BioNTech SE Q3 FY2022 Earnings Call

Welcome to the BioNTech Third Quarter 2022 Update Call. I would like to hand the call over to the Vice President of Investor Relations and Strategy, Sylke Maas. Please go ahead, Sylke.

Thank you all for joining us today as we review our third quarter operational highlights and provide you with some financial updates. BioNTech is in an exciting phase of its corporate development and we are delighted to share our progress with you. A few housekeeping items before we start. I invite you to view the slides that accompany the webcast, and the third quarter 2022 press release, both of which were issued this morning and can be found in the Investors section of our website. Taking the first look at slide two, I would like to remind you that during today's presentation, we will make several forward-looking statements. These forward-looking statements include, but are not limited to, our COVID-19 vaccine revenues as these include figures that are derived from preliminary estimates provided by our partners, our estimated financial results for 2022, the continued global demand for our COVID-19 vaccine, expected COVID-19 vaccine production, supply, and deliveries for 2022 and beyond. The planned next steps in our pipeline programs; the timing for enrollment initiation, completion, and reporting of data from our clinical trials; the timing of and our ability to obtain and maintain regulatory approval for our product candidates; and other risks described in our filings made with the US Securities and Exchange Commission, including our most recent quarterly report filed today. Actual results could differ from those we currently anticipate. You are therefore cautioned not to place undue reliance on any forward-looking statements, which speak only as of today, shared during the conference call and webcast. Also please note that slides three and four provide detailed and important safety information regarding our COVID-19 vaccine. Finally, today's agenda can be found on slide five. It is my pleasure to welcome the BioNTech management team, who will guide you through our third quarter update. I'm joined by Ugur Sahin, CEO and Co-Founder of BioNTech; Ozlem Tureci, our Chief Medical Officer and Co-Founder; Jens Holstein, our Chief Financial Officer; and Ryan Richardson, our Chief Strategy Officer. With that, I would like to turn the call over to Ugur.

