Moderna, Inc. (NASDAQ:MRNA) Q4 2022 Earnings Call Transcript

Moderna, Inc. (NASDAQ:MRNA) Q4 2022 Earnings Call Transcript February 23, 2023

Operator: Good morning. My name is Kevin and welcome to Moderna’s Fourth Quarter 2022 Earnings Call. Please be advised this call is being recorded. At this time, I’d like to turn the call over to Lavina Talukdar, Head of Investor Relations at Moderna. Please proceed.

Lavina Talukdar: Thank you, Kevin. Good morning, everyone and thank you for joining us on today’s call to discuss Moderna’s fourth quarter and full year 2022 financial results and business update. You can access the press release issued this morning as well as the slides that we will be reviewing by going to the Investors section of our website. On today’s call are Stephane Bancel, our Chief Executive Officer; Stephen Hoge, our President; Arpa Garay, our Chief Commercial Officer; and Jamey Mock, our Chief Financial Officer. Before we begin, please note that this conference call will include forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please see Slide 2 of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance or results to differ materially from those expressed or implied in these forward-looking statements.

With that, I will now turn the call over to Stephane.

Stephane Bancel: Thank you, Lavina. Good morning or good afternoon everyone. Welcome to our Q4 2022 conference call. Today, I will start with a quick business review of 2022. Stephen will then review our clinical programs before Arpa gives an update on our commercial progress and plans. Jamey will then present our financial results and I will come back to share some posts on where we are heading. We are pleased to report today revenues of $19.3 billion for fiscal year 2022, GAAP net income of $8.4 billion, and GAAP diluted earnings per share of $20.12, cash and investment balances of $18.2 billion at the end of the year. We continued our disciplined capital allocation policy, reinvesting first in our company. In 2022, we invested $3.3 billion in R&D, our highest level of R&D investments ever.

We invested $1.1 billion in SG&A and $400 million in capital investments. We made investments in Metagenomi for access to new gene editing enzymes and Carisma in oncology. We announced an investment in CytomX and the acquisition of OriCiro in Japan to continue to streamline our manufacturing processes. And just yesterday, we announced the collaboration with LifeEdit. $3.3 billion was returned to shareholders through a buyback of 23 million shares. I am proud of the strong results by our team in 2022 as we made history with a number of outstanding accomplishments for patients. In respiratory vaccines, we developed new products with remarkable speed, getting the mRNA-1273.214 against Omicron BA.1, the strain recommended by WHO and mRNA-1273.222 against Omicron BA.5, the strain asked by the U.S. FDA.

We developed 1273.222 in less than 2 months. We are able to protect millions of people from potentially severe disease resulting from new COVID strains. Our RSV vaccine went from Phase 1 start to Phase 3 data in 24 months and met its primary efficacy endpoint in the Phase 3 trial. In oncology, our personalized cancer vaccine was the first demonstration of positive results from an mRNA cancer treatment in the randomized clinical trial. In rare diseases, our propionic acidemia program showed early positive clinical results in a repeat dose chronic disease setting in reducing metabolic decompensation events in patients. And we announced what we hope will become the first effective inhaled mRNA therapy in humans as our partner, Vertex, entered a Phase 1 trial using our technology in the therapy for cystic fibrosis patients who lacks the CFTR protein.

Finally, we had our first ESG Day and published our first ESG report, providing additional transparency in how we conduct our business. I want to take a moment this morning to touch on transition the Moderna Executive Committee. As we announced in late 2022, Marcello Damiani decided to retire as Chief Digital Officer after more than 7 years with the company. Marcello joined Moderna before our first clinical trial and we are today a digital-first company, as a big testament of his ability to scale digital resources. I am grateful to Marcello for his contribution during the early years of Moderna. I am excited to have worked already with Brad Miller since early January. Brad brings a wealth of enterprise solution and platform organization experience in several of the top technology companies.

