Moderna, Inc. Price & Performance (MRNA)

Thank you, Kevin. Good morning, everyone, and thank you for joining today's call to discuss Moderna's fourth quarter and full year 2024 financial results and business updates. You can access the press release issued this morning as well as the slides that we'll be reviewing by going to the Investors section On today's call are Stephane Bancel, Chief Executive Officer Jamie Mock, Chief Financial Officer and Stephen Hog, President. Before we begin, please note that this conference call will include forward looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please see Slide two of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward looking statements. I will now turn the call over to Stephane.

Thank you, Lavina. Good morning or good afternoon, everyone. Thank you for joining us. I will start with a review of 2024 Jamie will present our financial results and outlook Stephen will review our clinical programs, we then come back share key priorities for 2025. Before we take your questions. In 2024, recorded revenue of $3,200,000,000 The team has worked hard to generate cost savings of $2,600,000,000 or 27% down from 2023. We reported a loss of $3,600,000,000 We While we had anticipated to end the year with $9,000,000,000 in cash, thanks to the team's work on OpEx CapEx and also working capital ended the year with $9,500,000 of cash and investments as yet. In September 2024, we are now focused on 10 high value programs which we expect potential approvals over the next three years. Turning to sales growth. Diversification These programs include the respiratory vaccine, next gen COVID, combination flu plus COVID, [indiscernible] seasonal flu.

In late September, CMV and coronavirus in rare disease PA and MMA, [indiscernible] Addition to driving sales growth, the prioritization of these programs will allow us to reduce our R and D expenses in this time frame. From a pipeline standpoint, it was a year of strong progress. In 2024, became a multiproduct company with the approval of MOSIA. We now have two commercial products on the market. [indiscernible] And we filed for FDA approval on Xtlan COVID-nineteen combination of robust COVID, and the R and D vaccine for ARIKAYCE-eighteen glucoma. And our seasonal flu vaccine is currently in a Phase three efficacy trial. Also reported additional progress across our programs. [indiscernible] [indiscernible] EBITDA and DGD. In oncology, presented data at major medical meetings in 2024. For our IND program in June, we reported positive full year data in adjuvant melanoma for the Phase two trial for checkpoint program vaccine, amounted to 4,359 we presented positive Phase one data in September. In rare diseases, we showed positive early safety and clinical data from PNM.

Thanks, Stefan, and hello, everyone. Today, I'll walk through our financial results for the fourth quarter and full year 2024. I'll also outline our 2025 financial framework as we continue to optimize our operations and position the company for long term success. Let's begin by reviewing our commercial performance on Slide eight. The fourth quarter of twenty twenty four, net product sales were $900,000,000 with $200,000,000 in The United States, and $700,000,000 outside The United States, For the full year, net product sales were $3,100,000,000 at the lower end of our revised guidance.

U. S. Sales were $1,700,000,000 for the year, benefiting from a $200,000,000 favorable adjustment related to a prior period return reserve reversal. Excluding this adjustment, sales volume saw a decline compared to last year.

Primarily due to lower vaccination rates, lower market share and increased competition.

However, we observed signs of stabilization and believe the COVID market will remain durable over time. Outside The U. S, product sales were $1,400,000,000 aligning with the midpoint of our guidance.

This includes approximately $400,000,000 from advanced purchase agreements that will not recur in 2025. The vast majority of our sales were from SpikeVax. While we launched our second product, EMREFVIA, in the third quarter, sales were only $25,000,000 for the full year. While early RFV sales were limited, we see long term opportunity to expand our presence in this market both in The U. S. And internationally. Moving on to Slide nine, I will now walk through our financial results for the fourth quarter Total revenue for the fourth quarter was $966,000,000 down 66% from the same period last year.

As expected, sales were impacted by the earlier launch of our updated COVID vaccine in The U. S. With FDA approval granted three weeks earlier than the prior year. This allowed us to meet demand sooner shifting a portion of sales into the third quarter. International sales were also lower year over year reflecting the ongoing phase out of advanced purchase agreements.

Cost of sales for the quarter was $739,000,000 including $45,000,000 in third party royalties dollars 193,000,000 in inventory write downs, and a non cash charge of $238,000,000 from the termination of a contract manufacturing agreement. The contract termination is part of our continued effort to optimize our manufacturing footprint following the strategic resizing initiative launched in 2023 to align with the transition to a seasonal endemic market. While cost of sales declined by $190,000,000 compared to the prior year, lower product sales volume drove cost of sales to 79% of product sales. Excluding the resizing charge, this would have been 53%.

R and D expenses in Q4 were $1,100,000,000 reflecting a 20% year over year decline. The decrease was primarily driven by lower clinical development and manufacturing costs, across our COVID RSV, flu and combination vaccine programs.

This was partially offset by increased investments in our neurovirus and INT programs.

Additionally, last year's R and D expenses included $120,000,000 upfront payment related to our collaboration with the Maddox, which did not recur this year, [indiscernible] SG and A expenses for the fourth quarter were $351,000,000 down 25% year over year.