Thank you, Sylke. A warm welcome to all participants of today's conference call. I'm pleased to update you on BioNTech's operational progress during the third quarter of 2022. Before I start, let me highlight the fundamentals of our success. With our deep expertise in immuno-oncology, our scientific rigor, and our fully integrated spectrum of research and manufacturing competencies, we succeeded, together with our partner, Pfizer, in developing and supplying various adapted vaccines globally. We did so at an unprecedented speed. Since BioNTech's inception, we have pursued our vision to establish a fully integrated global immunotherapy powerhouse aspiring to translate science into survival. We follow a technology-agnostic, solution-focused multi-platform strategy. Our innovation engine leverages various emerging technologies and therapeutic approaches. Our aim is to address high unmet medical needs in oncology, infectious diseases, and beyond. We are advancing a diversified product pipeline of immunotherapies and are seizing an unprecedented opportunity to accelerate our progress towards our long-term vision to bring the next-generation of immunotherapies to patients. Moving to our third quarter highlights. We reported total revenues of €3.5 billion, contributing to total revenues of €13 billion for the first nine months of the year. The strong performance can be attributed to the continued successful execution in our COVID-19 vaccine franchise, and reflects shipments of the Omicron-adapted vaccine booster, which started early in September. We are updating our 2022 financial guidance by raising our vaccine revenue estimates to €16 billion to €17 billion. We have expanded our team to more than 4,000 employees around the world. We are expanding our global mRNA manufacturing network to ensure access to our innovative medicines worldwide. We recently signed a Letter of Intent with the State of Victoria for strategic partnerships to establish an mRNA research and innovation center to translate encouraging academic research into the clinic. We will establish one of our modular BioNTainer manufacturing facilities in Melbourne to enable end-to-end clinical scale manufacturing of mRNA product candidates. In oncology, we are executing across our broad pipeline. We have advanced a total of 19 candidates, in 24 ongoing clinical trials, including five Phase 2 trials. In the third quarter, three new programs entered Phase 1. At this year's ESMO conference in September, we presented another positive clinical update for BNT211 for the treatment of solid tumors. Ozlem will share more detail on the data update momentarily. Slide 7 highlights our quarter three progress of our COVID-19 franchise. This quarter, we and our partner, Pfizer, continued to build on our global COVID-19 vaccine leadership with first-to-market Omicron BA.4/BA.5-adapted vaccine launches across multiple countries and regions worldwide. As of mid-October 2022, we have invoiced approximately 300 million doses of our BA.1 or BA.4/BA.5-adapted bivalent vaccine. We had multiple regulatory developments around our original COMIRNATY vaccine. The vaccine is undergoing conversion to full market approval in several regions around the globe. It has received full marketing authorization in the EU for all existing and upcoming indications and formulations. Additionally, we received EC approval for a three-dose primary series in children aged six months to five years in the EU and for a third booster dose for children aged five to 11 years. Thus far, a booster dose was recently approved by the EC for individuals aged 12 and older. With this, regulatory approvals have given our COVID-19 vaccine one of the broadest labels among available vaccines. Our Omicron BA.4/5 bivalent vaccine boosters now have approvals for use in more than 45 countries and regions worldwide. We have recently reported initial positive data at the 30-day post-boost time point in the Phase 2 clinical trial of our Omicron BA.4/5 adapted bivalent vaccine in individuals 12 years and older. Additionally, we initiated a Phase 1/2/3 trial of the Omicron BA 4/5 adapted bivalent vaccine in children aged 6 months to 11 years. At the end of October, as part of our ongoing collaboration, we and our partner, Pfizer, initiated a Phase 1 clinical trial evaluating our Omicron BA 4/5 adapted bivalent vaccine in combination with an mRNA influenza vaccine. The mRNA influenza vaccine candidate is also partnered with Pfizer and has now advanced to Phase 3 clinical testing after positive data from the Phase 2 trial were reported in the second quarter of this year. Slide 8 highlights our COVID-19 vaccine execution on a global scale. Our mRNA platform and established processes allow for the development, testing, and manufacturing of variant-adapted vaccines at an unprecedented speed, supporting a rapid regulatory path. With the occurrence of Omicron at the end of 2021, we and Pfizer started evaluating monovalent and bivalent vaccines directed against Omicron sub-lineages and other strains of SARS-CoV-2. Data from these studies were presented to regulatory agencies in June and July 2022, which supported regulators' definition of the most appropriate regulatory pathway. It took us approximately two months to go from the first regulatory recommendation for the BA 4/5 adapted vaccine to our first shipment of the respective vaccine. The ability to execute with such speed was enabled by three factors: our continued surveillance and analysis of variants of concern, our extensive and proactive COVID-19 clinical program, and the rapid manufacturing adaptation. We are well positioned to supply countries and regions around the globe. I thank our team and collaborators for their tireless efforts to make this accomplishment possible yet again in such a short period of time. Slide 9 elaborates on the need for an Omicron BA 4/5 adapted booster supported by current research, including our own data. In the Northern Hemisphere, we see case numbers steadily rising. Epidemiologically speaking, BA 4/5 and their related sub-lineages continue to be the dominant strains. Omicron BA 4/5 adapted bivalent vaccines may also provide robust protection against potential future emerging Omicron sub-lineages or new variants of concern that are closer to the wild-type strain. The enhanced neutralization breadth may be driven by the expansion of memory B cells against epitopes shared broadly among variants, as well as in part induction of de novo immune responses against new epitopes. Moreover, expansion and preservation of T cell responses may protect against severe disease. Slide 10 allows us to look at the evolution of the COVID-19 pandemic. Based on current world evidence, we anticipate a long-term need for annual or seasonal variant-adapted boosters. If the virus is in a state of continuous evolution, the possibility of a new wave of infections driven by novel immune evasive strains remains. We are vigilantly monitoring the landscape and are prepared to adapt our vaccines as needed. The risk of severe COVID-19 disease remains high in vulnerable populations. The full extent of the prevalence of COVID-19 patients who go on to experience longer-term health consequences is also not yet fully understood. Clinical data has demonstrated that boosters extend the protection offered by COVID-19 vaccination. Research has shown that natural immunity acquired through SARS-CoV-2 infections is variable across individuals and that the protection it offers wanes over time. The booster restores enhanced infection-acquired immune protection and further reduces the risk of reinfection. Slide 11 shows our framework to support a sustainable vaccine business in the future. First, we have demonstrated the safety, tolerability, and efficacy of our mRNA COVID-19 vaccines. Second, we have shown our ability to rapidly adapt our products and processes to address emerging variants of concern. Third, our expertise in navigating the evolving vaccine landscape on a global scale has positioned us as a first mover and enabled us to receive one of the broadest labels among the currently available COVID-19 vaccines. This applies to both the original COMIRNATY vaccine and our Omicron BA.4-5 adapted vaccines. Fourth, with continued innovation, we are improving the already strong product profile of our COVID-19 vaccine, targeting continued protection from current and future virus threats. These four pillars are built on our validated mRNA platform, proven science, discovery, development, manufacturing, and commercialization, and position us for success as we continue to expand and advance our pipeline and build our 21st-century immunotherapy powerhouse. With that, I would like to thank you all for your confidence in our success and your continued support and turn the call over to Ozlem.

