Moderna, Inc. Price & Performance (MRNA)

Good morning, everyone, and thank you for joining us on today's call to discuss Moderna's first quarter twenty twenty five financial results and business updates. You can access the press release issued this morning as well as the slides that we will be reviewing by going to the section of our website. On today's call are Sivan Bansel, our Chief Executive Officer Stephen Hoag, our President and Jamie Mok, 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 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 implied in these forward looking statements. With that, I will now turn the call over to Stephan.

Thank you, Lavina. Good morning or good afternoon, everyone.

Thank you for joining us today. I will start with a review of our business in Q1, Jimmy will present our financial results, our outlook. Stephen will review our clinical programs and I will come back to key priorities and catalysts, before we take your questions. Let me start with a review of financials. Our Q1 revenues were $100,000,000 a loss of 1,000,000,000 These were in line with our expectations and reflect the highly seasonal nature of our respiratory vaccine business. We ended the quarter with $8,400,000,000 in cash and investments. As you are aware, we are focused on financial discipline, I'm pleased to announce that continued cost reduction efforts in the first quarter of twenty twenty five led to a 19% reduction of cost of sales, R and D, ASG and D combined compared to the first quarter of twenty twenty four. I would like to thank our team for their great work. During the quarter, we made solid progress against our three priorities. Priority number one, expanding markets for commercial products. Earlier this year, we awarded a Tether opportunity allowing us to compete for COVID vaccine business in Europe. Additionally, during the quarter, Emiratesvia received approvals in Australia, in Taiwan, and in The UK, and most recently, in Switzerland.

This is in addition to a proposal we received in 2024 in The US EU, and Canada. Our second priority as a single pipeline to drive sales growth, and diversification I'm excited to announce the expansion of our oncology portfolio with Checkpoint Medicine, which Steven will review later. For Phase III FRU program, we have exceeded the required number of case accruals run an interim vaccine efficacy analysis. We also presented encouraging data from other key programs, including RSV, CMV, and IND at recent medical conferences. We are pleased to share that IND will now be known by the I'm [indiscernible] of Itysmirin autogens. The distinction reflects the growing maturity of our product development program, marks an important milestone as we continue advancing towards potential regulatory approvals. And finally, on our third priority, executing with financial discipline. The first quarter of twenty twenty five marks the third consecutive quarter where we reduced combined R and D and SG and A expenses by double digit year over year. With that, let me turn to Jimmy. Thanks, Siobhan, 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.

Start with our first quarter financial results shown on slide seven. Net product sales were $86,000,000 driven primarily by COVID vaccine sales. The US 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 into routine seasonal vaccination patterns. In addition to product sales, recorded $22,000,000 of other revenue bringing total revenue for the quarter to $108,000,000 a decrease of 35% year over year but in line with expectations. Cost of sales for the quarter was $90,000,000 compared to the first quarter of twenty twenty four, cost of sales decreased $6,000,000 primarily due to lower sales volume. While total cost of sales declined year over year, it represented 104% of net product sales this quarter, up from 58% in the prior year driven by lower volume and revenue mix. And D expenses were $856,000,000 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 studies.

This was partially offset by continued investment in our norovirus program, and oncology. SG and A expenses were $212,000,000 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 $7,000,000 in the first quarter, Similar to the prior year, the 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 $1,000,000,000 a $2.00 $4,000,000 improvement compared to a $1,200,000,000 loss in the first quarter of twenty twenty four. Loss per share was $2.52 improvement from a loss of $3.00 $7 the prior year period. We ended the quarter with cash, cash equivalents, and investments totaling $8,400,000,000 compared to $95,000,000,000 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 still expect total revenue in 2025 to be in the range of 1,500,000,000.0 to $2,500,000,000 with first half sales of approximately $200,000,000 reflecting the seasonality of our respiratory vaccine business, As a reminder, the wide range of our guidance for reflects the uncertainties in vaccination rates, the competitive market environment, the size of the RSV market, and timing of licensure of our factories and product approvals in Australia Canada and The UK.

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 $1,200,000,000 reflecting continued improvements in manufacturing efficiency, and lower expected inventory write offs. Offset by increased costs associated with the go live our new manufacturing sites in Australia, Canada, and The UK. I'll now provide some perspective on the newly introduced global tariffs. Those in action as of today have not had a significant direct impact on Moderna. All of our drug substance for The U. S. Market is manufactured at our facilities in Massachusetts, Our commercial drug substance has been shipped overseas for fillfinish operations before shipment to the final customers. Internationally, our new plants in Australia, Canada and The U. K. Are expected to be online in 2025 to supply local markets. Finally, materials sourced from China are not material to our total cost base.