The decrease was primarily driven by reductions in purchase services external consultants Moderna, as we continue to focus on cost management and operational efficiencies. We recognized an income tax benefit of $4,000,000 in the fourth quarter Similar to the prior year, the benefit was not material due to the global valuation allowance maintained against most of our deferred tax assets. Net loss for the quarter was $1,100,000,000 compared to net income of $217,000,000 in Q4 twenty twenty three. [indiscernible] Loss per share was $2.91 compared to earnings per share of $0.55 in the prior period.

We ended the quarter with cash, cash equivalents, and investments totaling $9,500,000,000 up from $9,200,000,000 at the end of the third quarter. The increase was primarily due to accounts receivable collections. [indiscernible] Now let's turn to our full year 2024 financial results on Slide 10. Total revenue for the year was $3,200,000,000 a 53% decline from 2023. Primarily driven by lower product sales, which I discussed on the prior page. Other revenue contributed $127,000,000 for the year, reflecting grant revenue, collaboration, licensing and royalty revenue. [indiscernible] Cost of sales for the full year 2024 was $1,500,000,000 or 47% of net product sales. Excluding the $200,000,000 non cash resizing charge, would have been 39% and below our previous guidance of 40% to 45%. Represents a $3,200,000,000 decrease from 2023, due to lower manufacturing resizing charges, as well as lower inventory write downs and reduced unutilized manufacturing capacity costs all of which reflect improved efficiency. [indiscernible] R and D expenses for the year were $4,500,000,000 down 6% from 2023. The decrease was largely due to lower clinical trial and manufacturing costs, as well as fewer upfront payments for collaboration agreements. We did however purchase two priority review vouchers during the year which offset some of those savings.

For the full year, SG and A expenses totaled $1,200,000,000 a 24% decrease compared to 2023. [indiscernible] The decrease reflects disciplined cost management across the organizations, We have continued to build capabilities and bring more functions in house allowing us to reduce on external consultants while improving operational efficiency.

Additionally, these savings were supported by better leveraging digital technology, and artificial intelligence to streamline operations. We recorded an income tax benefit of $46,000,000 for the full year compared to an income tax expense of $772,000,000 The shift is mainly due to the global valuation allowance we established last year on most of our deferred tax assets which continues to impact our tax position.

Net loss for the year was $3,600,000,000 compared to $4,700,000,000 in 2023, with a loss per share of $9.28 compared to $12.33 in the prior period. Moving to Slide 11, we want to highlight the significant reduction operating expenses in 2024. [indiscernible] On a GAAP basis, cost declined $3,900,000,000 from $11,100,000,000 to $7,200,000,000 Excluding resizing charges of $1,600,000,000 and $200,000,000 for 2023 and 2024 respectively, we reduced operating expenses by $2,600,000,000 compared to 2023.

Driven by manufacturing footprint resizing, Pricing renegotiations, R and D prioritization, volume reductions and a greater use of digital tools to improve efficiency. Additionally, 2023 and 2024 operating expenses included non cash costs of $900,000,000 and $600,000,000 respectively. Related to stock based compensation and depreciation and amortization.

If we would exclude the manufacturing footprint resizing charges, stock based compensation and depreciation, our defined cash costs were $8,900,000,000 in 2023, and $6,300,000,000 in 2024. Representing a year over year decline of $2,600,000,000 To avoid double counting, please note that in 2023, there was approximately $300,000,000 of depreciation and amortization included in the $1,600,000,000 of resizing charges. [indiscernible] We are committed to drive additional cost efficiencies in 2025 and beyond by prioritizing investments to support the 10 product launches [indiscernible] 2025 GAAP expenses are projected at $6,400,000,000 in 2025 which includes $900,000,000 of non cash charges, from stock based compensation, depreciation amortization.

Excluding those items, we project a cash cost of $5,500,000,000 This represents an approximately $1,000,000,000 year over year reduction from our prior 2024 projection of $6,500,000,000 We are also planning for an additional $500,000,000 of expense reduction in 2026 as we continue to drive efficiencies across all areas of the business. Now let's turn to our financial framework. For 2025. We expect total revenue in 2025 to be in the range of $1,500,000,000 to $2,500,000,000 with first half sales of approximately $200,000,000 reflecting the seasonality of our respiratory vaccine business. As discussed with investors in January, our wider guidance reflects the uncertainties in vaccination rates, the competitive market environment, besides the RSV market and timing of licensure of our FACT As a reminder, we filed three products to the FDA in 2024, and we are not including any new product revenue in our guidance range. Also, we expect the revenue and R and D expense from our recently announced pandemic influenza program to be relatively immaterial in 2025 and is embedded in our guidance.