Thank you, Ugur. I'm delighted to provide you with our COVID-19 vaccine and pipeline update to date. On Slide 13, we have a multi-pronged innovation strategy to respond to the evolving pandemic and improve upon our vaccines with next-generation approaches that generate broader and more durable immunity. We have successfully delivered our first variant-adapted vaccines to address the Omicron BA.1 and BA.4-5 variants. We believe that our vaccine has the potential to be combined with the original flu vaccine. Across many parts of the world, people are currently receiving the Omicron-adapted vaccine boosters at the same time as their flu shot. Health agencies, including the US CDC now recommend co-administration of COVID-19 boosters with the annual influenza vaccine. A combination product has the potential to provide seasonal protection from both viruses with a single shot. We are working together with our partner, Pfizer, to develop an influenza combination vaccine, which leverages our mRNA technology. In the midterm, we are also developing next-generation engineered vaccine candidates to expand the breadth of the immune response and provide more durable protection. This includes our T cell-enhancing vaccine candidate and engineered spike vaccine approaches. Our approach is supported by insights from continuous surveillance of variants and our robust clinical program. On Slide 14, our innovation strategy has already yielded success with our Omicron BA.4/BA.5-adapted bivalent vaccine, approved for use in more than 45 countries and regions around the world through the rapid execution that Ugur highlighted. We are continuing to broaden the label of our Omicron BA.4/5-adapted bivalent vaccines across different age groups. This includes FDA emergency use authorization for individuals aged five and older in the US. In the EU, we received marketing authorization for individuals aged 12 and older. Submission for ages five to 11 years in the EU has been completed, and we are awaiting CHMP recommendation. As a next step, we plan to submit data to regulatory agencies from our ongoing trial in children aged six months to four years in the first quarter of 2023 to extend access to our Omicron-adapted bivalent vaccine to young children. Our regulatory activities are supported by our ongoing clinical program, evaluating the BA.4/5-adapted boosters in various age groups. Slide 15 highlights the positive data in the ages 18 and older cohort reported from the ongoing Phase 2/3 trial of our BA.4/5-adapted booster in individuals 12 years and older. The study was initiated in August and enrolled approximately 900 healthy volunteers, each receiving either 30 or 60 micrograms of the BA.4/5-adapted bivalent booster over the original vaccine as a comparator. Adolescents aged 12 to 17 received a 30-microgram dose of the Omicron-adapted vaccine over the original vaccine. The data at the 30-day time point is from the sentinel cohort, which included 40 people in each age group: 18 to 55 years of age and older than 55 years, each having received the 30-microgram dose of the bivalent vaccine. The comparator group included 40 individuals over 55 years of age who received the original vaccine. The data showed that the safety and tolerability profile of the bivalent booster remains favorable and similar to the original vaccine. On Slide 16, you can see the titers of neutralizing antibodies broken down by age group and by pre-vaccination status. While 18 to 55-year-olds had a 9.5-fold increase over baseline, for the group as a whole, the increase was notably higher, namely 16-fold for those who were baseline negative. In the individuals who were older than 55 years, the overall group experienced a 13.2-fold increase in neutralization titers, whereas individuals who were negative at baseline experienced a 28.3-fold increase. These responses were higher than those observed in the comparator group receiving the original vaccine, who saw only a 2.9-fold increase over baseline. There was not much difference between the groups who were negative or positive at baseline in the comparator arm. The reference strain neutralization titers were at least as high as those observed in individuals who received the original vaccine. Overall, adults saw a substantial increase in response with the bivalent vaccine compared to the original vaccine, and the improvements were most pronounced in those over age 55 and those who were baseline negative prior to vaccination. Given that Omicron BA.4/BA.5 continue to be the dominant circulating strains, these data provide strong evidence of the protection that boosting with the bivalent vaccine can provide to adults, particularly the elderly. Slide 17. The second pillar of our innovation strategy includes our collaboration with Pfizer to develop a COVID-19 Influenza combination vaccine built on BioNTech’s validated mRNA technology. The Phase 1 clinical trial has been initiated to evaluate the safety, tolerability, and immunogenicity of the mRNA quadrivalent influenza vaccine candidate in combination with our Omicron BA.4/BA.5 adapted bivalent vaccine. We are building on the experience made in the BNT161 program partnered with Pfizer developing an influenza mRNA monovalent vaccine, for which a Phase 3 trial was initiated by Pfizer in September. In the combination trial, the quadrivalent influenza vaccine candidate contains two type A strains and two type B strains that have been selected for the current seasonal traditional flu vaccine. 180 people aged 18 to 64 will be enrolled across six trial arms to test various combinations of the influenza vaccine candidate and the Omicron adapted vaccine at 30 and 60 microgram doses. The influenza vaccine candidate individually stands against licensed influenza vaccine as a comparator arm. Slide 18 details our two development tracks to create next-generation vaccines. One track includes our engineered spike protein vaccine candidate designed to elicit more broadly neutralizing antibody protection against the vast array of variants, including those which have not yet evolved. The other track includes vaccine candidates designed to enhance the T cell response against SARS-CoV-2. Our first testing candidate for this program, BNT162b4, targets highly conserved non-spike proteins that have been selected based on their potential to engage with the T cell arm of the immune system. This approach has the potential to increase immune resilience, enhance and broaden the T cell response, and provide memory T cell resistance and durability of B cell response. A clinical trial starting in combination with our Omicron BA.4/BA.5 adapted bivalent vaccine is expected in the coming weeks. Slide 19 highlights our infectious disease pipeline. In addition to the previously mentioned COVID-19 vaccine trial initiations from the third quarter, we expect the start of multiple Phase 1 human trials of our mRNA vaccine candidates over the coming months. This includes our Shingles and HSV-2 vaccine candidates, which are expected to enter the clinic in the final part of this year, our malaria vaccine candidate trial, either in the fourth quarter of 2022 or early 2023, and our tuberculosis vaccine candidates expected to dose the first patient in early 2023. These programs build on our validated platform of nucleoside-modified mRNA LNP with optimized backbone design to address diseases with significant global need. Moving to our oncology program update. Slide 20 provides an overview of our oncology pipeline that is grounded in our multi-modality toolbox and advanced through focused execution. We now have a total of 19 oncology product candidates across four different drug classes in 24 ongoing clinical trials, five of which are randomized Phase 2 trials. Our programs address areas of high unmet need and have the potential to tackle tumors using complementary strategies by targeting tumor cells directly or by moderating the immune response against the tumor. Many of our products can be rated as having potential to be combined with other pipeline assets. In the third quarter of 2022, preclinical programs advanced to Phase 1 clinical testing. This includes our FixVac candidate BNT116 for second-line treatment of non-small cell lung cancer and our bispecific RiboMab product candidate, BNT142 for solid tumors. In collaboration with Genmab, we recently initiated a Phase 1 study evaluating BNT313, our anti-CD27 Hexabody product candidate in solid tumors. At the ESMO Immuno-Oncology Congress in December 2022, we expect to have two presentations. One is on preliminary safety data from the safety run in part of a study that precedes randomization in the ongoing Phase 2 trial of our FixVac program, BNT113. This trial is evaluating BNT113 in combination with pembrolizumab in patients with first-line HPV16+, PDL1+ head and neck cancer carcinoma. The other presentation will include preliminary efficacy and safety data from another Genmab collaboration, the Phase 1 trial of BNT312, a CD40×4-1BB dual body in advanced solid tumors. Finally, we have BNT211, our next-generation CAR-T therapy product designed to overcome first-generation CAR-T cell therapy mutations in patients with solid tumors. We recently presented follow-on data for BNT211 at the ESMO Annual Congress. The Phase 1 dose escalation data continue to show encouraging clinical activity and safety.