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, supporting our commercial execution. While we are pleased with the cost reductions that we achieved in both R and D and SG and A during the first quarter of twenty twenty five, 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 $400,000,000 And we still expect to end 2025 with approximately $6,000,000,000 in cash and investments.

Beyond 2025, we are announcing today our plan to drive an additional 1,400,000,000.0 to $1,700,000,000 of cost reductions by 2027. As part of our commitment to achieve our 2028 breakeven target on a cash cost basis. To that end, we are reducing our 2026 GAAP operating expense forecast from $5,900,000,000 to a range of $5,400,000,000 to $5,700,000,000 This guidance includes $900,000,000 of non cash charges from stock based compensation, depreciation and amortization. Excluding these items, we now project a 2026 cash cost of approximately $4,700,000,000 at the midpoint of the range. We are also planning to reduce 2027 GAAP expenses to between 4,700,000.0 and $5,000,000,000 with a 2027 cash cost of approximately $4,200,000,000 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 $6,000,000,000 which represents a 55% reduction over four years, from $11,000,000,000 annually in 2023 to $5,000,000,000 or less in 2027. The first $4,000,000,000 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 twenty twenty three, restructure our manufacturing footprint footprint to better optimize for endemic level demand, of our COVID vaccine.

We also reduced SG and A by 24% from 2023 to 2024. Through a variety of cost out initiatives throughout the company. And R and D declined 6% year over year to $4,500,000,000 in 2024. While we are continuing to drive additional cost reductions and efficiency gains in both cost of sales and SG and A, the largest future source of cost reductions will come from R and D. Currently represents nearly two thirds of our expense base. This projected decline in R and D expense will come from the completion and wind down of our ongoing Phase III trials. Procurement savings from contract renegotiations, and other process efficiencies. In summary, we are encouraged by the progress we've made in our cost out initiatives to date. As Stephan mentioned, we now have had three consecutive quarters of double digit year year declines, in combined R and D and SG and 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 turn the call over to Steven.

Thank you, Jamie.

Morning or good afternoon, everyone. Today, I will review progress across our pipeline. Slide 11 is a review of our prioritized pipeline, which is introduced at our R and D Day last September. As you know, we have since filed for regulatory approvals for three of these programs. Our next generation COVID vaccine mRNA-twelve eighty three, our RSV vaccine for high risk adults aged 18 to 59, mRNA thirteen to forty five. And our BLUM plus COVID combination vaccine for individuals age 50 and over or mRNA ten eighty three. As part of our ongoing portfolio optimization, we've made a strategic decision to de prioritize the flu COVID combination vaccine for younger adults, those age 18 to 49. While we remain committed to the long term potential of combination respiratory vaccines, we are going to be focusing our efforts on combination vaccines in the older adult population for now. At the same time, we are excited to announce the advancement of our oncology pipe. With the addition of the checkpoint program. The prioritization of this Phase II program is based on early putting encouraging data and is consistent with our strategy. To build our therapeutics pipeline, particularly in oncology. We are targeting filings for Checkpoint and the other six programs on the right hand side of this slide.

By 2028. Subject as always to data and regulatory consultations. Moving to slide 13, which outlines the latest developments in our late stage respiratory portfolio. As I just mentioned, we submitted regulatory filings late last year, for three programs. Our next gen COVID vaccine has a PDUFA date of May 31, The age group expansion for our RSV has a PDUFA date of June 12, and we look forward to decisions on both products in the coming months. For our flu COVID combination vaccine, we received a November 2025 PDUFA date However, feedback from the FDA during the review, the flu vaccine efficacy data will now be needed to support the application. As a result, we now expect the review timeline to be extended into 2026. And be dependent upon positive Phase III efficacy results from our ongoing flu vaccine trial. And the addition of these data to the submission. And on that point, our standalone flu vaccine candidate mRNA-ten ten is in its phase three 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.