This will be instrumental as Moderna scales into a fully-integrated biotechnology company. I want to also share with you that Juan Andres, currently President of Strategic Partnership and Enterprise Expansion has informed me of his decision to retire and will be retiring at the end of May. Juan has played a tremendous role since joining Moderna in 2017 from Novartis, where he led all manufacturing for them. Juan served as Moderna’s Chief Technology, Operations and Quality Officer where he led our manufacturing from an early-stage clinical development company to a commercial company. I believe Juan did a historic job with his team in 2020 and 2021 to scale Moderna for global commercial launch during the pandemic. It is literally unbelievable that he led the team from having made across our entire portfolio, less than 100,000 doses in 2019 to more than 800 million doses in 2021, all during the pandemic.

We and hundreds of millions of people across the globe who received the Moderna COVID-19 vaccine owe Juan our gratitude. I believe very few manufacturing leaders would have led such an achievement. Most recently, Juan has focused on building out our organization to support Moderna’s growing pipeline, leading our efforts in producing of personalized cancer vaccine. Jerh, who used to work for Juan at Novartis, has joined us since early fall and has been leading manufacturing since then. I am thankful for Juan who has ensured a very smooth transition, helping Jerh every step of the way. Upon his retirement at the end of May, Juan’s responsibility will transition to Stephen Hoge, President of Moderna, to integrate PCV across all functions, with Jerh leading the manufacturing of PCV for multiple Phase 3s, and of course, for getting commercial ready.

On behalf of the entire Moderna team, I want to thank Juan for his continued leadership and wish him and his wife, Marina, the best of a well-deserved retirement. I am deeply thankful to have counted him for so many years as a partner at Moderna, and more importantly, for more than 20 years as a friend and a mentor. We will miss him. The company continues to expand at a rapid pace. We now have 3 commercial COVID-19 vaccine products. We have 4 development programs in Phase 3. We have to expand our commercial portfolio very soon. Overall, we have 48 programs underway with a team of 3,900 team members and now present on the ground in 16 commercial subsidiaries across Americas, Europe and Asia-Pacific. Our $18 billion of cash balance at the end of the year is enabling us to scale across research, clinical development, manufacturing, commercial and G&A.

With that, let me ask on to Stephen.

Stephen Hoge: Thank you, Stephane. Good morning or good afternoon, everyone. Today, I will review our progress against our key clinical programs. I will start with our respiratory vaccines. We have approved our Phase 3 development programs against the big three respiratory viruses, COVID-19, RSV and influenza. I will share some additional data on these in a moment, including some presented this morning on our older adult RSV Phase 3 trial. We are also advancing a portfolio of next-generation programs against these viruses, including mRNA-1283, which is a next-generation COVID-19 booster that is referred to as rather stable. We also have multiple next-generation flu programs. We seek to increase the breadth of coverage against influenza by adding additional antigens that are not present in currently-available flu vaccines.

Lastly, our respiratory portfolio includes a large number of combination vaccines to provide protection against multiple respiratory pathogens which has advantages for many stakeholders, including healthcare providers, payers and consumers. These include combinations of COVID, flu and RSV as well as two pediatric vaccines that include additional viruses that are important in children, including hMPV and PIV3. As we prepare for endemic COVID in 2023 and beyond, we wanted to briefly recap the recent VRBPAC committee discussions and recommendations. At the January VRBPAC meeting, the committee voted to harmonize the primary series and booster dose vaccines, which is an important step to simplify future guidance. The FDA also indicated that it expects to convene VRBPAC to determine vaccine strain composition for the €˜23/24 season in the second quarter of this year.

We believe that our mRNA platform has demonstrated its ability to deliver variant match vaccines on accelerated time horizons and we believe we are therefore well positioned to deliver whatever composition update the FDA and other public health agencies recommend. And moving to RSV, as you know, we shared the top line results from our Phase 3 RSV study in older adults earlier this year. And today, we shared additional data that was presented this morning at RSVVW. The top line results we have seen are incredibly encouraging and we are grateful to the FDA for breakthrough therapy designation for mRNA-1345, which further emphasizes the significant health impact of RSV in older adults and the high unmet need. In the top line data presented in January, the mRNA-1345 demonstrated 83.7% vaccine efficacy and the primary endpoint of lower respiratory tract disease with two or more symptoms.

