen problem I'll remind you that CMV is a seven mrna massive multi antigen product that is EBV as are many of our other vaccines and so we are we do believe that sometimes and glanced at it makes sense and sometimes multiple lines should make sense and we do both.
Speaker Change: As far as the question on <unk>, we are.
Speaker Change: As I said, a moment ago, we continue to have construct constructive exchanges of data and information with the FDA in their review of all of our files. We've also been participating and review of the information with the CIP CDC working groups that ultimately also recommend.
Speaker Change: These products our responsibility is to make sure. They have the information they need to do a risk benefit analysis to follow the science, where it leads are we are confident in the data we have in the case of our next generation Covid vaccine.
Speaker Change: Pointing to the fact that that is an 11000 person large multi year.
Speaker Change: Randomized efficacy studies and we think it is a really strong demonstration of the potential for that product to help patients against COVID-19, and so we're quite enthusiastic about it most of our other files include similarly, large or larger phase III randomized studies.
Speaker Change: It's quite a lot of information to get through and our job is to make sure that we presented objectively to the agencies. So they can conduct interviews we remain confident that those reviews will be consistent with prior practice and again it had been business as usual for the first half of this year for us.
Speaker Change: Thank you ladies and gentlemen, this does conclude the Q&A portion of today's conference I would like to turn the call back over to Stefan <unk> for any closing remarks.
Speaker Change: Thank you so much for joining us today as you can see where what are you focused on executing on those fronts G. Thank you for participating in our call and we look forward to speaking to you in the coming days or weeks. Thank you.
Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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