BioNTech SE Q3 FY2023 Earnings Call

Welcome to the BioNTech Third Quarter 2023 Update Call. I would like to hand the call over to Dr. Victoria Meissner, Vice President of Strategy and Investor Relations. Please go ahead.

Thank you. Good morning and afternoon. Thank you for joining us today for BioNTech's Third Quarter 2023 Earnings Call. As a reminder, the slides that accompany this call and the press release issued this morning can be found in the investor section of our website. On the next slide, you can see our forward-looking statements disclaimer. Additional information about these statements and other risks are described in our filings made with the U.S. Securities and Exchange Commission. Forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. On Slide 3, you can find the agenda for today's call. Today I'm joined by the following members of BioNTech's management team. Our CEO and Co-Founder, Ugur Sahin; Ozlem Tureci, our Chief Medical Officer and Co-Founder; Jens Holstein, our Chief Financial Officer; and Ryan Richardson, our Chief Strategy Officer. I would like to turn the call over to Ugur Sahin.

Thank you, Victoria. A warm welcome to all those joining us today. I will summarize our third quarter highlights before turning to my colleagues, who will provide further details. Slide 5. Let me start by providing an overview of our strategic priorities and latest achievements. This quarter we continue to build on our global COVID-19 vaccine leadership with first-to-market Omicron XBB.1.5-adapted vaccine launches across multiple regions worldwide. I thank our team and collaborators for their tireless efforts to make this accomplishment possible again in such a short period of time. Our COVID-19 influenza combination program, run in partnership with Pfizer, leveraging our proprietary mRNA technology has also reported positive top-line results. The Phase 1/2 study evaluating the safety, tolerability, and immunogenicity of co-administered mRNA-based vaccine candidates for COVID-19 and influenza among healthy adults 18 to 64 years of age when compared to a licensed influenza vaccine, demonstrated robust immune responses to influenza A, influenza B, and SARS-CoV-2 strains, as well as a safety profile consistent with the safety profile of the company’s COVID-19 vaccine. A pivotal Phase 3 study will be initiated in the coming months. Our second strategic priority is to advance our oncology platforms by initiating multiple trials with registrational potential. Jointly with our partner Duality Bio, we are initiating a pivotal Phase 3 trial to evaluate our next-generation antibody conjugate BNT323 in patients with hormone receptor positive HER2-low breast cancer who progress on previous standard of care but are chemotherapy naive. Furthermore, during this quarter we and our respective collaboration partners published original scientific data and presented new clinical data across several programs at International Scientific Congresses, including ESMO and SITC, that will inform our development strategies and next steps for these programs. Based on the successful results, we have expanded existing collaborations and made commitments with specialized developers, which add to our proprietary toolkit of technologies and strengthen our therapeutic product candidate portfolio. This covers the in-licensing of HER3-targeted antibody drug conjugate from MediLink Therapeutics and as announced today, our plan to bring forward an anti-VEGF, anti-PD-L1 bi-specific antibody in collaboration with our partner Biotheus. Our first strategic priority is to initiate and accelerate clinical programs that target infectious diseases of unmet medical need. In the third quarter, we initiated our third first-in-human trial in infectious disease this year, a program aimed at advancing mRNA-based vaccine candidates for the prevention of Mpox, run in partnership with the Coalition for Epidemic Preparedness Innovations. In summary, we continued our focused execution against our strategic priorities in the third quarter and look forward to additional progress in all three of these areas for the remainder of the year and into 2024. We will share more detail on our oncology, as well infectious disease programs at our Innovation Series Day in Boston tomorrow, an event that I invite you all to attend in person or online. Slide 6, focusing on our marketed COVID-19 vaccine COMIRNATY. We continued to build on our global COVID-19 vaccine leadership, the first to market Omicron XBB.1.5-adapted vaccine launches. This was preceded by a robust and successful regulatory process. In late August, the European Medicines Agency recommended full marketing authorization for our monovalent XBB.1.5-adapted vaccine. This was followed in September by the U.S. Food and Drug Administration authorizing the adapted vaccine for individuals aged six months to 11 years under emergency use authorization, and for those aged 12 and above. The vaccines have been approved under supplemental biologics license applications. Second, other national health regulators across the globe, including the UK, Japan, Canada, and South Korea have also approved our monovalent adaptive vaccine. Within two months, we went from the first regulatory recommendations for XBB.1.5 adaptive vaccine to our first shipments of the respective vaccine. The ability to execute with such speed was enabled by our continued surveillance and analysis of variants of concern, the strength of our mRNA technology which allows for scalable production, rapid manufacturing and adaptation, and our expertise at navigating the evolving regulatory landscape on a global scale. Historically, we have seen an increase in COVID-19 hospitalizations in the winter in line with other common respiratory diseases. On Slide 7, you can see independent former projections across scenarios, assuming different vaccination recommendations and immune escape levels. Based on these, it is expected that weekly hospitalizations are likely to increase this winter and have a healthcare impact similar to last year. COVID-19 burden is currently lower than in previous years. However, the absolute number of hospitalizations and deaths is still high in certain regions with thousands of hospitalizations and hundreds of deaths each week. The emergence of new variants coupled with the waning of both vaccine and infection-induced immunity indicates that susceptibility to infection remains a concern and may increase over time. Moreover, the data shown here suggests that providing simple, stable recommendations for updated doses could contribute to improved vaccine coverage over time, mitigating the risk associated with evolving COVID-19 variants.