Thank you, Ozlem, and a warm welcome to those of you on the phone. I would like to begin by presenting the key financial highlights for the third quarter of 2022, which you can find on Slide 27. Our total reported revenues for the third quarter reached €3.5 billion. Together with a strong first half year, we are in line with our prior year revenues for the year-to-date figures. I will elaborate on this shortly. Given this top line number, we delivered operating income of €2.4 billion and generated earnings per share on a fully diluted basis of €6.98. With respect to the company's liquidity position, we ended the third quarter of 2022 with €13.4 billion of cash and cash equivalents as well as trade receivables of around €7.3 billion. The trade receivables are primarily derived from our collaboration with Pfizer and remained outstanding due to the contractual settlement of the gross profit share under the collaboration. As of October 15, we collected €3.2 billion in cash from our outstanding trade receivables at September 30, improving our cash position and in turn, reducing our trade receivable position subsequent to the end of Q3. Continuing with Slide 28. We recognized €3.4 billion of COVID-19 vaccine revenues during the third quarter and €12.9 billion during the first nine months. Revenues for the first nine months are in line with our expectations. We believe the development of the pandemic has been and remains dynamic, causing a rephasing of orders and, with this, fluctuations in quarterly revenues. Let me give you some more details on our revenue streams. Under our COVID-19 vaccine collaborations, territories have been allocated between us, Pfizer, and Fosun Pharma based on marketing and distribution rights. Our COVID-19 vaccine revenues included €2.5 billion for the third quarter and €9.1 billion for the first nine months, which are related to our share of gross profit from COVID-19 vaccine sales in the collaboration partners' respective territories. These revenues represent a net figure, which means we generate a 100% gross margin of those revenues. As we have mentioned in the past, and explained in more detail in our financial statements and filings with the SEC, our profit share is to some extent estimated based on preliminary data shared between our collaboration partner Pfizer and us. The gross profit share is also impacted by write-offs. For example, for vaccine doses produced by our collaboration partner Pfizer, those write-offs reduced the gross profit share between the two companies and therefore, reduced BioNTech's revenue figure, but not those of our partner, Pfizer. Our COVID-19 vaccine revenues from direct sales to customers in our territory were €0.6 billion for the third quarter and €2.3 billion for the first nine months. Those revenues were significantly driven by the orders that were placed in late 2021 following the then-emergent Omicron variant, and the Omicron-adapted vaccine launches started beginning of September 2022. Also included in our COVID-19 vaccine revenues were €0.3 billion for the third quarter and €1.5 billion for the first nine months of revenues from sales to our collaboration partners. Now, I'd like to move on to our detailed financial results for the third quarter and first nine months of 2022, as shown on Slide 29. As I discussed revenues on the previous slide, let me move to cost of sales that reached approximately €0.8 billion in the third quarter of 2022, compared to €1.2 billion for the comparative prior year period. For the first nine months of 2022, the cost of sales reached approximately €2.8 billion, compared to €2.3 billion for the comparative prior year period. The change in cost of sales resulted mainly from the recognition of costs related to our COVID-19 vaccine revenues in our own territories, including the share of gross profit that we owe to Pfizer. In addition, cost of sales were impacted by expenses arising from inventory write-offs and expenses for production capacities derived from contracts with contract manufacturing organizations. Research and development expenses reached €34.8 million for the third quarter of 2022, compared to €260.4 million for the comparative prior year in 2021. For the first nine months of 2022, research and development expenses amounted to €1 billion, compared to €0.7 billion for the comparative prior year period. The increase was mainly due to the increased headcount and higher expenses in the context of share-based payments. General and administrative expenses reached €141 million for the third quarter of 2022, compared to €68.2 million for the comparative period in 2021. For the first nine months of 2022, general and administrative expenses reached €361.8 million, compared to €154.9 million for the comparative prior year period. The increase in G&A was mainly driven by the planned increase in headcount and increased expenses for purchased external services. Income taxes were accrued with an amount of €0.7 billion for the third quarter of 2022, compared to €1.5 billion for the comparative period in 2021. For the first nine months of 2022, income taxes were accrued with an amount of €2.6 billion compared to €3.2 billion for the comparative prior year period. The derived effective income tax rate for the first nine months of 2022 was 26.8%. In the third quarter of 2022, net profit reached €1.8 billion compared to €3.2 billion for the comparative period in 2021. In the first nine months of 2022, net profit reached €7.2 billion compared to €7.1 billion for the comparative prior year period. Our diluted earnings per share for the third quarter of 2022 amounted to €6.98 compared to €12.35 for the competitive period in 2021. For the first nine months of 2022, our diluted earnings per share was €27.70 compared to €27.46 in 2021. Now let's move to slide 30 for the outlook for the 2022 financial year. We are updating our 2022 financial guidance, raising our COVID-19 vaccine revenue estimate for the full year to the upper end of the original range, €16 billion to €17 billion, from €13 billion to €17 billion previously. The narrowed guidance reflects delivery of the Omicron-adapted bivalent vaccine booster, which started early in September and is expected to continue throughout the fourth quarter of 2022, as well as higher prices and a positive foreign currency effect. We reiterate our planned expenses and CapEx, which we have summarized for you on the slide. We also updated the estimated annual effective income tax rate from previously 28% to approximately 27%, which is a further improvement to the previous year. I’ll be moving to the completion of the first tranche of our share repurchase program, as shown on slide 31. The share repurchase program approved by the Management Board and the Supervisory Board permits the repurchase of ADSs for a value of up to $1.5 billion over two years. Our intention is to use some or all of the repurchase ADSs to meet pending obligations from share-based payment arrangements. The first tranche of the repurchase program had a value of up to US$1 billion and began on May 2, 2022, and ended October 10, 2022. As shown on the slide, a total of 6,945,530 ADSs were repurchased at an average price of US$143.98, representing 2.8% of the shares issued as of April 30, 2022. In addition, we had paid out a dividend of approximately €0.5 billion to shareholders in 2022. In November, the second tranche of the repurchase program worth up to $0.5 billion has been approved, commencing on December 7 this year. All information and an overview of the buybacks can be found on our IR website. With that, I would like to turn the call over to our Chief Strategy Officer, Ryan Richardson, for an update on our outlook for 2022 and concluding remarks. Thank you.