Now turning to our non respiratory vaccine, rare disease portfolio. Our For our CMD vaccine, we recently presented durability data from our Phase II study at the ESMOND conference. Demonstrating that mRNA-sixteen forty seven continues to elicit robust antibody responses for three years post vaccination. Showing very strong durability. Also had the opportunity to share these findings along with an overview of our CMV program at the inaugural CMV vaccines work group as a part of the April ACIP meetings. We're encouraged by the establishment of this workgroup which reflects the growing recognition of CMV as a significant public health concern and a commitment to reducing the disease burden, of CMV. Our phase three CMV efficacy study for mRNA sixteen forty seven continues to accrue cases. We remain blinded to the study results at this time and expect a final F analysis to come later this year.

For norovirus, are pleased to note that the FDA clinical hold for our Phase three trial was lifted during the quarter, The study is fully enrolled in the Northern Hemisphere. And we are continuing to enroll in the Southern Hemisphere. The phase three efficacy readout for norovirus is dependent upon case accruals. And given the uncertainty of that timing, the targeted approval could be in 2026 or 2027, depending upon that readout. We expect to have more clarity on the pace of case accrual and potential readout timing later this year. In rare diseases, our probiotic acidemia or PA program is currently in a registrational study. We've made good progress with regulators and with enrollment. Following review of program timelines and other aspects of the launch, we now anticipate a 2027 approval, Similarly, for methylmalonic acidemia or MMA, we've finalized the registrational study design with the FDA, and we plan to initiate that trial in 2025. We expect the potential for approval for MLA in 2028. Continue to advance our oncology portfolio with significant progress across our individualized neoantigen therapy program, entismarin, our checkpoint program, and our early stage oncology programs. In collaboration with Merck, we have several late stage studies underway for intismarie.

As a reminder, the phase three trial in adjuvant melanoma is now fully enrolled. We also have two phase three studies in non small cell lung cancer, both evaluating in Tysmoran in combination with KEYTRUDA in patients with and without prior neoadjuvant treatment. Additionally, we're conducting randomized phase two trials in adjuvant high risk muscle invasive bladder cancer and adjuvant renal cell carcinoma. I'm happy to announce that the phase two adjuvant renal cell carcinoma study is now also fully enrolled. We're also expanding the scope of our antismarin program into earlier stages of disease, With the addition of a new phase two study, that moves beyond the adjuvant setting. This study evaluates centisomeran as monotherapy or in combination with BCG, the standard of care in high risk non invasive bladder cancer. And will help us explore intismarin's potential in earlier disease settings beyond the adjuvant landscape. As I mentioned a moment ago, we have prioritized advancement of our checkpoint program. Based on encouraging early clinical results. The program is currently being evaluated in a phase two study for both first line metastatic melanoma and first line metastatic non small cell lung cancer. I'll review the details of that program the next slide.

We're also advancing two novel cancer etrogen therapies to the clinic. MRNA-four thousand one hundred and six is a tumor targeted antigen therapy designed to direct the immune system against multiple shared tumor antigens. The first patient has been dosed in a phase one study in solid tumors that is assessing safety, pharmacodynamics, immunogenicity and preliminary for the program. And we have an open IND for mRNA-four thousand two hundred and three, which is designed to boost the activity of an engineered T cell therapy to improve its persistence and effectiveness. This program is being developed in collaboration with Emetics. These cancer antigen therapies Check Point, mRNA-four thousand one hundred six and mRNA-four thousand two hundred and three are off the shelf therapies. In contrast with entismarin, which is an individualized cancer treatment. These programs reflect our growing oncology pipeline, with more coming soon. Now let me provide an overview of the checkpoint program. MRNA four thousand three hundred fifty nine, starting with its mechanism of action. Checkpoint is designed to help a patient's immune system recognize and attack tumor cells by encoding mRNA based cancer antigens for PD L1 and IDO. The therapy trains the immune system to recognize upregulation of PD L1 and IDO by cancer cells and immunosuppressive regulatory T cells.

By combining this targeted immune activation therapy with check checkpoint inhibition with traditional antibodies such as Keytruda, we aim to enhance the antitumor response. Overcoming immunization improving the depth and durability of responses. Check one is being evaluated in a phase onetwo clinical study which is now moving forward and enrolling the Phase two portion. This study is designed to assess the safety and tolerability of checkpoint both as a monotherapy and in combination with Keytruda in first line non small cell lung cancer and first line metastatic melanoma. Key efficacy endpoints will include objective response rate disease control rate, duration of response, and progression free survival. Is an open label study. 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-four 59 mechanism of action. We shared early phase 1A data at the ESMO Medical Congress in late twenty twenty four. And we're excited and looking forward to sharing the data from the Phase 1B portion of the study at a medical conference later this year. Based on the early encouraging results, we plan to expand checkpoint into multiple additional cancer indications. With that review, I will now hand it over to Stefan.