Positive sales is projected to be approximately $1,200,000,000 reflecting continued improvements in manufacturing efficiency, and lower expected inventory write offs, offset by increased costs associated with the go live of our new manufacturing sites in Australia, Canada and The UK. R and D expenses are anticipated to be approximately $4,100,000,000 as we continue to invest in our late stage pipeline while maintaining financial discipline, SG and A expenses are expected to be approximately $1,100,000,000 reflecting a continued focus on efficiency while supporting our commercial execution. We expect taxes to be negligible in 2025, Capital expenditures are projected to be approximately $400,000,000 This increase from our prior guidance of $300,000,000 is primarily due to the timing of spend between 2024 and 2025. 2024 actual capital expenditures was approximately 150,000,000 below our prior guidance. Some of that reduction was attributable to prior expect to end 2025 with approximately $6,000,000,000 in cash and investments, In summary, 2024 with a year of financial discipline. And we are well positioned as we enter 2025.

We remain committed to managing costs optimizing our operations and investing in our future growth.

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

Thank you, Jamie, and good morning or good afternoon, everyone. Slide 15 shows the prioritized programs we highlighted at our R and D Day in September.

As Stephane mentioned earlier, we are focused on pursuing these 10 approvals over the next three years to drive growth. We've now filed for approval for three respiratory vaccines our next gen COVID vaccine our RSV vaccine for high risk adults ages 18 to 59. And our flu COVID combination vaccine Most of the other seven prioritized programs are in pivotal studies, and the remainder are expected to begin their pivotal studies in the near future.

Slide 16 highlights the most recent updates from our late stage As a reminder, in September, we presented positive asset We have since filed for approval in multiple [indiscernible] Also in September, we shared positive Phase three data for RSV vaccine in high risk adults ages 18 to 59.

This vaccine has also been filed for approval in multiple countries with a June '12, The United States, For our combination flu COVID vaccine, we previously shared positive Phase three immunogenicity and safety data And on the basis of that data, we filed for approval at the end of last year in The United States and other countries.

We've previously demonstrated efficacy for the flu for the COVID component of the vaccine. Demonstration of efficacy for the flu component may ultimately be required for approval. To that end, our standalone flu vaccine mRNA-ten ten is currently in a Phase three efficacy study that is accruing cases rapidly. Based on the current pace of case accrual, we are optimistic we will be able to conduct the first analysis of efficacy for our flu vaccine at the end of the current season. Now turning to our non respiratory portfolio. Starting with our latent and other virus vaccines. For our CMB vaccines, we announced last month that the Data and Safety Monitoring Board informed us that the early efficacy criteria was not met and recommended the study continue to its final analysis. We remain blinded to the study and continue to expect the results for the final analysis later this year. Our norovirus vaccine Phase III study is fully enrolled in the Northern Hemisphere.

And we are preparing to enroll participants for the upcoming Southern Hemisphere season. The trial is currently on FDA clinical hold in The U. S. Following a single case of Guillain Barre syndrome, which remains under investigation. Given that enrollment had already completed for this season, we do not currently expect any impact on timelines While we complete the investigation, we and update trial documents with this information. In oncology, we and our partner Merck have multiple late stage studies underway evaluating INT or mRNA-four thousand one hundred and fifty seven. In combination with KEYTRUDA.

The first of which adjuvant melanoma is part of our 10 prioritized program The Phase three for this is now fully enrolled. Two additional Phase three studies are underway in non small cell lung cancer cancer and there are two randomized Phase two trials ongoing in high risk and adjuvant renal cell carcinoma.

In rare diseases, propionic acidemia or PA is in its registrational study. And methylmalonic acidemia or MMA we have with MMA, we have agreed with FDA on our pivotal study design and expect to start that study in 2025. With that, I'll now hand it back to Justify. You, Stephen and Jamie. For 2025, have three priorities: Priority one is to rep sales of approved products. Priority two is to focus on our late stage pipeline where we believe we have up to 10 product approvals have the next three, yes. Which will drive sales growth and diversification. Productivity free is to deliver cost efficiency across the business. Me take you through each of these. Our first priority is to review the SpikeVax mRNA vaccines. Importantly, we entered 2025 with two approved products which gives us a better competitive positioning than when we entered 2024. [indiscernible] in the respiratory vaccine market. Addition, upcoming MRELBIA approvals outside The U. S. Should also add to sales 2025.

Priority two, we are focused on delivering up to 10 per year over the next few years which will bring with our sales growth. [indiscernible] these 10 expected products target the total addressable market of over $30,000,000,000 priority free deliver cost efficiency across the business. Demonstrated our commitment to cost savings by the $2,600,000,000 cost reduction we made in 2024. [indiscernible] We will continue to focus on improving efficiency by reducing costs across the entire company. Cost manufacturing, and across SG and A. In 2025, but also in 2026. Efficiency program, we're reducing cash cost to an estimated $5,500,000,000 in 2025 and $5,000,000,000 in 2026. This brings our total cash cost reduction to over $1,000,000,000 over these two years from a $6,200,000,000 in 2024. We will continue to address our cost structure cash cost basis, no later than 2028. In November, if needed, we will reduce our construction further than the $5,000,000 cash cost level if our sales objective For Latin American products, we expect important milestones.

We filed three deals for C and E will follow to having the final results of our Phase three study in 2025.