Thank you, Jens. Moving to slide 33, our COVID-19 vaccine has played a significant role in combating the pandemic with the launch of our variant-adapted B4/5 vaccine. We and our partners have gained approval in over 45 countries and territories since receiving our first approval in August this year, and we have quickly distributed around 300 million doses of variant-adapted vaccines as of mid-October. We have revised our full year 2022 order book and now anticipate invoicing up to 2.1 billion doses this year, with some deliveries rescheduled to early 2023 due to supply availability and projected uptake of our variant-adapted vaccines. By the end of the year, we aim to complete our existing contract with the United States government for 105 million doses and our contract with the European Union for 650 million doses. Looking ahead to 2023, we expect the COVID-19 vaccine market to transition toward a hybrid public-private model, with some regions, especially the United States, likely adopting a commercial contracting model. In the U.S., we and our partner Pfizer expect the list price for a single dose of the adult vaccine to range from $110 to $130, reflecting its cost-effectiveness and public health significance. In the future, we anticipate seasonal demand to peak in the latter half of the year, similar to other seasonal respiratory infectious disease vaccines. As highlighted on slide 34, we continue to meet our 2022 clinical targets. In the remaining months of the year, we anticipate further updates, some displayed on this and the following slides. In infectious diseases, we foresee the ongoing development of our COVID-19 vaccine pipeline, with several next-generation vaccine candidates entering clinical trials before the year's end. Additionally, we expect updates from our ongoing clinical studies on variant-adapted vaccines. Beyond COVID-19, we plan for multiple mRNA vaccines to begin clinical testing this year and early next year. By the end of 2023, we aim to initiate up to five new clinical trials in infectious diseases. Moving to slide 35, in oncology, we recently dosed the first patient in the Phase 1 trial for BNT313, our anti-CD27 HexaBody in partnership with Genmab. By year-end, we also plan to have the first patient dosed in a second Phase 1 trial for BNT116 in first-line NSCLC. We will present a clinical data update for BNT312 at the ESMO IO Annual Meeting in December. Looking toward 2023, we predict an active year for our oncology pipeline, with up to 10 clinical trial updates across various programs. In conclusion, as shown on slide 36, we anticipate 2023 to be a pivotal year for BioNTech. We are committed to long-term investments in our next-generation COVID-19 vaccine pipeline while continuing to distribute our variant-adapted vaccine globally. We will also expand and accelerate our innovative oncology and infectious disease pipelines in anticipation of multiple late-stage data releases and clinical trial initiations that we expect will drive future growth. With our strengthening balance sheet, which we foresee continuing into next year, we will reinvest in the company to enhance capabilities and accelerate growth. Additionally, we will explore complementary business development and acquisition opportunities that align with our strategy. We remain steadfast in our optimism about creating long-term value for patients, shareholders, and society. I want to thank our shareholders for their ongoing support, and we will now open the floor for questions.

Thank you. We will now go to our first question. One moment, please. Your first question comes from Tazeen Ahmad from Bank of America. Please, go ahead.

