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spk14: Welcome to the BioNTech fourth quarter and year end update call. I would now like to hand the call over to Michael Horowitz, investor relations and strategy.
spk02: Please go ahead, Michael. Good morning and afternoon.
spk07: Thank you for joining us today for BioNTech's fourth quarter and full year 2022 earnings call. As a brief reminder, the slides that accompany this call and the fourth quarter and full year 2022 press release was issued this morning can be found in the investor section of our website. As outlined on slide two, 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, including our most recent annual report on Form 20S. 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 slides three and four, you can see detailed safety information regarding our COVID-19 vaccine. And on slide five, you can find the agenda for today's call. Today, I am joined by the following members of Biontech's management team. Our CEO and co-founder, Ullur Zahin, Oslobun Tureci, our chief medical officer and co-founder, Jens Horstein, our chief financial officer, and Ryan Richardson, our chief strategy officer. I would like to turn the call over to Ullur Zahin.
spk01: Thank you, Michael. Good morning and good afternoon and a warm welcome to all the core participants. We appreciate your continued support. Today I will summarize our fourth quarter and full year 2022 highlights and priorities before I pass the call over to my team to provide some further details. Slide seven. We and Pfizer continued our global leadership in the fight against COVID-19 in 2022. We achieved our supply target for the year with approximately 2 billion doses invoiced, which included the successful global launch of our first variant-adapted vaccine. In the beginning of 2022, there was no clear regulatory pathway about how to introduce variant adapted vaccines. With our diligent scientific and clinical approach, we were able to navigate this regulatory uncertainties. We have evaluated various variant vaccine candidates, manufactured and have shipped about 550 million doses by mid-December. We maintained and continued to build on the strong market position we have established for our COVID-19 vaccine franchise to further label expansion in regions around the world. I would like to thank our growing team and our partners for the steadfast commitment which contributed to these successes. Moving to the next slide. We also continued the rapid advancement and expansion of our clinical pipeline in 2022 and early 2023. We presented clinical data updates for programs from four distinct platforms at major medical congresses. In addition to advancing multiple new COVID-19 programs throughout the year, which led to two new product launches, we initiated nine phase one trials. This included five starts in immuno-oncology and four in infectious disease. Slide nine. Turning to the next slide. In 2022, we have started four new collaborations, broadened our pipeline, expanded our team by more than 1,500 new professionals, and continued to strengthen our financial position. Slide 10. Our drug discovery strategy is technology agnostic and aims to use modular technology platforms to produce novel product candidates. We continue to enhance and connect our platform technologies in 2022 and complemented our internal capabilities and pipeline with several new partnerships. One of those which I am particularly excited about is our partnership with Onco C4. which builds on our next-generation checkpoint immunomodulator platform with the addition of a novel anti-CTLA-4 antibody, which has shown a differentiated safety and activity profile. We believe this antibody is suitable for the development as monotherapy, but also can be combined with multiple drug candidates in BioNTech's pipeline. I will come back to that in a few minutes. Slide 11. The next slide recaps our strategic priorities for 2023. The first is to build and strengthen our COVID-19 franchise. We believe that the COVID-19 market will continue to be dynamic and we are investing with our partner Pfizer in multiple next generation programs which has the potential to drive future growth. This includes variant-adapted vaccines, our T-cell string vaccine, and our COVID flu combination vaccine. In immuno-oncology, our goal is to initiate multiple registrations in the next 12 to 18 months. Our most advanced programs include our mRNA cancer vaccine, our first cell therapy, and several novel antibody programs. We are preparing to advance these programs to registration studies. Third, we aim to expand our portfolio of novel vaccines against infectious diseases with high medical need. To date, we have already initiated programs against HSV-2, malaria, and shingles. And more trials start up front. Slide 12. Moving now to the next slide. With the new collaboration with OncoC4, we bring an exciting new checkpoint inhibitor molecule into our immuno-oncology portfolio that is going to enter a first registrational trial within the coming weeks. The first anti-CTLA-4 antibody, ipilimumab, was approved in 2011 by the FDA, followed by tremolimumab a couple of years later. To date, These two CTLA-4 antibodies have been approved in seven cancer indications, either as a monotherapy or in combination therapy. Approved CTLA-4 antibodies have shown lasting remissions in a fraction of responding patients. However, the associated high rate of toxicity, especially in combination with anti-PD-1 therapy, limits the further both use of this antibody. ONC392, the anti-CTLF4 antibody from Oncocifor, was designed to exert an improved therapeutic index for a unique mechanism of action, which enables depletion of intratumoral Tregs, but preserved Treg function in healthy human tissues by CTLF4 recycling. We believe this could allow for a longer dosing of this checkpoint inhibitor molecule, which in turn could broaden the spectrum of anti-tumor efficacy. Our goal is to continue to develop this antibody as a single agent IO compound and in combination with anti-PD-1. Moreover, we will evaluate its potential in combination with our own immunotherapy candidates. 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 Özlem, who will give more background on the new assets and our pipeline.