1345 was found to be generally well tolerated and there were no safety concerns identified by the Data and Safety Monitoring Board. In the data presented today at RSVVW, we confirmed that 1345 was well tolerated and has an acceptable safety profile. Solicited adverse reactions were mostly Grade 1 or Grade 2 and to-date most solicited adverse reactions were mild to moderate, with the most common adverse reactions being injection site pain, headaches, myalgia and arthralgia. Vaccine efficacy was consistently high across all age groups and in participants with pre-existing comorbidities that are at highest risk. Please refer to the scientific and medical meetings section of the Moderna Investor Relations website to see the full RSVVW presentation.

And we are very encouraged by these data and look forward to file a Biologics License Application with the FDA in the first half of 2023 as things proceed. With the option of using a priority review voucher, we might see regulatory action on this filing in late 2023 or early 2024. Now moving to flu. Last week, we shared with you data from our Phase 3 immunogenicity and safety study in the Southern Hemisphere, study P301. In this study, our first-generation vaccine, mRNA-1010 demonstrated superiority on zero conversion rates for influenza A H3 and H1 and superiority on geometric mean titers for H3 and non-inferiority on geometric mean titers for H1. mRNA-1010 did not meet non-inferiority on zero conversion or titers for the two influenza B strains.

Our separate Phase 3 efficacy study in the Northern Hemisphere, study P302, has now accrued over 200 confirmed cases of influenza-like illness, almost all of which are influenza A, which is expected €“ this was expected as the overwhelming majority of influenza burden in older adults is caused by influenza A, including over 95% of hospitalization in the most recent season. Now based on the case accrual in P302, we now expect the independent DSMB will review the first interim analysis of efficacy in that study in the first quarter of this year. Now, let’s take a look at our latent vaccines on Slide 14. Our CMV vaccine is in an ongoing Phase 3 study and we have begun dosing participants in the Phase I/II adolescent dose-ranging study. Our EBV vaccine to prevent infectious mononucleosis is in Phase 1, while our EBV vaccine to prevent long-term sequelae of EBV is in pre-clinical development.

We have two HIV Phase 1 trials ongoing and our HSV vaccine is in preclinical. And finally, our VZV program has begun dosing in participants in a Phase 1/2 study, which I will discuss further on the next slide. The VZV study is a Phase 1/2 randomized safety and immunogenicity study evaluating mRNA-1468 against Shingrix. This is a relatively large study, enrolling 500 zero negative older adults in multiple doses and dosing intervals and a 12-month study follow-up. Over 35% of participants will be 70 years and older, which is in line with the largest disease burden of shingles. Now, let’s take a look at our therapeutics portfolio on Slide 16 and I will highlight a few of the programs. We have recently reported strong top line data for our personalized cancer vaccine, which I will talk to in a moment.

In immunooncology, we are working to address disease burden beyond PCV with our checkpoint and triplet programs, both of which are in Phase 1 trials in various tumor types. In rare diseases, our Phase 1/2 PA program continues to enroll patients and we are looking forward to selecting a dose of the expansion arm. I will provide a brief update on that in just a moment. Earlier this year, our partner, Vertex, announced initiation of a Phase 1 trial in cystic fibrosis patients, which is our first inhaled pulmonary mRNA therapeutic program. And in cardiovascular, we announced Relaxin has initiated dosing in the Phase 1 study. Both of these study initiations represent important milestones for Moderna as we expand our modalities in therapeutic areas.

Now in December, we shared exciting top line data from our Phase 2 personalized cancer vaccine program, testing the combination of PCV and KEYTRUDA against KEYTRUDA alone in the setting of adjuvant melanoma. KEYTRUDA is the standard of care in that setting. In this study, we showed the addition of our personalized cancer vaccine treatment mRNA-4157 to KEYTRUDA reduced the risk of recurrence or death by 44% compared to KEYTRUDA alone. This was the first demonstration of efficacy for an investigational mRNA cancer treatment in a randomized clinical trial and we are pleased to announce that 4157 has received breakthrough therapy designation from the FDA. Along with our partner, Merck, we are excited about these results and expect to launch multiple late-stage confirmatory studies for PCV in 2023, starting with melanoma and then moving to non-small cell lung cancer.