Hello. Good morning. Thanks for taking my question. Can I just get some color on how long you think that the current BA 4/5 bivalent shot is going to be in use? Should we expect it to have any coverage of the newer variants, like, for example, the BQ.1 and BQ.1.1? If it doesn't, how should we think about some of the shipments that you mentioned in your prepared remarks that have been shifted into 2023? Would those be delayed until later next year? Do the parties that have ordered it have the right to delay shipment for a newer version of the vaccine? Thanks.

I would like to respond to your first question, Tazeen. With regard to how long the BA 4/5 Omicron-adapted vaccines would allow us to respond to the pandemic, that will really depend on how the virus further evolves. Some of the currently emerging variants of concern are closely related to BA.4/BA.5 and are from the BA.2 lineage. There is some probability that there will be cross-neutralization and cross-protection against these variants. We will continue to test this through cross-neutralization assays, which are ongoing and will then provide further insights. But it really depends on how the virus further evolves.

Ryan, do you want to take the second question, or should I provide an answer?

Yeah, absolutely, I can start. On the question of shifting doses, Tazeen, a significant portion of those doses that were shifted for delivery next year were actually donation doses to a variety of countries around the world. So, we see that dynamic as not specifically related to the variant vaccine in question. Generally speaking, these contracts are flexible. While we see some of those doses shifted to 2023, we still expect a significant proportion of contracted doses next year and beyond. And that could be served by either the current vaccine or future vaccines if a future variant vaccine is needed.

Thank you. We will now go to our next question. One moment, please. And your next question comes from the line of Matthew Harrison from Morgan Stanley.

This is Steve on for Matthew. Thanks for taking my question. I would like to ask, as you think about the PCV data next year, what kind of PFS difference would you like to see to think about moving it ahead? Thank you.

Just to clarify the question, you referenced the PCV, so you're talking about the IMS program?

In melanoma, yes.

Yes. I think this is too early to define a threshold. We are working with hazard ratios. We have to understand whether any type of improvement is in line with the further progress in the field that has been made in first-line melanoma. We have to align this understanding also with the progress that we have made in the manufacturing of our IMS platform. So, in the meantime, we have improved our algorithm and reduced the turnaround time for the vaccine and come up with process improvements. This would also require discussions with the authorities to make the final decision that we will focus on and can just use the study to expand the clinical trial for a potential accelerated approval or conduct a confirmatory trial.

Thank you. We will now go to our next question. And your next question comes from the line of Chris Shibutani from Goldman Sachs. Please go ahead.

Yes. Thank you very much. Recent media reports suggest the potential for distribution of your COVID vaccine in China with the initial target population being ex-pats. As we're trying to better understand the potential scope of this opportunity, thinking in terms of units and pricing, can you, number one, give us any updates on development when perhaps your vaccine might be approved in China? Number two, would this be an approval that might enable broader distribution to Chinese nationals? And then, on the price front, help us at all with anything that we can understand about the potential pricing in that market? Thank you.

Yeah. Thanks for the question, Chris. I think it's a little too early to actually provide specifics there. We have seen some positive re-engagement, as has been reported, and we can confirm that we have been taking part in some discussions, which are very positive. However, it's still too early to say, or to try to predict to what extent an approval for the expat population could be granted, when it might be granted, or what that would mean commercially. So, at this stage, we're continuing to monitor the situation very carefully and hope to provide updates in the near future.

Thank you. We will go to our next question. And your next question comes from Jessica Fye from JPMorgan. Please go ahead.

Hey there. Good morning. Thanks so much for taking my questions. On the COVID-19 vaccine market, Moderna has talked about how they expect the COVID-booster market to be in the range of 500 million to 600 million doses per year, not unlike flu, but potentially a bit below that in 2023, and working up to that 500 million to 600 million thereafter. Do you share that view that COVID vaccine volumes could trailed that 500 million, 600 million range next year, but then increase in 2024 and beyond to something closer to the flu range? Thank you.

Yes, this is Jens Holstein responding to the question, and Ryan might add his thoughts as well. We all recognize that the pandemic has changed over the course of this year, and forecasting its future trajectory is quite challenging right now. However, it's clear that COVID is more lethal than the flu, with significantly higher mortality rates. The elderly and high-risk individuals will definitely need vaccinations, along with anyone else who feels they require protection against the virus. Looking ahead, the situation will largely depend on the emergence and severity of any new variants. It's highly likely that we could see a business model similar to that of the flu in the future. Considering what I mentioned earlier, COVID remains a serious illness and represents a substantial multibillion-dollar market moving forward. In this endemic phase, we anticipate that pricing will differ significantly from what we currently see, which offers potential for growth. Lastly, I believe BioNTech and Pfizer have demonstrated that we are well-positioned in the market. We have maintained a strong market presence over time, and I am confident that this will continue to be a significant and promising market for us. Ryan, would you like to add anything?

No, I think you covered most of it. I would just second the notion that in 2023, we are not going to yet be into a true endemic market because it will be a hybrid market with significant contracted volumes. Also, we expect the emergence of a private market on top. I think the volume numbers that you've said are plausible. We have still seen evidence of higher uptick in the booster segment than, for example, we see with flu. And so that's one data point there. Obviously, here, we do expect a very different price point versus the flu market. So, I think those factors combined to create the multi-billion long-term market opportunity that we expect that Ugur just outlined.

Thank you. We will now go to our next question. Your question comes from Daina Graybosch from SVB Leerink. Please go ahead. Your line is open.

