The conference call for Moderna's second quarter 2024 financial results and business update is about to begin. The operator introduces the speakers and explains the process for asking questions. Lavina Talukdar, the speaker, thanks everyone for joining and introduces the other speakers. She also mentions that the call will include forward-looking statements and refers listeners to the accompanying presentation for important risk factors. Stéphane Bancel, the CEO, will discuss the business, followed by Jamey Mock, the CFO, who will present the financial results. Stephen Hoge, the President, will review the clinical progress, and Stéphane will conclude by discussing the commercial progress and upcoming milestones.

In the second quarter of 2024, Moderna's respiratory franchise has made great progress, with the mRNA-1273 vaccine (Spikevax) playing a critical role in combating COVID. The company's RSV vaccine (mRESVIA) has launched in the U.S. and is expected to have a positive impact on public health in the U.S. and other countries. Moderna's flu vaccine candidate (mRNA-1010) and flu + COVID combo vaccine candidate (mRNA-1083) have both shown positive results in Phase III trials, demonstrating the strength of their mRNA platform. The company is also ready to meet the demand for the '24-'25 respiratory season with their COVID vaccine.

Moderna's mRESVIA has received positive opinions from regulatory agencies in the U.S and Europe, and they are waiting for approvals in other countries. They have also partnered with BARDA for pandemic flu development and Mitsubishi Tanabe Pharma Corporation in Japan. In Q2, their revenues were up and they have reduced operating expenses by $600 million. They have also announced the addition of David Rubinstein, co-founder and co-chairman of Carlyle Group, to their board.

In the fourth paragraph, the speaker announces changes to the board of directors, including the addition of David and the retirement of co-founder Bob Langer. The financial performance for the second quarter is also discussed, with net product sales of $184 million, a decrease of 37% from the previous year due to lower sales volumes of the COVID-19 vaccine outside of the United States. However, sales were above the expected guidance due to stronger sales in the US. Other revenue of $57 million was also recognized, including $30 million from a licensing agreement with a pharmaceutical company in Japan.

In the second quarter of 2024, the company reported a cost of sales representing 62% of net product sales, which was down 84% from the same period last year. R&D expenses increased slightly by 6% and the company purchased a priority review voucher. SG&A expenses decreased by 19% due to cost discipline and strategic investments. The company reported zero income tax expense and a net loss of $1.3 billion, an improvement from the same period last year. Cash and investments totaled $10.8 billion at the end of the quarter, down from the previous quarter due to ongoing expenses.

In this paragraph, the speaker discusses the cost reductions that the company has achieved in the second quarter and attributes them to various factors such as internal capabilities, targeted investments, and procurement efforts. They also mention the use of artificial intelligence in scaling the business efficiently and thank their teams for their efforts. The speaker then moves on to the 2024 financial framework.

The company has revised its 2024 net product sales expectation to a range of $3.0 billion to $3.5 billion due to low sales in EU member states, increased competitive pressures for respiratory vaccines in the U.S., and potential revenue deferrals in the rest of the world. The revenue framework assumes a similar COVID vaccination rate in the U.S. as last season. The company expects a sales lift of 40% to 50% in Q3 and the remaining balance in Q4. Cost of sales is expected to be 40% to 50% of product sales. R&D expenses are expected to be approximately $4.5 billion and SG&A expenses to be approximately $1.3 billion. Taxes are expected to be negligible and capital expenditures to be $0.9 billion. The company expects to end 2024 with $9 billion in cash.

In the second quarter, the company has made progress in improving their working capital management. Stephen Hoge then reviewed updates from their clinical programs in respiratory vaccines, oncology, and rare diseases. They received approval and positive recommendations for their RSV vaccine, mRESVIA, in the U.S. and Europe. They are also in discussions for their flu vaccine and announced positive Phase III results for their next-generation COVID vaccine, mRNA-1283. They also shared positive results from their Phase III trial for a combination flu and COVID vaccine.