We are planning to explore additional indications for 4157, where we believe there is a strong biologic rationale for immune-stimulating approaches. These include early-stage and metastatic settings and will include indications where KEYTRUDA is not yet approved. Finally, we expect to release full data from our Phase 2 study at an oncology meeting this spring and in an upcoming publication. Now moving to PA, since our update with our €“ at our R&D Day, the PA Paramount study has made good progress. Our fourth cohort is now fully enrolled and we are currently enrolling patients in our fifth cohort which doses at 0.9 milligrams per kilogram every 2 weeks. We are encouraged that to-date we have not observed any dose-limiting toxicities. And we are also encouraged that all patients and families have opted to continue treatment electively in our open-label extension study across all prior dose cohorts.

Now, the next step in this trial will be to review available data and determine a dose for expansion. I will now hand the call over to Arpa Garay who will provide an update on our commercial activities. Arpa?

Arpa Garay: Thank you, Stephen and good day to everyone. I will start with a review of sales on Slide 20. In the fourth quarter, total product sales were $4.9 billion. In the U.S., our sales were $1 billion, sales in Europe approximated $2.2 billion, and sales in the rest of the world were $1.6 billion. We ended the full year strong, with total product sales for 2022 of $18.4 billion. Sales in the U.S. for the full year were $4.4 million, sales in Europe were $6.7 million, and in the rest of the world were $7.3 billion. We are reiterating approximately $5 billion in COVID sales for delivery in 2023 from our currently-signed advanced purchase agreements and deferrals. And we do expect additional sales from key markets such as the U.S., EU and Japan.

Slide 21 summarizes the current composition of sales for 2023. We have advanced purchase agreements from Canada, Kuwait, Switzerland, Taiwan and the United Kingdom. We expect these sales to be recognized upon delivery of vaccines in the second half of 2023. Additionally, we expect further sales from deferrals from 2022 contracts. These deferrals are from the countries listed on the slide and are expected to be mainly recognized from deliveries in the first half of 2023. Together, these advanced purchase agreements and deferrals totaled approximately $5 billion in sales for 2023. We do expect additional sales from key markets, including the United States, EU and Japan, as well as Australia and other countries in Asia and Latin America. In the U.S., contracting discussions with commercial customers are ongoing and we will provide visibility into expected U.S. sales at a future date after we complete these discussions.

In our discussions with commercial customers in the U.S., it is clear to us that our customers recognize that COVID is still a substantial health burden. Throughout 2022, COVID continued to be a leading cause of hospitalizations and deaths. If you look to the chart on the left hand side, what you will see here is data available through September of 2022 COVID was the third leading cause of death in the United States only after heart disease and cancer. And if you look to this right-hand side, 4 months for the fall and winter season from October 1, 2022, 2023, hospitalizations from COVID in the U.S. are nearly 450,000, more than double from flu and nearly 3x higher than RSV in that same 4-month period. There continues to be a clear need to protect against severe COVID infections and our customers recognize that.

Given this need, we estimate the U.S. fall 2023 COVID market volume to be approximately 100 million doses. We base this assumption after looking at 2022 vaccination rates and including potential recommendation for two-dose booster series for high risk individuals. Taken together, the doses administered represent roughly 30% of the U.S. population. A few factors that can impact this volume include viral evolution, regulatory recommendations as well as vaccine understanding and uptake by consumers. Moderna’s commercial organization is prepared for the transition to a commercial market in the U.S. Let me now take you through how we have been preparing to go to market. First and foremost, we are committed to access, which I will explain in greater detail in just a moment.