Hi. Thanks for the question. I want to ask about some academic applications that were posted as a preprint from the broken lab recently, which were looking at the immunogenicity of the bivalent boosters versus another boost of a wild-type monovalent. Their data showed pretty modest increases in antibody titers with the bivalent booster, much more modest than what you today have shown in the greater-than-55 population. I wonder if you can talk about how you interpret their data. If their data is correct, and that you get a very modest difference with the bivalent, let's say, for younger people under 55, what does that tell you about the bivalent booster, whether boosters will be needed, and what kind of booster we may need in the future? Thank you.

Hi, Daina. Thank you for the question. First of all, we have studied the preprint and we see that the study lacks differentiation between individuals who had prior infections and those without prior infections. Our data set demonstrates that this is crucial for drawing conclusions since individuals without prior infections have a much higher increase in overall 4-fold neutralization titers compared to those with prior infections. Our published data, both from the 7-day and 1-month follow-ups, align consistently within groups, indicating a reliable finding across a broader subject group. The key finding remains that we see a few-fold higher increases in neutralization titers in the elderly population when compared to the wild-type vaccine. Importantly, each vaccination with a variant-adapted vaccine significantly induces B-cell responses, which manifest later in a timeline of three-plus months. Hence, we believe that, similar to flu, there will be a sustained need to use variant-adapted vaccines to retrain the immune system to new variant sequences, as sticking to the existing wild-type vaccine is unlikely to suffice. It is also crucial to recognize that boosting, irrespective of the type of vaccine, results in reduced severe disease states and mortality. Thus, regardless of whether we administer boosters with wild-type or variant-adapted vaccines, we see notable reductions in severe disease rates.

Thank you. We will now go to our next question. Your question comes from Akash Tewari from Jefferies. Please go ahead. Your line is open.

Hey, good morning. This is Avi on for Akash. Thanks for taking our question. We have one on COVID vaccine sales. How many of the total 300 million EU contracted doses remain to be delivered in 2023? Also, you mentioned some of your shipments have been pushed to next year. So in total, how many confirmed orders are there for next year? Consensus models estimate 2023 total vaccine sales of around $10 billion. Do you feel you will be able to hit that number with your existing orders signed for 2023? Thanks.

Well, yes, thank you for the question. I'll start, and then Jens Holstein may chime in as well. I think you first asked about next year and the EU contract. What we announced in our prepared remarks was that we plan to deliver the planned doses for the EU this year as we planned for 2022, and also complete the existing US contract announced earlier this year. We are not disclosing an order book number for next year. What we can tell you is that our signed overall orders have continued to grow throughout this year, regardless of the delivery time period, but we’re not guiding to any future order book because we think it’s premature to do so, and frankly, it is not as relevant now given that the demand picture continues to be dynamic. We expect the emergence of a private market in some geographies next year, hence we're tracking well to meet demand. Jens, do you want to add to that?

Yes, okay, sorry, Ryan. I myself had a little bit of trouble understanding you because the line was not that good. The connection was not that great. However, as correctly pointed out by Ryan, we will deliver according to plan for 2022 for the EU. We’re not expecting any shifts here. As you know, we have contractual agreements signed for 2023 with the EU for 450 million doses and an option for an additional 450 million doses. But as Ryan correctly stated, that might be at a later point in time. Overall, we need to move away from simply thinking about the order book because we have seen shifts. It heavily depends on market demand and the evolution of variants over time. As Ryan pointed out, there will be markets that move into a private setting going forward, and this might take a few more years. Therefore, drawing conclusions solely from an order book number can be misleading.

Thank you. We will now go to our next question. And the next question comes from Yaron Werber from Cowen. Please go ahead. Your line is open.

Hi. This is Brandon on for Yaron. Thanks very much for taking the questions. Congrats on the strong quarter. Just a quick one from us. When we think about the emergence of future variants and look at kind of the timeline from the first Omicron wave in December and then BA.4/5 around April or so, then the rollout by September of your BA.4/5 booster, do you think this is more or less the reasonable timeline we could expect for future variants in terms of your interactions with the FDA and the materials and data you’ll need to get future boosters authorized, or are there important considerations we should really keep in mind as the landscape shifts in the coming months and years?

Ugur, do you want to take that?

Yes, I can take that. I think the future vaccine adaptation and booster process will depend on two aspects: one is the regulatory landscape, and the second is how fast we can respond to new variants. Starting with the latter, as you know, the BA.4/5 variant emerged recently. After the FDA's decisions, we were able to come up with an adaptive vaccine and enable delivery within about two months. This means our internal processes for vaccine adaptations have improved even faster than we anticipated early in 2022, and we aim to further optimize the vaccine adaptation process for a quick response to new variants. The second important aspect is the authorization of the vaccines based on pre-existing clinical data on multiple variants. To remind everyone, we have conducted multiple clinical trials with different variants, and the safety profile we identified was consistently reliable for all variant-adapted vaccines. Furthermore, the preclinical data, clinical data, and breakthrough subjects with breakthrough infections have shown predictive value regarding what we observe in clinical settings. The authorization of the BA.4/5 adapted vaccine followed this logic, thus facilitating a rapid authorization and availability of the adapted vaccine. We believe that this will also serve as a model going forward. It means, once new variants emerge requiring boosting, we should be able to respond promptly, and we anticipate a regulatory process to allow such variant-adapted vaccines to be delivered within a few months following the emergence of the variant.