Fluentorovirus vaccines are in Phase three studies and the timing of data we have will be subject to clear the growth. We will also be subject to weather the crew. For PA, we're already joining data from our registration study and we expect to start registration study for MAA this year. Will continue to focus on delivering the greatest possible impact to people for MRN in Brazil. Our controlling of products and pipeline are progressing well. [indiscernible] [indiscernible] our pivotal study is ongoing. Our money platform is working. Demonstrated progress in our cost reduction program We have proven that we have a financial discipline to achieve our goals and fulfill our mission. With this operator, we'll be happy to take questions.

Our first question comes from Ellie Merl with UBS. Your line is open.

Hey, guys. Thank you for taking the question. Can you help us understand the breakdown of the R and D spend across your program? So if you needed to or wanted to reduce R and D spend further, how much flexibility is there on the expense structure there for say further cuts in the 2026 timeframe? And then just a second norovirus. I Can you give any more detail around sort of this why one case of GBS prompted the clinical hold And yes, any more color surrounding the situation there would be helpful. Thanks.

Yes. Thanks, Ali, for the questions. Maybe I'll address the first one on R and D. So we still think there's a lot of room to be reduced and a lot of flexibility. So as a reminder, we're guiding $4,100,000,000 for 2025 and in R and D Day, we said we would take it down by $1,100,000,000 from the $4,800,000,000 level by 2027. So that's suggests a number of about $3,600,000,000 $3,700,000,000 To answer your question on what we're spending on, that's still back primarily over 50% of our trial spend and therefore overhead is related to respiratory trials, which as you know we expect to roll off over this year and the following year.

And then we only have a Phase three trial that we've started are in latent disease and oncology for norovirus and CMV and INT and we expect those to be reduced over the coming years as well. So we expect that there will be some flexibility beyond the $3,600,000,000 that we've already indicated. But right now, we're still monitoring the sales line, but that is an area that we could continue to reduce if need be.

And thank you for the second question. I'll take it. So just a little bit of context. As you alluded to, GBS does happen obviously in the background population It's usually seen in older adults about one to two per hundred thousand participants per year or people per year.

And given we've enrolled well over 250,000 participants studies over the last couple of years, it wouldn't be surprising to see cases in our clinical trial as you suggested. And although that hasn't been associated as a risk factor with our approved vaccines, this is something that that does happen. As it relates to this case, when we identified it, we proactively decided to pause our activities and update our study documents because we prioritize patient safety and obviously transparency, first and foremost, and we wanted to make sure that all that information was shared as soon as the case emerged. We submitted those for review with regulators globally and the FDA has placed us on a clinical hold while they review that information in those documents. Everybody prior to the emergence of this case in the current season study. We really don't expect there to be any impact on the conduct of the study or its timelines for readout on efficacy, which will ultimately be case driven. So from our side, this is just about being prudent and transparent and making sure that we're prioritizing patient safety.

Understood. Thank you.

Our next question comes from Gena Wang with Barclays.

Your line is open. Thank you. Maybe I just follow-up on the norovirus.

What would it take for the FDA to remove the clinical hold? What kind of outcome that would deem to be okay? And then another question regarding the CMV.

Now we should see more events accrued. Will still happen in the first half twenty twenty five? Should we see the final readout? [indiscernible] Jean, it broke for just a second. Could you repeat the the CMV portion of the question?

Sure. CMV, since now we seen additional months of events accruing should we still be able to see the final redial in the first half twenty twenty five? [indiscernible] Thank you. So I think so let me deal with that. First, So yes, we continue to accrue cases in the CMV trial. As I said, we remain blinded to the the interim analysis. We still do expect that result in 2025. I don't know that we've got into the specific timing, but we still do expect the result in 2025. As it relates to norovirus clinical hold, obviously, I think the FDA needs time to review the materials we submitted. They may come back with some questions. If they do, we'll answer those. But as has been suggested even in the question, a case of GBS is not necessarily unexpected. And because we've updated the documents, we really do expect there to be minimal impact on trial conduct at this point. But it would be ultimately up to the agency what they need to see before we move forward with further enrollment in our site.

Thank you.

The next question comes from Michael Yee with Jefferies. Your line is open.

Hi, thanks. Good morning. We had two timing questions. For you guys. First on the INT cancer vaccine, which of course is a really exciting product. I think previously, if you've done some math on the Phase two, it's certainly possible on the event rates that were seen in Phase two, that the data could come by end of year or first half of twenty twenty six and the company has not totally dissuaded us or others from that type of timing. Do you generally agree with that timing? And can you shed some light on how to think about the powering for the INT Cancer Vacc cancer the norovirus, I think you mentioned that you're enrolling the Southern Hemisphere, but completed the Northern. Do you need both to hit the primary or to hit the event rate and just help us understand the timing of that despite the fact that it's on hold [indiscernible] Thanks for the question. So first on INT, there are some differences between the study population between the Phase two and the Phase three. And so We will want to be guided by the actual event accrual, okay.