Thank you, Ugur. Glad to be speaking with everyone. Today we will provide a high-level pipeline update. We will delve into the more advanced programs in greater detail at our Innovation Series Day event tomorrow. Starting with an overview of our infectious disease pipeline on Slide 11. In addition to our marketed product, COMIRNATY, we continue to pursue our multi-prompt innovation strategy to improve upon our vaccine with next-generation approaches aimed at generating broader and more durable immunity. This includes our stabilized spike vaccine approach being studied in the Phase 2 trial and our T-cell enhancing vaccine candidate in an ongoing Phase 1 trial. We believe that our COVID-19 vaccine has the potential to be combined with a seasonal flu vaccine. Across many parts of the world, people are currently receiving the Omicron XBB adapted vaccine boosters, at the same time as their flu shots. 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. We recently reported Phase 1/2 results where our combination candidate showed robust immune responses to influenza A, influenza B, and SARS-CoV-2 strains, as well as a safety profile consistent with the safety profile of a company's COVID-19 vaccine, which met the criteria for advancement to a Phase 3 trial. In addition to the previously mentioned COVID-19 and influenza vaccine programs, we started multiple first-in-human trials of our mRNA vaccine candidates in the last year that address Shingles, HSV, TB, and Mpox. On Slide 12, as expected, SARS-CoV-2 continues to evolve. The Omicron XBB sub-lineages currently account for the majority of COVID-19 cases globally, including the XBB descendant EG.5.1, whose dominance is growing. Slide 13. We and our partner Pfizer tested for potential effectiveness of an Omicron XBB.1.5-adapted monovalent vaccine as a primary series and booster in preclinical models. You can see here the neutralizing antibody response in mice immunized with our Omicron BA.4/5 adapted bivalent vaccine as a booster after two doses of the original BNT162b2 vaccine. One group of mice again received the BA.4/5 adapted bivalent COVID-19 vaccine as a fourth dose and the other group received the new XBB.1.5-adapted monovalent COVID-19 vaccine as a fourth dose. You can see a four to fivefold increase of neutralization of several XBB-related variants when dose four is the XBB.1.5-adapted monovalent vaccine as compared to last season's BA.4/5-adapted vaccine. These preclinical data indicate that an XBB.1.5 variant-adapted monovalent vaccine in the pre-vaccinated setting has the potential to induce broad cross-neutralizing antibody titers against multiple XBB sub-lineages. We can also see an increase in geometric mean titers of neutralizing antibodies across XBB lineages, including EG.5.1 and BA.2.86 when compared to the previous bivalent BA.4/5 vaccine component arm. Slide 14 shows the design of our ongoing Phase 2/3 clinical study testing the safety, tolerability, and immunogenicity of our Omicron XBB.1.5-adapted monovalent vaccine in 700 vaccine-naive and vaccine-experienced participants. While data from the study will be reported in 2024, there is already clinical real-world data shown on Slide 15, demonstrating that our XBB.1.5-adapted vaccine elicited significantly higher neutralizing antibody responses against XBB.1.5, XBB.2.3, EG.5.1, and BA2.86 compared to pre-vaccination levels. Moving now to our oncology pipeline on Slide 16, which is grounded in our multimodality toolbox and is advancing through focused execution. We now have one Phase 3 study ongoing and a second Phase 3 expected to dose its first patient soon. Gotistobart, our anti-CTLA-4 monoclonal antibody, which we believe offers a differentiated safety profile, a Phase 3 clinical trial evaluating its efficacy and safety as monotherapy in metastatic non-small cell lung cancer patients who have progressed on previous IO therapy has started in June this year and will enroll 600 patients. BNT323, our anti HER2 antibody drug conjugate, also being studied in a Phase 3 clinical trial assessing its efficacy versus investigators' choice of chemotherapy in patients with hormone receptor positive HER2 low chemotherapy naive breast cancer patients whose disease has progressed on at least two lines of prior endocrine therapy or within six months of first line endocrine therapy plus CDK-4 inhibitor. We've also recently initiated two new Phase 2 trials, one in partnership with Genentech evaluating our individualized cancer vaccine candidate, BNT122, in the adjuvant setting for patients with pancreatic cancer. The other in partnership with Genmab is evaluating our BNT311 bispecific conditionally PDL1-41BB agonistic antibody as a second line treatment for patients with endometrial cancer. Also, as part of our collaboration with Genmab, BNT314, a bi-specific antibody designed to boost anti-tumor immune responses through outcome-dependent 41BB agonistic activity is ready to move from preclinical to Phase 1 clinical testing with the first patient dose expected in the next few months.