The combination vaccine for participants 65 years and older showed higher immune responses compared to an enhanced flu vaccine. The company has shared these results with regulators and is planning for the next steps. In the oncology field, the company has an mRNA-4157 program that targets tumor mutations and is being studied in multiple large trials in various types of cancer. The program was launched based on positive results in a Phase II trial in adjuvant melanoma. Recent data from a three-year follow-up showed sustained improvement in recurrence-free survival and distant metastasis-free survival with the combination treatment of INT plus Keytruda compared to Keytruda alone.

The paragraph discusses the latest data and developments in the treatment of cancer and rare diseases by the company. It highlights the impressive results of combination treatment with INT and Keytruda, as well as the selection of their MMA candidate for the FDA START program. The paragraph also mentions the completion of contracting for the upcoming COVID season, with increased competitive pressure compared to last year.

Moderna is working closely with public health officials, healthcare providers, and pharmacies to drive widespread adoption of their COVID vaccine. They have advanced discussions in the EU but expect low sales in 2024 due to feedback from large governments. They have signed contracts in place in the rest of the world, with ongoing discussions in some countries. They are fully prepared for the upcoming season and can quickly pivot to manufacture the vaccine for different strains. In the US, they are ready to supply millions of doses to all segments of the market. Their goal is to ensure widespread availability of the vaccine to all customers, including retail pharmacies, healthcare professionals, and public health entities. Preparing the global healthcare system for vaccination is a top priority for Moderna.

The company has implemented a real-time order tracking system and is using AI tools to optimize distribution of their product. They have also launched a back-to-basics campaign to educate the public on the importance of getting a new booster each year, and are working with public health authorities to highlight the impact of long COVID. They will also be targeting high-risk groups and collaborating with retail pharmacies to effectively market their products. The company is also excited about the launch of their second product, mRESVIA, and aims to have it recommended on par with competitor vaccines.

ACIP has recommended a single dose of RSV vaccine for all unvaccinated adults aged 75 and above, and for those between the ages of 60 and 74 who are at increased risk. This makes approximately 40 million people in the U.S. eligible for vaccination. The company's focus is on the pharmacy segment, where 95% of RSV vaccine administrations occur. They have begun shipping their product to pharmacies, but face a highly competitive environment and lower market share due to larger competitor contracts. The company is also expecting upcoming milestones, including a COVID approval and release, Phase III data for high risk individuals for RSV, and filing for their flu program and next-gen COVID vaccine in 2024.

The company is working on a combination flu-COVID vaccine and hopes to update regulators soon. They are also excited about the progress of their INT program and are looking to discuss accelerated approval with regulators. They expect to achieve milestones in their rare disease portfolio and have scheduled an R&D day for September 12. The first question from an analyst asks about the factors contributing to the company's maintenance of its year-end cash balance guidance, despite a lowered product revenue guidance range.

The paragraph discusses the company's year-end cash balance and factors that may affect it, including deferrals of revenue, working capital, and a cushion of funds. The CEO also mentions competitive pressures from larger competitors in the market for their COVID and RSV vaccines, specifically in terms of supply chain, pricing, and co-marketing efforts.

The intensity and pressure on COVID and RSV has increased compared to last year. There are two established players in the RSV market, one with a large market share and the other trying to gain market share. The company has signed contracts and is actively supplying customers with RSV products. They are also working on finalizing contracts and demonstrating the value of their product during the season. The company is focused on both COVID and RSV, as they are important for patients and the company. In terms of guidance, the company did not specify the exact split between COVID and RSV, but all three drivers are similar in size. Regarding the seasonal flu and the seasonal flu plus COVID combo, the company intends to file for the seasonal flu in 2024 and is engaging with regulators on next steps for the combo product.

The speaker explains that the deferrals and EU expenses are related to COVID, while the competitiveness in respiratory vaccines is split between COVID and RSV. They also mention recent Phase III results for the flu COVID program and discussions with regulators. The next question is about guidance for revenue, opex, and cash flow, and the speaker addresses the potential for lower cash guidance and the flexibility of opex. The second question is about RSV projections, and the speaker suggests that they may be lower due to factors such as lower share and price.

The speaker discusses the company's expected cash flow for the next year, with $9 billion expected and no changes to the previously stated $6-7 billion for 2025. They mention a $4 billion loss in cash this year due to non-repeating prepayments, but anticipate growth in 2025 with the launch of new products and more experience in the market. They also mention potential impacts on market share and pricing for RSV, but do not provide specific guidance.