So accrual rate, the relaunch rate, in the Phase III study before we feel confident that we could offer a timing on that. And so as we have started to recruit cases, the study, as you know, is fully enrolled. So there are one of the events that start to happen. We'll have a better sense of that Certainly, 2026 seems plausible but whether or not it could be on the early side of that or the late side of that, we just don't know. This point it is event driven. And so more as we have information in the future. On the question of Norvirus, so we have we fully enrolled and fully dosed the Northern Hemisphere which is the majority of the study. But given epidemiology, we also wanted to enroll some participants in Southern Hemisphere geographies. At the end of the day, we will also be case driven. You ultimately need cases of norovirus towards that efficacy endpoint. Because the majority is the sizable majority of the studies is completely enrolled now. What this Northern Hemisphere is completely enrolled, which is the majority of the participants we intended. It's possible that we won't need Southern Hemisphere participants, but we do intend to enroll Southern Hemisphere because we want broader epidemiology towards that final endpoint.

So again, we don't know when that will happen. We do currently hope that we're sufficiently powered in this season to CF But if more participants are needed, then of course, we will enroll them to accrue more cases towards that efficacy endpoint.

Got it. Thank you guys.

Our next question comes from Salveen Richter with Goldman Sachs. Your line is open.

Good morning. Thanks for taking my questions.

Could you help us understand what the clinical bar is for the neurovirus program? And then on the IND portfolio, will we get any data or just enrollment updates for the programs beyond melanoma?

Thank you.

So on the clinical bar for Norvirus, obviously, there are other vaccines out there for for gastrointestinal infections, rotovirus and others, where we will want to show a meaningful decrease in the rate of moderate to severe Those are really where the burden of disease happens, particularly in higher risk populations like older adults or the immunocompromised. We'll look at a pretty broad range of endpoints as secondary and exploratory endpoints as well, things like hospitalization, utilization of healthcare services. We have not disclosed our target profile for that yet or the powering a assumptions we have in those interim analysis. And so I won't do that here, but we will perhaps in the future provide update on that. But we will be looking for a meaningful reduction in the rate of moderate to severe acute gastricenteritis. As for INT, obviously, we're we're all looking forward to the melanoma, adjuvant melanoma Phase three readout. As you know and as I mentioned, there are additional Phase 3s as well as two randomized Phase 2s including bladder cancer and renal cell carcinoma which depending on the rate of approval of events, could have readouts that we would be updating on as well in the coming years.

Thank you. Our next question comes from Terrence Flynn with Morgan Stanley. Your line is open. Hi. Thanks for taking the question. Maybe a two part for me. Just wondering if you can confirm if you still have not seen any cases of GBS with your RSV vaccine. And then I know you've filed for approval for the COVID flu combo [indiscernible] Can you tell us anything more there about what the bar is? Is it only on the flu side or do you need vaccine efficacy for both COVID as well? And kind of what level of protection you need to see? Thank you.

Thanks for those questions. So So first, I can confirm that GBS has not yet or has not been identified as a risk factor for RSV vaccine.

Or our COVID vaccine spikebacks to date. And so obviously, we'll continue to track that closely, but that's encouraging. On the combo study, so we have demonstrated efficacy for the COVID component. As may remember, mRNA-twelve eighty three, had a successful efficacy study. In that we announced last year. And that is the COVID component of the combination vaccine. And so to satisfy that requirement, As for the flu vaccine, we have had multiple Phase three readouts in our flu vaccines as well as for the combo vaccine demonstrating non inferior or superior immunogenicity and good good safety profile for those, I think, but we have not yet demonstrated efficacy for the flu component of that vaccine. That trial, as I mentioned, is actually ongoing right now. And given that it is a [indiscernible] flu season in the Northern Hemisphere as many folks know, and given the case accrual rate we see there, we do expect that we'll we're actually quite optimistic we'll be able to conduct the first interim analysis of efficacy at the end of this current season. And so that would then be the demonstration of efficacy for the flu component. Of the combo vector.

Thank you. Our next question comes from Tyler Van Buren with TD Cowen. Your line is open.

Hey guys, thanks for the update and for taking the question. Regarding CMV, just to confirm, even though the criteria for early was not met at the interim, is it still possible that higher vaccine efficacy threshold from the first interim could still be reached with the final analysis due to a wide confidence interval with fewer patients at the time of DSMB review or do you think that's less likely?

Thanks for the question. So what we if you look at the power that we had at that first interim analysis, it actually was intended as an early look, but not sufficiently powered that you would have high compound if it was in between efficacy. And for that, reason, it is still very much possible that at the final analysis, [indiscernible] FC that is favorable from our perspective meets or exceeds our expectation The most important thing to say though is that we remain completely blind to this. All we know is that the confidence interval did not exclude the lower bound target. And given the powering of the study, that for that interim analysis, that's not necessarily surprising stopping for early efficacy, early criteria and would have been an upside scenario in our view. So we remain blinded We will accrue the full number of cases We continue doing that study and then we'll to that final analysis, which is actually the fully powered analysis for assessing against our our targeted product profile.

Thank you. Our next question comes from RBC Capital. Your line is open.

Great. Thanks so much for taking my question.

Maybe Stephane, big picture, we all know that you have worked very closely with the Trump administration during the pandemic.