Thank you, Ozlem, and a warm welcome to everyone who dialed into today's call. Before we go into the financial details for the third quarter and the first nine months of 2023, I'll start by giving you an overview of some key financial highlights which you can find on the next slide. Our total revenues reached EUR2.3 billion for the first nine months of 2023 and were significantly derived from sales of our recently approved Omicron XBB.1.5-adapted monovalent vaccine, which started to pick up at the end of the third quarter of 2023 and are expected to accelerate for the remainder of the year. Our revenues during the first nine months of 2023 were negatively influenced in the amount of approximately EUR0.6 billion, triggered by write-downs and other charges reported by our collaboration partner Pfizer. As a reminder, as part of our gross profit share arrangement with Pfizer, write-downs and similar charges by Pfizer reduce the gross profit which both parties generally share equally, and this ultimately impacts BioNTech's revenue figure. As part of this contractual model, we only commercialized COMIRNATY in Germany and Turkey, and commercialization costs remain with the party being responsible for its respective markets. While we have been impacted by such write-downs on the top line, our sales and marketing expenses remain low. As we have outlined in earlier earnings calls, the revenue development for COVID-19 vaccines is expected to mimic a flu-like setting. I will go into more details concerning our financial guidance in the course of the call, but want to emphasize now that taking the Pfizer announcement and its implications onto the 2023 revenues into account, we have updated our 2023 COVID-19 vaccine revenue guidance of around EUR5 billion to somewhere around EUR4 billion for the full financial year 2023. During the first nine months of 2023, we generated a profit before tax of EUR0.5 billion, which on top of our operating results demonstrates our positive financial results generated from our strong financial position, overall resulting in earnings per share on the fully diluted basis of EUR1.94.