Thank you, Stephen and Jamie. We are focused on three priorities.

Priority one, to drive sales for approved products. Priority two, to focus on our late stage pipeline to drive sales growth and diversification. Priority three, to deliver cost efficiency across the entire business Our first priority is to drive use of Spivax and Amosvia vaccines. Enter 2025 with two approved products, which puts us in the better competitive position compared the beginning of 2024. With our ability to now offer RSV for full season expect to better compete in the respiratory vaccine market. And we said international should add to sales this year. Priority two, we are focused on delivering up to 10 product approvals we believe will drive sales growth. Together, these 10 anticipated product targets a total addressable market, of over $30,000,000,000 As Stephen discussed earlier, we updated some of our priority programs. The combination of in age 50 and older, we expect the additional several flu vaccine efficacy data coming soon. For combo filing, we'll extend the review and approval timeline to 2026. For norovirus, the product timing is dependent on case accrual, which will meet a potential 2026 or 2027 approval. Are very pleased with the addition of Checkpoint AMT to our new product pipeline. MRNA-four thousand three and fifty nine.

And finally, for PNMMA, we anticipate approvals in 2027 twenty twenty eight, respectively. Priority three, drive cost efficiency across the entire business, We've demonstrated our commitment to cost discipline through reduction achieved in 2024 twenty twenty five to date. We remain confident in our ability to further streamline our operating structure, for the remaining of 2025, through 2027.

We are pleased to announce today that 2027 cash cost target of $4,200,000,000 giving us additional confidence in achieving our cash breakeven target in 2028. For our self privatized program, we expect important milestones We file for approval for three products in 2024, for next gen COVID mRNA-twenty twenty three, or IV vaccine for high risk eighteen to fifty nine year olds, We look forward to regulatory decision on this. For flu plus COVID combination vaccine, we expect an extended review time line pending positive standard flu efficacy data and submission. With targeting a 26 approval. For CMV, we look forward to having the final results of our Phase III efficacy study in 2025, exceeded the case accrual goals for flu efficacy study expected without by this summer. Although virus vaccine is in Phase three, and the timing of our data will be subject to case accrual. In oncology, the results of ongoing anti Semiran Phase III adjuvant melanoma trial will be subject to event accruals, and we expect to present our Phase II five year durability data in adjuvant melanoma year. As mentioned before, we are very excited by the addition of a Check Point AMT to a prioritized portfolio, and we look forward to sharing data at the medical meeting later this year.

For PA, we are already generating data for a registrational study and we expect to start a registrational study for MMA this year. I am very thankful to our team for our progress achieved so far. [indiscernible] [indiscernible] and great cost reduction efforts across the company. With this, we'll be happy to take your questions.

Thank you. Our first question comes from Salveen Richter Goldman Sachs. Your line is open.

Thank you. Good morning. You noted that based on FDA feedback confirming the need for Phase three FluF data. We now expect an extended review timeline and you're targeting approval in 2026. Could you comment any further on your interactions with the FDA and why they decided to require this? And more broadly, just to the potential risks to the vaccine business outlook under the new administration? Thank you.

Sure. Thank you, Salveen, for the question. So first on the narrow question of the flu study, we have moved forward very quickly in enrolling cases as the FDA everybody is now aware. And actually in that flu study which we originally thought might be a two season efficacy study, we now know that very shortly here we will have a readout with a very large number of cases in a 40,000 person study. And since that will speak to the potential value of our flu component, it makes good scientific sense that that would be a part of the review.