But have you talked to either the President, RFP or any of their representatives this time around?

If so, what has been the message that you have been hearing from them I think any color there would be much appreciated. Then maybe second, Stephen, on norovirus Can you just talk about the timing of the GBS case?

Is that something that occurs soon after the individual received the back trying to understand correlation versus causation here. So again, any color, much appreciated. Thanks so much.

Thank you for the question. So as you know, we worked productively. We've the Trump administration in the President Trump's first mandate and we look forward working with a new team as they get confirmed by the Senate and the defendant bills Vaccines are a very important piece of keeping people healthy. And we look forward to having those discussions Yes. And as on the neurovirus case, as you probably will know, we've enrolled about 20,000 relatively rapid enrollment for the current norovirus season. For that reason, you can imagine that it's relatively proximal, which is why we're being cautious and communicating around it first and foremost with participants, investigators and regulators, just so they have that information. Now to the point of correlation versus causation, it's important to note that in this case, there's there are these extremely rare events that do happen It's very hard to finally determine causal relationship. And so other than reporting it, it happened around this time, and investigating it thoroughly and communicating about it. [indiscernible] may never have an interview on that. [indiscernible] confidentiality for that participant and more generally, I don't think I would offer any more information about it other than continue to investigate it and see if what the potential causes would be Got it.

Thanks so much.

Our next question comes from Cory Kasimov of Evercore ISI. Your line is open. Hi. This is Adi on for Cory.

I wanted to ask what possible changes have you seen in the past month that has caused the bump to expense guidance already. To expense guidance, Eddie? The increase in R and D and SG and A spend I think so I don't know if it's a big confusing. So we've been basically talking about two different sets of numbers, neither have changed [indiscernible] and one which includes stock based compensation and depreciation and amortization So maybe that's what you're referring to versus what we define as cash costs which excludes those two numbers, which have not changed. As a reminder, those numbers were close to $9,000,000,000 in 2023, We had $6,300,000,000 in 2024.

We're guiding to $5,500,000,000 in 2025 and $5,000,000,000 in 2026. So perhaps you're looking at the GAAP inclusion, but I we have not changed any estimates from our cost.

Got it.

And I had just one more follow-up. If you can provide any more color on the language of the The PA program, the PR at JPM and today's PR suggests potential decrease in MDE frequency. Wanted just some additional color on it.

Thank you for that. So on the as we had previously disclosed, from our ongoing clinical trial there, We have seen a significant substantial decrease in the rates of metabolic decompensation events in that propionic acidemia PA study. And we've we believe and ultimately have agreed with regulators that that is the endpoint that we will assess for the pivotal part of that study. We've moved forward into that pivotal phase. What we'll be looking at is the rates of Metabolicty Competitions or MDEs for participants prior to being on drug versus once they start treatment with that medicine. That rate and the reduction in it will ultimately be we believe, the pivotal endpoint that would support registration for the drug for PA.

And so as we move forward, with new participants, as well as some older participants who are already on the study, we'll be looking at that comparison on reduction in the rates of NDEs.

Thank you. Our next question comes from Courtney Breen with Bernstein. Your line is open.

Fantastic. Thank you so much for taking the call today taking the question today.

I wanted to kind of pivot a little bit to some of the cost as well and specifically the inventory write downs. I think they continue to be an issue for kind of seasonal vaccines. We to produce in advance and then see the season play out. I would love to understand a little bit more about what the future looks like in this space. You're going continue to be in a seasonal market kind of both with COVID, now with flu. And with RSV. And so as we think about kind of projecting and manufacturing appropriately to minimize those write downs, but maximize the opportunity. What does good look like? Number one, kind of what is the goal in terms of limited inventory write downs? And number two, kind of what is it the things that you're changing to kind of continue to improve your ability make to the right amount?

Yes. Thanks for the question, Courtney. It's a great one. So as you know, maybe just a step back, 2023, I forget what the numbers are, but we've reduced this dramatically already. But nonetheless, we did have $500,000,000 of inventory write downs in 2024 and about $100,000,000 of unutilized manufacturing capacity. And so at $600,000,000 on $3,000,000,000 of sales, that obviously not what good looks like yet. What I will say is much of this is related to our raw materials where we take a inventory reserve based on future demand. And if you look at our inventory levels now, Courtney, we are under $300,000,000 think $270,000,000 So the go forward should look much better as we project moving forward on the raw material side. On the excess capacity side, you're right. We still have a fair amount of either write offs of good product that we produce because we produce last year, for example, we assumed $4,000,000,000 in sales and we came in at $3,000,000,000 So we obviously overproduced. And we are still going to produce to the higher end. Of our guidance range of $1,500,000,000 to $2,500,000,000 which is why you see a cost of sales in the neighborhood of 50% But as we get better, what we're working on is matching what does that future demand look like and what is the supply that we should account for.