To ensure coverage of our vaccine, we are engaged in discussions with private customers as well as public entities such as the VA, CDC and the Department of Defense. We are increasing awareness and educating consumers as well as healthcare providers about the benefits of booster vaccinations in alignment with public health agencies such as CDC and ACIP. We are reaching healthcare providers and consumers through innovative digital outreach programs. We have built the infrastructure needed to fulfill customer orders and shipments and our commercial and medical organizations have been scaling to execute on this plan and we are ready for the transition to a commercial market in the United States. Very importantly, as we enter the commercial phase of the endemic COVID market, we want to emphasize our commitment to vaccines access for everyone in the United States regardless of their ability to pay.

For all insured individuals in the United States, consistent with preventative health services requirements, current reimbursement rules will be sustained. As an ACIP-recommended vaccine, Moderna’s COVID vaccine will continue to be available for zero out-of-pocket costs for individuals with insurance. And we are proud to say that for uninsured or underinsured people in the United States, Moderna will be launching a patient assistance program that will provide COVID-19 vaccines at no cost. Let me now summarize our COVID vaccine outlook. In 2023, we expect COVID sales of approximately $5 billion. In addition, we are expecting sales from U.S. commercial market orders, EU, Japan and other countries. We will provide visibility into these sales after we complete ongoing discussions with governments and with customers.

We can recognize COVID continues to be a burden to healthcare systems and this continues to be an important point as we discuss the value of booster vaccinations with our customers. In the U.S., we expect commercial market volumes to be approximately 100 million doses in 2023 and Moderna’s commercial organization is prepared for the transition to a commercial endemic market. Last but not least, we are committed to patient access in the United States. I now want to turn to another launch in the respiratory vaccine space that the commercial team is preparing for, our RSV vaccine in 2024. As you heard from both Stephane and Stephen earlier, we are very pleased by our Phase 3 RSV vaccine results. Stephen’s organization will be filing for the approval soon and we expect we maybe approved in late 2023 or early 2024.

With the potential approval fast approaching, I am very excited for the RSV vaccine launch and I want to provide additional color into the launch plans. The RSV launch will leverage the existing commercial infrastructure that is already in place for COVID and we will continue to invest to support it ensuring strong execution. Both COVID and RSV markets overlap considerably as we look at our target customers as well as potential target patients and audiences and we will leverage this overlap between the two markets. We will ensure awareness of RSV disease and the associated economic burden of RSV in older adults across key stakeholders such as healthcare providers and payers. Upon approval of our RSV vaccine, we will educate consumers on key attributes of our vaccine.

These planned activities will be initiated in 2023 and in full force upon approval. We have the added benefit of an in-place commercial infrastructure built for COVID. Many of these resources can be leveraged for flu as well into the future. I look forward to keeping you updated on our progress throughout this year. And with that, I will turn it over to Jamey.

Jamey Mock: Thanks, Arpa and hello everyone. This morning, I will cover our 2022 financial performance and provide a framework for our 2023 financial outlook. Moving to our fourth quarter results, starting on Slide 29, total product sales decreased by 30% year-over-year to $4.9 billion. The decrease in 2022 was mainly driven by lower sales volume compared to overall higher demand in the prior year. Cost of sales was 39% of product sales compared to 14% of product sales in 2021. The key driver of the increase in cost of sales as a percent of product sales was a catch-up royalty payment to the National Institute of Health, or NIH, of $400 million, representing 8% of product sales in the fourth quarter. In December 2022, we entered into a non-exclusive patent license agreement with the National Institute of Allergy and Infectious Diseases and institute or center of the NIH to license certain patent rights concerning stabilizing prefusion coronavirus spike proteins and the resulting stabilized proteins for using COVID-19 vaccine products or 2P technology.

Pursuant to the agreement, we have agreed to pay low single-digit royalties on future net sales of our COVID-19 vaccines. Our cost of sales also includes a charge of $297 million for inventory write-downs related to excess and obsolete COVID-19 products and expense for unutilized manufacturing capacity, and CMO wind-down costs and related charges of $376 million, and a loss on firm purchase commitments and related cancellation fees of $281 million. These charges other than royalties are driven by costs associated with surplus production capacity, overall lower demand and a shift to our most recent Omicron BA.4/5 targeting COVID-19 bivalent booster. Research and development expenses were $1.2 billion, which increased by 87% versus prior year.