Thank you, Jens. I'll now provide a brief summary of the outlook for our updated COVID-19 vaccine franchise and an overview of our latest progress in oncology before concluding with our strategic outlook for the remainder of the year. We're making good progress on our three main strategic objectives. Regarding our COVID-19 vaccine franchise, we look forward to advancing our COVID-19 influenza combination vaccine into a Phase 3 trial in the coming months. If successful, we believe simplifying immunization practices for healthcare providers could positively impact compliance and help reduce the burden of these diseases and its impact on healthcare systems. In immuno-oncology, we are building a unique and powerful portfolio of complementary therapies. We expect to start multiple trials with registrational potential over the next 12 to 18 months while continuing to generate data that inform our go, no-go development decisions. And in infectious diseases, we plan to broaden our pipeline with new therapies that target high medical need indications. Now moving to the next slide on the ongoing global rollout of our adaptive vaccine. In the two and a half months following regulatory recommendation for an XBB.1.5-adapted monovalent vaccine, we and Pfizer have shipped vaccine doses to more than 40 geographies around the world. Across key markets, we continue to benefit from a strong market position. In some regions, such as Europe and Japan, we have gained considerable share. In the U.S., where we leverage our partner Pfizer's commercial capabilities, we are seeing approximately 50% of vaccines going through the retail channel. We expect that vaccine uptake will continue through increase to the end of the year.

We will now begin the question-and-answer session. Thank you. We'll now take our first question. It is from Daina Graybosch from Leerink Partners. Please go ahead.

Hi, thank you. I have two financial questions. One, you have many programs going into Phase 3, and that's certainly going to increase your R&D expenses. And I wonder, Jens, if you can give us any guidance on sort of the near to midterm and how much R&D we should expect in our model? And the second one is, whether you could help us at all with any inventory write-down understanding more predictability behind how we might see that next year and in the future few years after that? Thank you very much.

Yes. Thanks, Daina. Thanks for the question and let me start with the second one maybe first, with the inventory write-offs. As I stated in my speech, I think this EUR600 million that we had to face from Pfizer this year has been really a reflection of the situation that we moved from the pandemic into an endemic situation. Going forward, of course, we have to, with new variants coming up, always have some sort of write-offs to be reflected, being it on Pfizer's side or on our side. So there will be something, but not at all at that magnitude that we have seen now with this shift in 2023. So I think from our perspective going forward, the magnitude is a fraction of what we had to announce, unfortunately, for 2023. Then in terms of the R&D expenses, Ryan was alluding to additional clinical trials, further late-stage trials. Of course, that means that our R&D expenses are expected to go up. And that's something that we envisage and want because we believe strongly that we have valuable compounds that we need to invest money in. So those numbers will go up in terms of the magnitude for the next couple of years. You've got to bear with us a little bit until we give our guidance. But we have highlighted that in terms of all our costs for 2023 that we are carefully looking at how much money do we want to spend or do we need to spend. But first and foremost, we want to create value with a cash position that we'll have and that of course goes hand-in-hand with increased R&D expenses going forward.

Yes, and to add to Jens's comments regarding the R&D expenses, it's important to note that for several pivotal or soon-to-be pivotal programs, we anticipate sharing R&D costs with a partner. This is true for our collaboration with Pfizer, where we evenly split R&D expenses. We also mentioned today that we expect to initiate a couple of pivotal trials involving combination vaccines, which could serve as a mid-term growth driver if they prove successful. Likewise, we have several oncology programs that are also partnered, where we share costs.

Okay. Great guys. Thanks so much. Good morning. I have a couple of questions. It was encouraging to see that the safety profile in general for the COVID and flu combo vaccine resembles what you saw just for the regular COVID vaccine. But I'm wondering if you could just provide any additional data, particularly on what reactogenicity might have looked at and what we found, for example? And then secondly, a financial question. On R&D, can you elaborate on whether at least some of your expenses have come from deprioritizing certain programs and if so, can you talk to us about what programs those were? Thanks.

Yes, we were struggling with unmuting. Thank you, Tazeen, for the question. The first one was about reactogenicity profile for our variant-adapted vaccine. And that is, in principle, more or less equal to the profiles we have developed for the BA4, BA5 adapted version and what we see with the flu mRNA vaccine in the respective dose levels. And that supports that safety profile including the reactogenicity is a platform characteristic. So, in all that regard.