And as an example, as we've continued to adjust for that, that's the example of the termination of a contract manufacturing agreement that we had in the fourth quarter. So we continue to be proactive about what is that future demand what is the capacity we require and you should see that come down and certainly $600,000,000 on $3,000,000,000 is not what we expect. We want that to be less than 10%, let's say, over time, but I'm not saying that that will happen in the year 2025. But it will get better also because our inventory balance is down dramatically.

Thank you.

Our next question comes from Edward Chenoff with Piper Sandler. Your line is open.

Great. Thank you very much. Most of my questions have been answered.

But I think I saw some news maybe on the Vertex CF program. And I was wondering if you could just kind of give us an update on what's going on there with that rare disease program? Thanks.

Yes. So thank you for the question, Ted. So we continue with our part Vertex, who is conducting that clinical trial. So the sponsor study and have most information on it. But we continue to have a path we've completed single ascending dose portion of that trial and are now in the multiple ascending dose portion of that trial. That is patients receiving treatment regularly to ultimately measure whether or not we're having an effect on respiratory measures and hopefully overall addressing the burden CF in those patients that can't take the small molecule correctors.

We do expect our readout from that multiple ascending dose trial. I think Vertex previously guided that we expect that this year, and we will look for them to provide further updates on that timing. [indiscernible] Great. Thanks, Steven.

Our next question comes from Jessica Fye with JPMorgan. Your line is open.

Hey guys, good morning. Thanks for taking my my questions. I had a few follow ups for Steven just from prior questions. I was hoping clarify the response on. On neurovirus, how confident are you that the trial will not go on some equivalent of clinical hold in the Southern Hemisphere have other global regulators confirmed they do not need a pause to review the information or is there a chance of stoppage there?

For CMV, just following up on Gina's question, think in the past you had said the final CMV analysis could come near months after the interim, which heard about in January.

So should we still think of that as the first half of twenty twenty five? Or can you clarify the prior answer? And then on the October COVID flu filing, I think the press release states [indiscernible] may require vaccine efficacy data from the Phase three flu trial.

Why is that a point of uncertainty that the FDA may require it? Has not been clear with you in your pre submission meeting? And then lastly for Jamie, can you recap what variables in the COVID vaccine and RSV markets would land you at the low end or the high end of your 2025 guidance like price, vaccination rates, market share, stuff like that? Thank you. So lots there for me. So I'll go first and then kick you to Jamie.

So first on the Northern Hemisphere and this norovirus study, as we said, we will look to enroll a second season in the Southern Hemisphere At present, we do not expect any delays in doing that.

Given that we have enrolled over 20,000 Northern Hemisphere, If there were any delays, we're not sure that it would have an impact study timeline. But at this point, we're as confident as we can be.

The that there won't be any delays in the South Hemisphere. As really [indiscernible] On case accrual. The second half we have previously said that case accrual was moving relatively quickly. It continues to accrue steadily in the study. Ultimately, it's an event driven analysis, so we can't miss necessarily predict the timeline, but we previously indicated that we expected it perhaps mid-twenty twenty five. We're not changing that here We continue to believe that that's possible. And ultimately, again, it will depend upon the rate of CASIC rules, which we don't control. [indiscernible] for the flu COVID product, when When we submitted the the package as part of our initial exchange with regulators, We are identifying review questions that they have or issues And as we said in our press release, in some cases, the proximity of the flu efficacy [indiscernible] really does loom large on the overall review for the combination product. And we will be we do expect that that may be necessary in some case [indiscernible] As it relates to individual conversations with individual regulators, I'll say, we're working through their review questions in that submission and I won't otherwise comment on the specific back and forth.

And with that, I guess, I'll turn it over to you, Ken. Okay. Thanks. Thanks, Jeff. Yes. As a reminder, on the high end, the $2,500,000,000 if you exclude the unusuals we saw in 2024, we call that essentially flat. In my prepared remarks, The U. S. Came in at $1,700,000,000 It had a $200,000,000 return reversal adjustment from the prior year.

Would take that to about a $1,500,000,000 number?

And then outside The United States, we were at $1,400,000,000 and said that there was about $400,000,000 of advanced purchase agreements that demand level we do not anticipate repeating. So the high end is essentially flat, Jess, So you can anticipate both inside U. S. And outside U. S. Similar market share, vaccination rates. We do have a little bit of uptick in RC. In the high end, but it's all together rather minimal. General. On the low end, it basically assumes no increase in RSV. On in The U. S, you would have to expect it to go down substantially. So you'd have to expect it to go down 5% to 10% from a market share perspective. Vaccination range would have to go down again 7% to 10%.

Both of those things would have to happen to go down, let's say $500,000 And then really the biggest factor outside The United States, R and D the licensure timing of our plants in The U. K, Canada and Australia. So should those be licensed and registered on on time, we will be on the upper end. But if they are delayed, we've factored that into the lower end of our guidance.

Our next question comes from Simon Baker with Redburn and Lake. Your line is open.