That's going on for our flu COVID combination. I'll remind you, we had already demonstrated efficacy for the COVID component, and really now we're almost sitting on top of that flu efficacy component. So 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'll have to complete that review, obviously hopefully see a positive result. And then submit it to the current BLA for the mRNA-ten eighty three program that will inevitably lead to some form of clock stop and extension of the review timeline. And so we're excited to see those results in flu, we think they will, we hope they will be constructive for the flu COVID program and look forward to submitting them, sharing those results first and then submitting them once we have them. As far as more broadly, question about 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 file reviews, that includes our twelve eighty three program, the RSV program, 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 flu COVID combination space. So from our perspective, we are grateful for the ongoing collaboration work and we'll continue to make sure that we provide all the data required to conduct a diligent review of all of our products in our portfolio. [indiscernible] broadly, I guess the question of outlook and I invite others to sort of add if I miss anything, but you know we continue to see an opportunity, a real need for COVID vaccination, particularly this coming fall. And we'll remind that through this winter season, we still saw thousands of deaths in The United States, actually about one thousand deaths a week during the peak winter months from COVID-nineteen. The overwhelming majority of which were from folks who had not been vaccinated but were older Americans and had risk factors. And we do believe that vaccines have a unique opportunity to prevent those deaths, those hospitalizations, There's actually a publication out of Denmark just this week showing that this past year our updated vaccine composition was ninety six percent of ninety six percent effective at preventing death, eighty five percent effective at preventing hospitalization this year.

And so we do believe that there's a need and we believe there's an 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 COVID season.

Thank you. One moment for our next question. Our next question comes from Elena Merle with UBS. Your line is open.

Hey, this is Jasmine on for Ellie. Thanks so much for taking our question.

What's the latest on your thinking, whether it's seeing INT Phase three data in 2026 is still a reasonable expectation?

I'm wondering what your plans are for new trials expansions and other indications for both INT and the newly prioritized check point. Thank you.

Sure, thank you for the question. So first I'll remind you that the phase three melanoma study, it reached its target enrollment September of twenty twenty four. Last year we announced that. Given the historical event rates, that would lead us to expect that we would have accrued enough events for at least the first analysis of efficacy in 2026. And so we are still ultimately waiting for events, and it will be event driven, whether that analysis happens. But based on our prior experiences both in Phase 2b and the other expectations, we still believe that 26 readout is possible, it's not likely. 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. And for the Phase II studies, we did, as you noted, recognize that we've now fully enrolled the randomized study in renal cell carcinoma, which is exciting. Because that randomized study has a chance of a readout, We have not with our partner Merck guided on when we expect that will be, but I will note that events do accrue relatively quickly in that indication in that population.

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. There will hopefully be others, but I will defer from commenting on them until we and Merck are ready to announce that we've started those efforts. On the question of checkpoint, we are we are obviously encouraged we would like, we look forward to sharing the data that's the base that encouragement at an upcoming medical meeting. Because we've been looking at that program very carefully in its phase 1b portion of the study, which I'll remind you is combination with antibody checkpoints. To see whether or not we can see a synergistic effect. And we're currently moving forward in at least two histologies that we talked about today so that's first line non small cell lung cancer and the first line metastatic indication. Obviously we have also been looking at it in second line indications as a part of that phase one program. And we'll continue to do so. We will add additional histologies in the future, but we're not ready to announce any today.

Thank you.

One moment for our next question. Our next question comes from Tyler Van Buren with TD Cowen. Your line is open.

Hey, guys. Thanks very much for all the updates. Just at the risk of being repetitive here and just to be clear and more specific given how close we are to the PDUFA, it's business as usual for the December review. Can you talk about just how interactions are going for that program and what your confidence is in approval given the new leadership and recent denial of the Novavax program.

Yeah, I mean, can't kind of comment on others programs because I'm not familiar with what's going on there. But in those confidential exchanges, but I can speak to ours. Which is it really has been business as usual. There are 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 date those assessments have we believe been constructive and positive and we have seen no signs that we're in that there's any question about our ability to make the existing PDUFA date. Now, again, review is ongoing. And we have to defer to what questions may come from from the FDA or others as we move forward. But it really has felt like business as usual.

Thank you. One moment for our next question. Our next question comes from Michael Yee with Jefferies. Your line is open.

Hi, thanks. This is Dina on for Mike. Just a quick question about a recent media article that came out yesterday regarding how vaccine trials would be run, that they would now require to be run against a placebo. Just wanted to get your thoughts about that. What do you think that will do to enrollment? Will it be harder to enroll, easier, And is that going to be required, do you think, for all respiratory vaccines, specifically COVID for you guys or just newer vaccines such as, you know, CMV or any others that you're working on in the product line? Thanks.

Thank you for the question. So, [indiscernible] obviously, I can't comment on a policy change that either hasn't happened or that we haven't been communicated directly to us. I will note that as you did, our COVID vaccine, our RSV vaccine, our CMV vaccine, our norovirus vaccine, these are all conducted as placebo controlled studies. And for many of the other products in our pipeline, there are portions of their development that happen in placebo controlled studies usually. Earlier clinical development or in certain populations. For instance, our COVID vaccine was studied in children in a placebo controlled context. So it will really depend upon ultimately what the FDA and HHS feel is appropriate and their guidance a program by program level of what that will require.