Yeah, so the combo vaccine with regard to the safety and reactogenicity profile does not differ from the dose-dependent reactogenicity profile of the COVID-19 vaccine.

Yes, I'll step in. During our review of activities, we undertook a few initiatives. We have prioritized several programs, including earlier ones. We will keep you informed about any relevant updates regarding our later stage programs, but there's nothing to report at this time. We also closely examined our collaboration with Pfizer on these programs to determine how much funding is truly necessary to achieve the desired outcomes. This is another factor to consider, along with some shifting of expenses from 2023 to 2024. As always, there are a few items to note, but I wouldn’t categorize those costs as savings. We view deprioritization and the ability to run clinical trials at a lower cost as genuine cost savings, and that constitutes a significant part of the explanation for the cost reduction.

Thank you very much. Good morning and good afternoon. Two questions, if I may. First on the oncology program, BNT122, the iNeST cancer vaccine, ongoing melanoma study, but we noticed that there was an absence of commentary in the press release. Should we still expect the study to report top line results by year end and perhaps you can comment on what your expectations are for this program and if they've changed? My second question is on the COVID flu combination data to make sure in terms of immunogenicity, the press release mentioned titers generated by lead formulations work compared to concomitant administration of COVID and flu vaccines. Is that the immunogenicity comparison that the FDA will be evaluating in Phase 3 or are they looking for titers compared to monotherapy vaccination of COVID and flu separately? Thank you.

Yeah, thank you, Chris. Maybe I'll take the iNest question first and then turn it over to Ugur and Ozlem for the flu-COVID. So on BNT122, actually on our last earnings call, we provided revised guidance that we did not expect data this year. As you remember, the trial is randomized and has a PFS threshold to trigger the PFS analysis, which we had not been met and which we didn't anticipate would be met this year. We do plan to provide a trial update this year, but we're not expecting data this year.

And the second question was related to the?

To the comparator to the flu combo vaccine. If I got that right.

Yes. So we are comparing both. We are comparing flu mRNA, COVID mRNA as comparator as well as established flu vaccines that are based on proteins or inactivated flu vaccines. Both comparisons will be in the study.

Hi, this is Amy on Akash. Thanks so much for taking our question. So just two from us. Number one, we've seen Pfizer reduce costs in the face of reducing COVID vaccine demand while at the same time we're seeing Moderna increase costs. When you think about BioNTech's plan to spend over the next three to four years, how willing are you to eat into the cash generated during COVID? Should we expect it to decline on an annual basis or will the team aim to sustain R&D solely off of residual vaccine demand? And then number two on the COVID flu program, given the economics between you and Pfizer are 50% right now and may drop to potentially in the 30% range, if this program does become a success for BioNTech, do you anticipate it being net positive, net negative or break even for BioNTech's cash generation? How should we think about the increased demand potentially being offset by lower economics? Thanks so much.

We are currently experiencing a transition period. Our COVID vaccine business is moving from a pandemic-focused market to an endemic one, which is expected to continue into next year. Additionally, we are working towards becoming a commercial stage oncology company, with several programs outlined to facilitate this shift. During this transition, having a robust balance sheet is a significant advantage, and we are pleased that if we achieve our revenue targets this year, we will maintain profitability, which is crucial for us. Over the next few years, as we navigate this transition, we plan to uphold a strong balance sheet, which will remain a top priority.

Yeah, Ryan covered it very nicely. It's not much to add. I mean, going forward, of course, with the collaboration, we first and foremost got to invest in these combination trials currently. Flu COVID, flu COVID RSV, those settings will eat up some cash, but we're very positive about our expectations on the profitability share that we will get out of the collaborations and those combinations. In our view, this will create new markets and will secure, of course, the existing part and business that we have for COVID. So we think economically that should be something of great value for the company going forward.