The increase in R&D spend continues to be driven by our clinical trial expenses, particularly with our Phase 3 studies for RSV, seasonal flu and CMV. The increase in R&D was also driven by the acquisition of a Priority Review Voucher and an increase in personnel-related costs due to increased headcount. Selling, general and administrative expenses were $375 million, also reflecting an increase of 87% year-over-year. The growth in spending was primarily driven by continued investments in personnel and outside services in support of our marketed products and company build-out. The effective tax rate was 11% compared to 10% last year. After-tax net income decreased by 70% to $1.5 billion. Diluted earnings per share in Q4 decreased by 68% to $3.61.

Now turning to our full year 2022 financial results on Slide 30. Total product sales for the full year 2022 were $18.4 billion, an increase of 4% year-over-year. The growth was mainly attributable to customer mix and a higher average selling price in 2022 in certain markets. Cost of sales was 29% of product sales compared to 15% of product sales last year. The increase was driven by higher write-downs for excess and obsolete inventory related to our COVID-19 vaccines, unutilized manufacturing capacity and losses related to future purchase commitments for raw materials. The key drivers for these charges are similar to the drivers in Q4. Costs associated with surplus production capacity, overall lower demand for the year, in particular from low-income countries, and rapid product advance shift from our original vaccine to Omicron targeting COVID-19 bivalent boosters.

The previously-mentioned catch-up royalty payment NIH of $400 million is also a driver of the increase year-over-year. The effective tax rate was 13% compared to 8% last year. As a reminder, we had a net operating loss carry-forward of $2.3 billion at the end of 2020, which resulted in a non-recurring benefit to the reported tax rate in 2021. After-tax net income of $8.4 billion decreased 31% versus prior year. The decrease of net income was primarily due to higher cost of sales, higher other operating expenses and a higher effective tax rate. Diluted EPS decreased 29% to $20.12. Now turning to cash and cash deposits on Slide 31. We ended 2022 with cash and investments of $18.2 billion, compared to $17 billion at the end of the third quarter.

The increase was driven by our commercial activity. Cash deposits for future product supply reduced from $3.8 billion at the end of the third quarter to $2.6 billion by the end of the year. Now turning to Slide 32. I wanted to give an update on the progress we have made on our capital allocation priorities. Our top investment priority has been and will continue to be reinvesting in our base business across multiple areas. Research and development spending increased 65% year-over-year from $2 billion in 2021 to $3.3 billion in 2022, and we are projecting an additional increase to approximately $4.5 billion in 2023. The clinical data from our PCV, RSV and flu trials were encouraging and further validates the potential of our mRNA technology. We are also investing in our digital capabilities, the commercial build-out of the organization as well as expanding our manufacturing footprint.

We plan to significantly accelerate our capital expenditures in 2023 as we expand both our international and U.S. manufacturing footprint. Our second investment priority is to see attractive external investments and collaboration opportunities that will enable and complement our platform. We’ve recently announced several new transactions, and I’m happy to report that we have successfully closed our acquisition of our OriCiro Genomics in the first quarter of 2023. OriCiro is a great example of the companies we are valuating to enable our mRNA platform. It will create substantial value from both the speed and cost viewpoint and impact our pre-clinical, clinical and commercial pipeline for years to come. Our collaboration with LifeEdit, which we announced yesterday, is another example for an attractive external investment opportunity.

We believe the combination of Moderna’s mRNA platform with LifeEdit proprietary gene editing technologies, including base editing capabilities, has the opportunity to advance potentially life transformative or curative therapies for some of the most challenging genetic diseases. We are in multiple active discussions regarding additional external collaboration opportunities, and we will be disciplined in our approach. After evaluating internal and external investment opportunities, we then assess additional uses of cash. In 2022, we repurchased 23 million shares for $3.3 billion at an average price of $143 per share. and we have $2.8 billion of share repurchase authorization remaining. Now, let’s turn to our 2023 financial framework on Slide 33.