Our responsibility as a manufacturer and 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 we will absolutely engage constructively in making sure we understand what those needs are are. And that we fulfill them.

Thank you. One moment for our next question. Our next question comes Terence Flynn with Morgan Stanley. Your line is open.

Good morning. This is Chris on for Terence.

Just one quick question.

On the COVID strain selection. So given the regulatory uncertainties, can you please elaborate on the process for the COVID strain selection moving forward? Thank you.

Sure. I will answer it from a global perspective. I will start by saying in every instance it is up to a regulator in all these countries to tell us as manufacturers what updates they may or may not want for the coming year. Note that some years flu does not update all of its strains. For sure. And some years, and so far with COVID, we've had updates every year. There are continuing evolving strains that we are tracking that we think might justify an update this year. That decision will really lie with a set of regulatory bodies. First, we will probably based on timing here from WHO and EMA and other international regulators, And then we would expect to also hear probably at the same time from the US FDA. The process is really up to them. How they choose to to ultimately conduct their selection process on whether not they want to do a strain update for this year and what the composition would be I'll defer to each of those individual regulators. But we would expect within the next month, 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.

Thank you.

Moment for our next question. Our next question comes from Cory Kisbah Evercore ISI. Your line is open.

Hey, good morning, guys. Thanks for taking the question. I wanted to ask you about the flu COVID combination and the updated timing you have there. You may not know yet, but is your ex is it your expectation that you would need to refile that with the updated flu efficacy data or could you just submit that data as a, I guess it would considered a major amendment? In other words, potentially delaying this by just three months and enabling a potential FDA decision in early twenty twenty six as opposed to later in the year. Thank you. Thank you for the question. 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. It is It is totally appropriate to submit that data as an amendment to the BLA It could also be from a pragmatic perspective, it may sense to update more broadly the BLA submission with it. Which could result in resubmission. We'll just go forward with whatever feels like the most pragmatic approach. And ultimately, 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 data set, from the pivotal phase three for the flu COVID combo and the review of all that information is progressing.

And so there are reasons why amending with the flu efficacy data may be the most pragmatic approach, But again, it will depend upon consultations with the FDA. Will only be appropriate to do after we have that flu efficacy data in hand.

Okay, helpful. Thank you.

One moment for our next question. Our next comes from Courtney Breen with Bernstein. Your line is open. Hi, thanks for the question today.

The main focus for us is really on some of the new cost cutting that you guys have announced today. What we would really like to understand is kind of what particular milestones or 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 there. And then kind of the second question is, what components would you point to as being those where you've felt you've been able to flex to enable kind of some of that cost cutting that we're now additional cost cutting that we're now anticipating in 2026 and 2027 from last expectations. Thank you.

Yeah, thanks for the question, Courtney. As to the first piece, in terms of what are the milestones or what's changed, 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. In RSV, CMV, norovirus, our combination vaccine, flu, and many of those just ramp down are completed by 2027, we had never really given guidance for 2027. So much of this was just extending our guidance out a year and indicating just what that R and D level will be. The second thing is as to a milestone, I mean, yeah, it's an uncertain environment, so there's nothing from 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, as we look out to 2027 and 2028, we felt that it was appropriate to get cash cost to about $4,000,000,000 to make sure that we fulfill on our commitment to breakeven by 2028. Now as to the how, I already mentioned the large majority 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 there's much to do, and the teams continue to identify additional opportunities and procurement. We're using digital tools. We're relooking how we get work done. And so we just think that there's a lot that we can go do And that's why we came out with new 2027 guidance Just as we look out, some of this is as expected. Some of this is the continued improvements that our teams see, and we look forward to executing on it. Fulfilling our commitment to break even by 2020 you. One moment for our next question. Our next question comes from Myles Minter with William Blair. Your line is open.

Hi, this is Vic on for Myles. Thank you so much for taking our question. First, for norovirus, have you guys identified the source of the GBS case that was originally identified the FDA and have there been any additional cases of GBS noted in the Northern Hemisphere, Southern Hemisphere trials and then second, for for the study in which you quantify the number of T cell clones induced 're curious how you're comparing that to BioNTech's product and whether you've used the same analysis pipeline that they've Use for their quantification for your sequencing data. Thank you.