And to your question on the combination vaccines, we haven't yet disclosed the full economics with Pfizer on combination vaccines. We plan to do that in the near future. We have communicated today that we intend with Pfizer to embark on pivotal trial, Phase 3 trials with those combination vaccines. And we do think that there is substantial potential for combination vaccines if successful to improve uptake of our COVID vaccine based on the rates that we're seeing now in terms of uptake. There's a large difference between, for example, where flu vaccines are in terms of uptake versus what we're expecting this year for COVID. So we do think the combination vaccines can play an important role in terms of offering convenience and added benefit to increase the franchise over time. And we think that from a timeline perspective, if successful, that those vaccines could start to have an impact for us from 2025 onwards.

Great. Thanks for taking my question. I have a couple. Just on 1046, the PDL combo, you mentioned moving to a second line endometrial study in combination with Pembro. Just any update and I'm not trying to front run to more, just any update on the checkpoint experience non-small cell lung cancer cohort, and is that still sort of in the cards? And then secondly, for 323, BNT323, on the HER2 low side, how do you define HER2 low? Is it histology? Do they have to have any expression at all? And why do you think you're confirming activity in a population that sort of failed other therapies before? Thank you.

Yes, to your first question, 1046, yes, the lung cancer cohorts are continuing and we will most likely report data on this cohort in the next year, mid-next year, and it's still a target for follow-up.

For BNT323, yes, HER2 low is defined as staining, which is 2 plus without any amplification. And activity of this ADC compound in this patient population, which is clearly better than Trastuzumab alone, is based on the highly potent ADC activity and on the bystander activity, allowing not only to remove antigen-positive tumor cells but also the tumor cells in the surrounding which are negative.

Hey, good morning. Thanks for taking the question. Can you outline what key pipeline updates we should expect between now and year end? You mentioned an update on the iNest melanoma trial. What else should we be looking forward to, whether from the 4-1BB programs or otherwise? And then related to iNest with the new trial starting in adjuvant pancreatic cancer, can you talk about what drove that decision and was it based on something you're seeing? And then Lastly, just a financial question. You lowered OpEx guidance again this quarter, but also suggested that from here, R&D will likely grow to support these pipeline investments. What about SG&A? That guidance didn't change as much. Is there less flexibility in that line if expenses need to be cut again? Thank you.

On the pipeline update, we anticipate data on BNT116 to be available soon at SITC. Additionally, tomorrow we expect to provide a comprehensive update on our late-stage oncology pipeline.

We had an IIT, an investigator-initiated trial, a small one, which, however, showed very promising results in terms of the immune responses and the magnitude of immune responses in pancreatic cancer patients, which are traditionally always seen as immune suppressed. We also could see that the success of inducing immune responses in half of this population was correlated with prolonged time to recurrence. And this data has motivated us to now set up a Phase 2 trial which has already dosed the first patients.

And then on the SG&A question, Jessica, we have reduced the cost here as well. Of course, we need to support the growth of the business going forward. Here specifically in the years to come, we need to set up a sales marketing organization for our parts where we commercialize on our own. So in that respect, we need to invest as well, but you see, I mean, the scale of costs here is relatively small in comparison to what you see at competitive levels and therefore if you look at the basis currently that we're having here, I think we're already relatively lean. But most important really is to set up a sales and marketing organization, so that will be something where we have to invest going forward some money.

Hi, thank you. So looking at the ongoing evolution of SARS-CoV-2, do you expect the virus evolution to slow down to the point where annual strain updates aren't necessary? And if that does happen, how strong is the proposition for annual boosters if a strain update isn't needed? And then a second question, looking more broadly, with the broad multiplicity of platforms that you have, how do you think about bringing a specific modality into the clinic against the tumor target when you have the option of using an ADC or a bi-specific or anything or several different options here? Thank you.