Thank you for taking my question. There's also a clarifying respiratory trials being fifty percent. Was that fifty percent of your total trial spend or 50% of your R and D spend? And then just another question on the flu COVID combo following off from Jessica's question. I just interested to know what the mechanism is and the timing at which point the regulators could ask for that extra data. Is this something that could come at any time? If it happens sooner rather than later, do you think it would have an impact on the approval timeline? And is there any risks in The U. S. That the initial filing gets a complete response and then you have to re file with that COVID data. Any color on the machinations of that would be very handy?

Yes. Thanks, Simon. On the first one, I was referencing 50% of the trial expense.

Which is what we break out in our 10 ks. There are other line items that hit RMB in terms of the overhead that supports it, people, the sites etcetera, our manufacturing facilities, as well as research But the 50% that I was referencing is really trial related, but you could imagine many of those other costs are also related. Therefore, to the respiratory trials as well.

Yes. Thank you. And so for the clarifying question, again, we have filed in multiple geographies and I'd I won't comment on individual regulatory exchanges. But generally speaking, we as a part of the initial round of questions and feedback that we're receiving, there are instances where we think we will be dependent upon that asset efficacy data from the ten ten study, which we do expect in the coming months, the current season. To be available The timing of that readout and the impact on the review process for regulators is not something I can predict at this point.

But we're in active discussion with regulators about it. So Certainly, it is possible that if that is substantially delayed or if it is not a favorable efficacy readout that it could for sure delay or impact the time line of approval for the combination product.

If we are able to complete that submission, get that data to regulators and they're able to conduct that review, it's possible that we continue with that. Review without substantial delay. Ultimately, we don't know at this point because it will depend upon those submissions and discussions with regulators But we did want to flag that we do think based on some of the initial conversations that we may be dependent upon that data. Ultimately for approval with some in some geographies.

Our next question comes from Myles Winter with William Blair. Your line is open.

Hi, thanks for taking the question. Just one on potential ASIP recommendation review for RSV vaccines.

Do you expect that here in a bit in February or the June meeting?

And is there anything built into the top end of that $2,500,000,000 revenue guidance from ResVIA that would require a widening of that recommendation? That are currently stands Joe, I'll take the first question on timing. Are obviously working closely with public health officials on the widening. We've filed for approval for the 18 to fifty nine high risk population. At this point, we are not yet approved.

And so from a broader sort of engagement with ACIP perspective, we'll wait for approval before we we do that to brokhing. We do expect that the benefit risk is favorable for RSV dexamethas including MRSPFIA And so do look forward to expansion of the recommendation to cover high risk populations, both the 50 to 59, which previously we've discussed, but ultimately, hopefully, 18 plus high risk populations Jamie, I don't know if you'll take the Yes, sure. Yes. So Myles, as I mentioned in just question, we have a little bit of growth in RSD. But I also mentioned that we have nothing related to new product approvals in our guidance for 2025. So that doesn't include the next gen COVID vaccine or what Steven just talked about the expanded indication related to RSC or anything from a combination approval should it happen. That's right. Thanks.

Our next question comes from Tim Anderson with Bank of America. Your line is line is open. Thank you.

So if I could just go back to that very last point on your 2022 revenue guidance, you're not including any new products. Because that would be tiny expense for the combo product because of the reasons that you've outlined Why wouldn't the next gen COVID product be included in guidance at this point given that the PDUFA date is not very far away, May, well characterized paradigm having COVID vaccines out there. I'm just wondering if that that lack of inclusion guidance anticipates some uncertainty about approval given the new administration coming in and this common thread of kind of an anti COVID stance across lots of people from the Trump administration. And then second question on neurovirus, If you're fully enrolled, that just a forced disclosure of that adverse event to the clinical and patient community or is there some other reason why they would do this? Yes, Tim, thanks for the question. Maybe I'll take the first one. So I don't think there's much to read into here. I think we've learned our lesson coming into 2024 in terms of guiding with a product that has yet to be approved.

So moving forward, we have eliminated any products Of course, there could be upside. I think we approach our guidance understanding that there is variability and therefore we will not put the any revenue related to the next gen COVID or the other two products as well. And again, I don't think there's anything else to read into as a result of that.

Yes. So on the question of norovirus, so importantly, we have already proactively communicated around this to all the investigators and IRBs and regulators around the world.

So that communications happened. And actually, we've updated all the documents that would be necessary to sort of broadly identify this So the purpose for the clinical hold [indiscernible] I anticipate we're asking FDA that question. I mean, at this point, they're appropriately and we think prudently and conservatively reviewing the documents and making sure that all their questions are answered around this It does not impact from our And so we'll look forward to engaging with them answering those questions Removing that whole, but as we said, we will not then reinitiate any enrollment we now have 20,000 participants in the Northern Hemisphere, which is more than we feel like we need. And so we'll just answer those questions and move forward. But I really couldn't offer any other insight around it, but it certainly isn't around transparency communication because that will happen proactively. We did that before as we submitted all the information to them and others.

Thank you. Ladies and gentlemen, this does conclude the Q and A portion of today's conference. I'd like to turn the call back Stefan for any closing remarks.

Thank you very much, everybody, for joining us and for your good questions. Have a great day and we look forward to speaking to some of you in the next hours and in the next days. [indiscernible] Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.