As Arpa mentioned earlier, we currently have COVID vaccine sales of $5 billion contracted for delivery in 2023. Also, we are actively working on preparing for the private market and government contracts in the U.S. and additional contracts for Europe, Japan and other key markets. To help you with your modeling purposes, we expect first half €˜23 sales to be approximately $2 billion. Our total cost of sales includes the cost of goods manufactured, third-party royalties, as well as logistics and warehousing costs. We expect full year 2023 reported cost of sales to be 35% to 40% of sales. This includes royalties in approximately 5% of sales, which are payable to UPenn and CellScript for modified chemistry licenses, and to NIAID and NIH for the 2P license that I mentioned earlier.

The increase in cost of sales as a percent of product sales compared to 2022 is primarily driven by presentation mix change as we move from a pandemic to endemic setting, with single-dose application significantly increasing in volume. Longer term, as the endemic market normalizes and we add additional respiratory and other products, we expect our cost of sales as a percent of sales will significantly decrease rates we’re experiencing in 2023. For R&D and SG&A, we expect full year expenses to be approximately $6 billion, with approximately $4.5 billion in R&D. The increase is driven by our maturing development portfolio and the global scale up of our company. We expect a negligible provision for income tax in 2023. And finally, we expect capital expenditures of approximately $1 billion.

The increase is primarily due to investments in expanding our manufacturing footprint. This concludes my remarks concerning our financial performance, and I will turn the call back over to Stephane.

Stephane Bancel: Thank you, Jamey, Arpa and Stephen. Let me now share some thoughts about where we’re heading. I’m really excited to see our mRNA platform and the investments we have made in science over the last 11 years leading to such a promising pipeline. We anticipate a number of important developments. Let me start with our first franchise, respiratory vaccines. In COVID boosters, we are working for the switch to U.S. commercial market, and we anticipate being able to quickly meet the full 2023 market needs for updated vaccines after VRBPAC and the FDA make this transaction in the spring of 2023. We plan to submit RSV vaccine for regulatory approval in the first half of 2023, and as you heard from Arpa, we will be ready to launch the RSV vaccine in late €˜23 or early €˜24.

In flu vaccine, for Northern Hemisphere, mRNA-1010 Phase 3 trial, the Data and Safety Monitoring Board is expected to complete its interim efficacy analysis in the first quarter of 2023 of second franchise latent virus vaccine. It’s progressing very well with a broad spectrum of programs. In our large CMV Phase 3 study, we look to complete the enrollment. For EBV, HIV and VZV programs, our next milestone will be Phase 1 data. Turning to Slide 37, let me review the milestone for mRNA therapeutics programs. For personalized cancer treatment, we expect to start our Phase 3 study in partnership with Merck in adjuvant melanoma, and we expect to rapidly expand to additional tumor types, including non-small cell lung cancer. Full Phase 2 data will be presented at an upcoming oncology meeting and published in a top-quality medical journel.

In PA, we plan to select those and begin the expansion arm of our Phase 1/2 study. MMA, we will have Phase 1/2 data. The next milestone for heart failure drug by Relaxin will be Phase 1 data in patients. And in Inhaled therapeutics, our partner Vertex expects to complete its single ascending dose study and initiate a multiple ascending dose study. To continue to build the best version of Moderna, we have established seven priorities for 2023. Priority number one, execute the operational and sales plan for COVID booster for fall of €˜23. Priority number two, build an unrivaled seasonal respiratory vaccine franchise. Priority number three, execute a bold campaign of cancer vaccine studies. Priority number four, advance rare metabolic disease programs.