Thank you. I can take the question. Regarding the evolution of SARS-CoV-2, we need to consider two main patterns of mutation. The first is the typical mutation of existing variants, which involves gradual changes in the spike protein amino acids. We have observed this with the alpha, beta, and currently the omicron variants. The second pattern involves variants that have developed numerous additional mutations. We have encountered this for the first time recently with a variant known as BA286, which includes over 30 additional mutations compared to the Omicron strain. While it is still referred to as Omicron, it is actually a new variant upon closer examination. We anticipate this trend will continue moving forward. Mutations that occur as single changes are unlikely to necessitate the development of a new variant-adapted vaccine. I expect that significant changes will require such vaccines. Additionally, we must consider that antibody levels decline over time. There are two contributing factors: the diminishing immune response, which leads to a higher rate and severity of infections, and the emergence of new variants. So, in summary, we expect to monitor two variants in the future, and this pattern may vary from season to season, much like we see with flu infections. The second question was about our interest in ADC technology and the possibility of combining it with our capabilities in target identification and antibody generation. The answer is yes; this is an area we are actively pursuing.

Thank you very much for taking my questions. Two very quick ones, if I may. Just going back to R&D spend, from what I can gather from what you were saying, it sounds like essentially you're doing the same for less rather than delaying or deferring. But I wonder if you could just give us a little bit more color on CapEx, whether that's savings driven or whether there are some deferrals in there? And then secondly on PM8002, you highlight the non-small cell lung indication, but that molecule is in, I think about half a dozen other tumor types. So I was just wondering what your interest in the other tumor types is for PM8002. Is that something you're looking to develop and do you indeed have rights across all tumors? Thanks so much.

Yes, let me maybe quickly start with the CapEx question. So indeed here we have some savings, but we also have to some extent some shifts here. So we're delaying some investments going forward, specifically in terms of the production area where we anticipated to invest maybe a bit more in 2023 given where we stand with COVID, the activities around other programs in the infection disease area, we said we watch how and when we actually invest, and in that respect we have some lower spend than anticipated. But of course also when you go through the cost base, you try to figure out if there are some savings here and there.

PM8002 is a bispecific antibody that combines a neutralizing anti-VEGF with a blocking PD-L1 arm. This antibody has been tested in over 500 patients, demonstrating a very favorable safety profile and showing effectiveness in multiple indications, including in combination therapies with chemotherapy. We view this molecule as an opportunity for a new generation of immuno-oncology treatments that leverage bispecific activity across various indications. We are particularly interested in combining it with our antibody-drug conjugate portfolio. It's established that anti-VEGF treatment works synergistically with chemotherapy by enhancing chemotherapy penetration and altering the tumor microenvironment, which in turn increases chemotherapy effectiveness. We anticipate similar outcomes in collaboration with our antibody-drug conjugates.

Thanks so much for taking the question. Just in terms of thinking about the profitability of the COVID vaccine business, just how should we think about the Pfizer COVID vaccine gross profit margins going forward, just given the endemic market and the impact this has on the revenue you recognize. You mentioned the continued shift to single dose vials and pre-filled syringes. Just trying to think about how you're thinking about long-term potential margins for that business and the impact on the revenues that you'd recognize as part of the profit share. Thanks.

Thank you, Ellie. I'll begin and then Jens will join in. The short answer is that we expect the COVID vaccine franchise to remain highly cash-generative and very profitable for us going forward. You correctly noted the shift to the endemic market that we discussed today. It's important to remember that we share gross profits with Pfizer on a 50-50 basis, and most of our revenue comes from this profit share in countries outside of Germany and Turkey, which are our revenue reporting regions. As a result, we do not anticipate the direct transition to single-dose vials and pre-filled syringes to significantly impact our gross margins. Most of that revenue is already coming to us net of cost of goods. Instead, it is the mix between Germany and Turkey and their relative contributions to the total that will affect our gross margins.

Yes. I think you said it basically. So everything that comes from Pfizer is 100% profit for us. So the relation between what we generate as revenue and what Pfizer generates is actually driving the story here at the end of the day. Remember, we have a multi-dose contract anyway for the next couple of years for the COVID standalone solution at this point in time. So Ryan made the point.

Thank you. And that concludes the question and answer session. I will now hand back to the speakers for any closing remarks.

Thank you very much for joining our call. We look forward to speaking with you again tomorrow.

Thank you. That does conclude the conference for today. Thank you for participating and you may now disconnect.