Thanks for both questions. So first, yes, on the norovirus study, we're pleased the clinical hold has been lifted. Obviously that means we've set aside any of the questions and importantly updated materials that were from an informed consent perspective, all that's out there. We have not seen an additional GBS case, obviously, That's encouraging, but not necessarily unexpected. It is a fortunately rare event when it does occur. As far as causality, we may never know.

I will remind you that there are GBS cases in the background population, particularly in older adults, that happen fairly regularly. Several per one hundred thousand. And we're enrolling these large [indiscernible] It's possible that it's related to the vaccine. It's possible that it's not. And we are working hard to assess causality, but you can't really ever get a direct link. What you really can do though is characterize frequency of these things and make sure that people are aware of them and as part of our ongoing phase three norovirus study we'll continue to very actively monitor additional cases of GBS We certainly hope we don't see any either on the placebo arm or on the But all of that pretty we're pretty encouraged, again, just to be off clinical hold and moving forward with enrollment and hope moving forward with that program. The intismarin question, so I can't speak to the way of BioNTech had run their pipelines, obviously we're not deeply familiar with it. We are really encouraged by the clonality that we're seeing in TCRs. I think it's some evidence that we're really deepening and broadening the response and that those are by what's happening in the vaccine.

That sorts of translational data though ultimately is supportive of what is the really exciting evidence of efficacy that we've already seen from that study. And I think that that's ultimately just giving us some of the why, but the what was the remarkable hazard ratio improvement that we've reported both at ASCO last year and that we'll look to be updating as we continue to follow that phase 2b study. Thank you. One moment for our next question. Our next question comes from Gena Wang with Barclays. Your line is open.

Thank you for taking my questions. I have a two quick questions. One is when we look at the COVID revenue, this quarter, The U. S. Was only $29,000,000 and seems only a fraction of the Pfizer U. S. Revenue. So any concerns on the future market share change? And the second question is regarding the flu vaccine. In data in summer twenty five. Could you please share your total events that you plan to achieve?

So Gina, I'll take the first question. I'm not sure if we heard the second question. We might ask you to repeat that. 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 it in the past, $1,700,000,000 Take out the gross to net changes, it's really $1,500,000,000 That across that marketplace is a 40% market share. And that's exactly what we see, I guess 38% scripts data, what we see through the first half. I would also say that our customers are trying to manage their working capital better. So their inventory levels are down. So I can't comment on other companies' revenue, but I can comment on what we see in the actual marketplace from a script perspective. Thank you. And, Gina, we didn't quite hear the second question. Could you just repeat it, please?

Sure. Of course. So the second question is regarding the flu vaccine, the interim data in summer twenty five. I don't know if you will be able to share regarding the total events and the stats around it that you plan to achieve.

I don't think we have provided any guidance on it. It is obviously a very large number of cases because there was a quite a large disease for this year. But at this point, I don't think we're gonna provide any guidance. We're ultimately just gonna conduct that analysis, literally the season is over and we'll try and share those results and obviously, explain them, once we've released that.

Okay, Thank you.

One moment for our next question. Our next question comes from Jeff Meacham with Citigroup. Your line is open.

Hi, good morning. This is Jarvi on for Jeff. Just broadly thinking about the recent ACIP meeting, I was just wondering if you could comment broadly on some of the comments that you made namely on CMV and its need for durability data and its implementation challenges and for COVID. Perhaps the possibility to move from universal recommendation to one that's risk based. And then separately for the new checkpoint program, Given the cost cuts that you guys are not implementing, could you please share perhaps any potential to either out license or even partner that program in the future.

Thanks. Sure, thank you for the problem. I'll try and catch it quickly. So first on CMV, look, think we're we do recognize for that vaccine we'll want to see good durability. Five, ten years would be ideal. If not longer. Because at the end of the day what you're trying to do with CMV is is zero convert people so that they can control and prevent really a substantial infection with the virus. 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 going to meet our objectives for really durable immune responses. That's incredibly encouraging. We've seen in a related program in EBV real durability and viral suppression. We previously reported on that. And so we're feeling pretty optimistic about the performance of the latent vaccine platform and specifically CMV in our ability to achieve durability. Far as the ACIP conversation on that, we were actually quite encouraged by how constructive people are about the need for a CMV vaccine.