Priority number five, drive rapid advancement and growth of our latent vaccine portfolio. Priority number six, deliver the next-generation pipeline and platform. As we said before, this is just the beginning. And Priority number seven, build a culture of perpetual learning and strengthen our processes and digital system as we want to scale the company to another level. On Slide 39, some key dates for 2023 Moderna Investor Days. April 11 will be our Annual Vaccines Day. September 13 will be Annual R&D Day, where we will present development pipeline key updates. And December 7 will be our second ESG Day. Now that we have delivered on the promise of mRNA science with our first product launch, our mission has evolved. Our mission is to deliver the greatest possible impact to people for mRNA medicine.

We are passionate about our ability to have a profound impact on humanity. We believe we have a technology to eliminate or greatly reduce human suffering caused by respiratory viruses, latent viruses, many cancers, regenerative diseases and a growing list of other diseases. We believe we can have an impact on disease treatment, with our therapeutic first and then with our gene editing programs. This is just the beginning. With that, the team and I are free to now take your questions. Operator?

See also 15 Best Oil Stocks to Buy and 13 Most Profitable Food Stocks.

Q&A Session

Operator: First question comes from Salveen Richter with Goldman Sachs. Your line is open.

Salveen Richter: Good morning, thank you for taking my questions. Could you speak to the regulatory strategy for flu, given the miss on the B strains for immunogenicity? And if you are confident into the interim efficacy analysis, given the abominating prevalence of ?

Stephen Hoge: I’ll take that. Thanks, Salveen for the question. Look, I think the honest answer is we’re still having incomplete information to provide guidance on the regulatory strategy. At this point, we are looking to the efficacy results from the P302 study that I described, which will guide us on that filing strategy. It’s important to note that efficacy, ultimate demonstration of non-inferior efficacy against an approved vaccine was always going to be required for full approval, and that the only thing that you could do with immunogenicity would be an accelerated approval path with an obligation to subsequently demonstrate efficacy. And so right now, we are actually very encouraged that the data that we’ve seen from our immunogenicity and safety study, which is running the Southern Hemisphere, P301, shows superiority on three out of four endpoints for the influenza A strains, which drive the overwhelming majority of disease, and the population of interest here are older adults, and account for over 99% of the cases in our efficacy study.

And so that first interim efficacy analysis that we’re conducting now in P302 will evolve over 200 cases and 99% of them are influenza A, and it will be our first chance to really see the performance of the vaccine in terms of prevention of influenza-like illness from flu A. That is the first interim analysis. And so it’s quite possible, as you would expect in any efficacy study, and we’ve all got some experience now with these respiratory efficacy studies, that we may end up €“ need to go to a second subsequent interim analysis and accrue even more cases to demonstrate either non-inferiority or superiority in that study. And so what we will do is we will wait for the results from the DSMB, the independent DSMB, and gauge from that. Based on those results, obviously, if we do see efficacy, that is the gold standard for proceeding with regulatory filing and full approval.

If we do not yet meet that threshold, then we will be looking forward to subsequent interim analyses in that study.

Salveen Richter: Great. Thank you.

Operator: Our next question comes from Gena Wang with Barclays. Your line is open.

Gena Wang: Thank you. Just quickly follow Salveen’s question. Do you need to show superiority in order to receive approval regarding the efficacy study? And then quickly on the revenue. Did I hear correctly the existing contract of $5 billion mainly will be in the second half €˜23? If that’s the case, is it fair to say that total COVID revenue in 2023 should be around $7 billion? And then regarding the $2 billion in the first half €˜23, how much will be from the U.S. market, i.e., out of estimated 100 million doses in the U.S., what could be your market share?

Stephen Hoge: I’ll take the first question. Thank you, Gena for that. So first on superiority. You do not need to demonstrate superiority to get a flu vaccine approved. That’s well precedented. Non-inferior efficacy is the threshold. Our goal, though, over time is absolutely to develop a superior influenza vaccine. And so if we don’t see it with the first-generation product, which is mRNA-1010, I would note that we have four other programs €“ flu programs in development, different stages of clinical trials, that are looking to do even better than perhaps flu mRNA-1010. And our goal over time would be to demonstrate that we have a superior influenza vaccine. But it is not actually required for approval. Non-inferiority should suffice. I’ll turn it over to Arpa, I think, for the other questions?