Elliott Bosco from UBS asks about the timing of the Phase III CMV study and the potential for deferrals of international COVID revenues in future years. Stephen Hoge and Jamey Mock respond, stating that the interim analysis for efficacy on the CMV program could happen this year and that deferrals could occur in 2025, but they have plans in place to mitigate this risk. Gena Wang from Barclays asks about the guidance for this year, specifically regarding COVID revenue in the U.S.

The speaker, Stephen Hoge, is discussing the performance of the company's U.S. business and the potential impact of competition on revenue. He also mentions the recent ACIP meeting and the decision to recommend the company's RSV vaccine for those over the age of 75 and those at higher risk. He also briefly touches on the potential market for RSV and the opportunity for bird flu.

The speaker discusses the importance of increasing vaccination coverage for the 40 million people who are not vaccinated. They also mention that there is still some benefit to revaccination after one year, but it may not be necessary until year three when the protection from other vaccines begins to decline. The speaker also mentions that RSV is a common illness and many people have been exposed to it before.

The waning protection from a virus infection is the reason why a vaccine is needed. People may benefit from a booster shot in the future, and recommendations for revaccination may be made by public health organizations. The company has an agreement with BARDA to advance their pandemic bird flu vaccine into Phase III. They will continue to work with public health entities, including the US government, to prepare for a potential bird flu pandemic.

The speaker is asked about potential indications for VX-522 in collaboration with Vertex for CF and whether they will develop them in partnership with Vertex. The speaker states that they have not provided updates on their preclinical programs and that they are still in the research and discovery phase. They also mention that they would welcome partnering with Vertex, but their current deal is limited to the cystic fibrosis program. The speaker is then asked about the regulatory path for their orphan disease program, specifically for MMA and PA, and they state that they are in the early stages of those conversations.

The company has received FDA START designation and is working on validating a biomarker for methylmalonic acid (MMA) in their clinical trial. They are also evaluating a single-arm study for proprionic acidemia and have seen a favorable trend in metabolic decompensations. They will engage with regulators on the best approach for both diseases and provide updates as they have more clarity.

Jessica Fye asks about Pfizer's comment on a potential RSV vaccine for both maternal and older adult populations. Stephen Hoge responds that the focus is currently on protecting older Americans, but they also recognize the need for a broad label and will be filing for approval for the 18-59 age group this year. There is no update on enrolment for the INT Phase III trial.

The company is pleased with the pace of enrollment for their clinical trial and expects it to conclude quickly. They have made progress in establishing a manufacturing facility and are optimistic about meeting their manufacturing goals. They also address the competitive environment for RSV and COVID and discuss their confidence in the EU tender and the purchase of a PRV.

The company anticipates better market share for their RSV product in 2025 due to its full season availability and launch in international markets. They also believe their COVID portfolio, including next-gen COVID and flu plus COVID, will drive growth and reset market expectations. The current contract for their COVID vaccine with the EU ends in 2026, but some countries may still need it in 2025 and 2026. The company is also discussing the potential for a combo vaccine with governments in Europe, which could be a valuable tool for public health and increase compliance. Their main priority for Europe in 2025 is launching RSV and growing the business until the flu mono or flu plus COVID product is available.

During a conference call, Greg from TD Securities asks about the size of the RSV market compared to last year and the company's expectations. Lavina Talukdar and Stéphane Bancel address the question, stating that they believe the market will potentially evolve over time and that the current guidelines are clearer, which may impact the market size and number of doses administered. Stephen Hoge adds that the current year market size is also a factor.

The speaker discusses the potential size of the patient population for the upcoming year, mentioning that it may be similar to last year or slightly larger. They also address concerns about the recent summer COVID surge and its potential impact on fall vaccinations. The speaker emphasizes the need to protect people during the winter season, as the virus is highly effective at spreading and causing disease.

The speaker states that the small summer wave will not significantly impact the view of the fall wave and that vaccination coverage rates will likely remain similar to last year in the United States. They also mention an upcoming R&D day on September 12 and thank the listeners for joining the call. The call ends.

This summary was generated with AI and may contain some inaccuracies.