Vaccine, that any efficacy there will be seen as valuable because the end the day this virus is a scourge. And so while durability was raised, we actually think we've addressed that question. And the question of efficacy we feel pretty aligned with that conversation. And optimistic that our current results will be positive. The question on COVID and changes in recommendations look, at the end of the day, it is for public health officials to decide how to use our products. Our responsibility is to bring forward the data allows them to make that decision. Risk based decisions have been applied in other countries, Certainly if you look at the types of populations that have been identified, those that are older adults, 65 plus, those who have any risk factor in fact, seventy four percent of Americans have a risk factor for severe COVID-nineteen, including 64. There was real support for that. And then there was general support for let's people decide. I think that was seen in the polling of the ACIP working groups. So those even without risk factors that might want to protect themselves against COVID, they should have the 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 in those with risk factors.

And so it makes sense that we will want to encourage strongly vaccination in those populations. Again, one thousand Americans a week dying through this past winter is is more than dying traffic accidents per week, it's really something we must address. As far as the Checkpoint program is concerned, [indiscernible] we're really encouraged by that data. We're moving forward at this point one of the reprioritization you saw in our pipeline is that we decided not to invest in a pivotal study for younger adult combination vaccines, that's the 18 to forty nine year old flu COVID combo vaccine. And really what you should interpret with that is that we are reprioritizing that investment into our oncology pipeline on the emerging data. It's not any disservice to the, or any problem with the ten eighty three program, we're actually really encouraged by We're going to focus there on older adults and those that are higher risk, and we're gonna take the opportunity to reinvest that money in Check Point, which we are encouraged to move forward with ourselves for now.

Yeah, maybe just to add to Steven's point, because I think it's an important strategic consideration. As we've said at several R and D days, you know, respiratory is a very important franchise for us. That even said, incredible medical needs. Many, many years to come, unfortunately. For the patients. R and D costs, as those phase three are behind us, R and D costs respiratory are coming down. That business is generating cash flow. We don't need to invest in manufacturing. And as Steven said, we really want to be thoughtful about deploying that capital to both oncology. We are very excited about our keystrophin programs, of course, but as you know, Merck is funding half of it, And so that's why when we see opportunities in the clinical data we're seeing on checkpoints, we are able to pivot very quickly. Which we think is very important to only have a company with a strong respiratory business, generating cash investing in growth on therapeutics. That's really where we're going.

Perfect, thank you.

One moment for our next question. Next question comes from Luca Issy with RBCCM. Your line is open.

Hey, guys. This is Shelby for Luca, and thanks for taking the question.

Maybe following up on the political landscape. RFK is on record arguing there is no evidence that a single antigen vaccine ever worked for respiratory diseases. He also claims he is working on multi antigen vaccines. Do you know what he means by that? Maybe bigger picture, how confident are you that your upcoming PDUFAs will be reviewed based on the risk benefit profiles of the molecule and not political agendas. Any thoughts much appreciated.

Thanks for the question. As far as the secretary's statements, I think you'd have to refer those questions to him. I I can't comment because ultimately it'll depend upon his perspective. I will note that we have products that have been approved that have demonstrated efficacy 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 product, including those single antigen and we have some multi antigen products. I'll remind you that CMV is a seven mRNA massive multi product as is EBV as are many of our other vaccines. And so we do believe that sometimes single antigen makes sense and sometimes multiple entity makes sense, and we do both. Far as the question on our PDUFA dates, as I said a moment ago, we continue to have constructive exchanges of data and new information with the FDA in the review of all of our files We've also been participating in review of the information with the ACIP CDC working groups that ultimately also recommend 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.

We are confident in the data we have. In the case of our next generation COVID vaccine, I'll point to the fact that that is an 11,000 person large multi year randomized efficacy study. And we think it is a really strong demonstration the potential for that product to help patients against COVID-nineteen. And so we're quite enthusiastic about it. Most of our other files include similarly large or larger phase three randomized studies. It's quite a lot of information to get through. And our job is to make sure that we present it objectively to the agency so they can conduct those reviews We remain confident that those reviews will be consistent with prior practice. And again, it has been business as usual through the first half of this year. For us. Thank you, ladies and gentlemen. This does conclude Q and A portion of today's conference. I'd like to turn the call back over to Stefan Benzahl for any closing remarks.

Thank you so much for joining us today. As you can see, we are really focused on executing on our strategy. Thank you for participating in the call. We look forward to speaking to you in the coming days or weeks. Thank you. Have a good day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.