Thank you. We will now go to our next question. Your question comes from Ellie Merle from UBS. Please go ahead. Your line is open.

Hey guys, thanks so much for taking the question. Just a financial one: given you booked the gross profits from the Pfizer collaboration, can you comment on your latest thoughts on how you're thinking about the profit margin with the Pfizer collaboration COVID business longer term, and how you see that changing? And also how this could change if there were, say, to be a combination COVID flu vaccine, for instance? Thanks.

Yes. Thanks, Ellie, for the question. Not an easy question to answer, I have to say. In terms of the gross margin, I think you've seen pretty stable gross margin development throughout the year. In the quarters, you have some ups and downs once in a while given that we had some write-offs, and we have elaborated on this in the documentation that we published. Going forward, I mean, with higher pricing, it all depends on what the costs are and what the cost of goods sold will be that we have to deduct. It's a bit too early to really give you clear guidance on this, what that means for our gross margin for 2023 and the years beyond. Specifically then, when flu comes in, which will take a while, we will see that at a later point in time. So, there will be some mixture that we will see going forward, and therefore, you've got to bear with us a little bit until we're able to really give you some more clarity on the impact.

Thank you. We will take one more question. And the question comes from the line of Simon Baker from Redburn. Please go ahead. Your line is open.

A question on pricing, if I may. You very helpfully gave us the list price range for the US of around $110 to $130 per single dose. I appreciate it's not the same thing, but I just wonder how we should think about contrasting that number with the $64 per dose that CMS talked about in April. Obviously, you also cover a far broader remit than the CMS was talking about, but just how we can think about how those numbers triangulate together? And on a similar point, could you give us any early indications for pricing outside the US for 2023? Thanks very much.

Yeah. Thank you, Simon. As you know, we're expecting this market to be a heavily tiered priced market like for any other vaccines. The price we've quoted there is a US list price. We would expect, of course, that there can be differences depending on the segment you're in. That's pretty much all we can tell you at this point. In terms of the dynamic, we do think that this market will have some important differences from other vaccine markets like flu in the sense that it’s, we expect that this will have a branded market for the foreseeable future. There is also a much different market structure here than you have in some other vaccine markets with many, many players. So, we feel good about our position here, due to having a strong product with a strong product profile, both on safety and efficacy and having continued to build strong safety data, establishing a robust brand. So, I think we feel good about the pricing shared, but that's pretty much all we can say at this point. In some geographies, there could be differences, and there's likely to still be a link to volumes on some level, as you would expect in a heavily contracted market like this where you have purchases in bulk.

To add to what Ryan just said, Pfizer has indicated that pricing is set relative to the benefit we bring with the product. As Ryan pointed out, it’s also a question of volume. We signed significant contracts with various governments. The contract size with other parties in the US market is, of course, quite different, and will have implications. Overall, while the way pricing will develop over time is to be anticipated to rise, more and more countries, once it become endemic, will exhibit similar pricing trends as we are seeing. The pricing variations that may emerge in Japan or Europe, when the European contract runs out, still need to be determined; it’s somewhat early to provide precise indications here, but this outlines the broad trajectory we envision.

Thank you. We will take one last question. Your question comes from the line of Shu from Berenberg. Please go ahead. Your line is open.

Great. Thanks for taking the question. I want to ask broadly on the mRNA cancer vaccine. Obviously, there is some skepticism around the cancer vaccine space. So, maybe Ugur, can you discuss a bit of your confidence in this modality for cancer vaccines? And maybe your updated thoughts on where this modality may play the most significant role?

Yes. Thank you for the question. The discussion around cancer vaccines often revolves around skepticism regarding their efficacy, especially in light of numerous past failures. Our response centers on positioning cancer vaccines in contexts where they can truly make an impact. We believe that the optimal application for cancer vaccines lies post-surgery, targeting the residual micrometastatic disease. For instance, in colorectal cancer, about 30% of patients experience a relapse within two to three years after surgery. Similarly, approximately 30-40% of triple-negative breast cancer patients see relapses within the first four years after surgery, while pancreatic cancer has relapse rates soaring up to around 70% after surgery. Hence, we aim to position our personalized cancer vaccines to elicit neoantigen-specific immune responses targeting the T cells. We have clinical data indicating this approach can harness strong T cell responses capable of controlling and eradicating residual tumor cells. Ozlem, would you like to address the second question about BNT211?

Yes. This was about our CAR-T cell program, BNT211, and the regulatory path we foresee there. Let me remind you that we're still in the dose-finding part of our Phase I/II trial, which means that we have only tested the first two or three dose levels of our CAR-T cells and are currently exploring whether adding a new CAR-T cell product makes a difference or not and determining how the treatment regimen should be. That said, we are incredibly excited about the early-stage data demonstrating manageable safety profiles alongside the compelling clinical activity, particularly in testicular cancer patients. We’re actively strategizing about the best regulatory path forward but cannot make any firm statements at this time; this will be addressed further next year.

Thank you. I will now hand the call back for closing remarks.

Thank you for joining today's call. We look forward to talking to you soon. Stay safe. Thank you and goodbye.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.