spk09: Thank you, Ugo. I'm delighted to speak with everyone today and provide our pipeline update. In 2022, we presented several clinical data updates from our oncology programs from four distinct platforms. A selection is shown on slide 14. At ESCO in June, we presented preliminary data from the ongoing investigator-initiated first-in-human phase one study, evaluating the safety and tolerability of autogene sevomirane, our INUS program, in combination with one dose of anti-PD-L1 immune checkpoint inhibitor, atesolizumab, and standard-of-care chemotherapy for adjuvant treatment of patients with resected pancreatic ductal adenocarcinoma. Autogen Sevomeron was well-tolerated and induced high-magnitude de novo neoantigen-specific T-cell responses in a fraction of patients. These patients also had significantly lower recurrence-free survival as compared to those without vaccine-induced de novo immune response. We are planning a Phase II trial in this patient population to open later this year. We had several presentations featuring our BNT211 program this year. At the ESMO Congress in September, we presented updates from our ongoing Phase I-II trial, evaluating the safety and preliminary efficacy of BNT211, our CAR T-cell therapy candidate, in patients with relapsed or refractory Clawden 6 positive solid tumors. The data showed a manageable safety profile and clinical responses. In patients with pesticular cancer, the objective response rate was 57% and disease control rate was 85%. This year, we are expecting a data update from the ongoing Phase I-II trial and we are planning to start a Phase II trial in second-line platinum-resistant testicular cancer in 2024. For BNT113, a candidate from our FIXVAC program, we presented preliminary safety data from the safety run-in phase of the ongoing Phase II trial, evaluating BNT113 in combination with PEMBRO versus PEMBRO monotherapy as first-line treatment. in patients with unresectable recurrent or metastatic HPV16-positive, PD-L1-positive head and neck squamous cell carcinoma at ESMO-IO in December 2022. Also at ESMO-IO, we and our partner, GENMAP, presented safety and preliminary anti-tumor activity data from patients with advanced metastatic head and neck squamous cell carcinoma treated with chemotherapy, pembrolizumab and BNT3-12, a first-in-class bispecific antibody combining CD4 and 4,1-BB checkpoint activation. The combination of BNT3-12 with PEMBRO with or without chemotherapy was well-tolerated with no reported DLTs and showed encouraging early activity with two partial responses and two complete responses, in all four evaluable patients. We will be sharing more data on several of our oncology pipeline candidates throughout this year. Slide 15 provides an overview of our oncology pipeline, including the collaboration Ugo mentioned earlier. We have a total of 20 oncology product candidates across four different drug classes in 24 ongoing clinical trials. five of which are randomized phase two 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 modulating the immune response against the tumor. Many of our product candidates offer the potential to be combined with other pipeline assets under development. In the course of 2022, we started five first in human clinical trials, one on BNT116, together with our partner Regeneron, a six-pack program in non-small cell lung cancer, two Ribomav programs, namely BNT141, that targets Claudine 18-2 positive tumors, and the T-cell engager, BNT142, in Claudine 6 positive tumors. Further, two immune-modulating antibodies, namely BNT3-13, a hexabody targeting CD27 and BNT3-22, two new product candidates from our collaboration with GenMAP, are being evaluated in solid tumors. Turning now to slide 16 and our new collaboration with OncoC4 and their next generation anti-CTLA-4 antibody, Onc3-92. We are very excited to work with our colleagues from Ong C4 on this promising compound. In preclinical models, Ong 392 has shown the most potent anti-tumor activity while inducing the least autoimmunity. CTLA-4 recycles between the cell surface and the endosomes where it is prevented from lysosomal degradation and recycles back to the cell surface. Interruption of this process is associated with the development of autoimmunity. Approved anti-CTLA-4 antibodies such as ipilimumab disrupt CTLA-4 recycling and induce lysosomal degradation and thereby immune-related adverse events. In contrast, Ong392 dissociates from the CTLA-4 molecule in the endosome and allows normal recycling of both the antibody and the CTLA-4 molecule and thus is designed for stronger cancer-feropoietic effect and less immune-related adverse effects. Turning to slide 17, Ongt392 is being tested in a trial that investigates dose escalation as single agent and in combination with PEMBRO, and in which indications such as IO-naive and refractory-resistant non-small cell lung cancer and melanoma are being treated with the recommended phase two dose. Ong392 as a single agent was well tolerated in a 0.1 to 10 mcg per kick dose range. No dose limiting toxicities were observed and MTD was not reached. The recommended phase two dose is 10 mcg per kick every three weeks as monotherapy. Patients that received 10 mcg per kick were treated up to 12 weeks in this study. ONC392 in combination with PEMBRO was administered at 3 and 6 mcg per kick and was well tolerated with longest dosing at 3 mcg per kick for up to 18 cycles and continuing. No DLTs were observed and MTD was not reached in the combination setting. Severe immune-related adverse event rate in the combo dose escalation cohorts was 23%. which is considered lower than what was reported for comparable IO-IO combinations. Recommended phase 2 dose for combination is 6 mcg per kick. In summary, ONC392 dosed as monotherapy or in combination was well tolerated, and the safety profile appears to allow higher dosing for a longer duration of treatment as compared to ipilimumab. Slide 18 shows efficacy data on ONC392 from various cohorts of the trial as A, monotherapy in patients with ovarian cancer, B, in combination with PEMBRO in various solid tumors, and C, in combination with PEMBRO in relapsed refractory melanoma patients. The left panel shows 28 evaluable ovarian cancer patients who had failed multiple lines of systemic therapy and received Ong392 at 10 mcg per kick monotherapy. The objective response rate was 21% and the disease control rate was 50% with one complete response, five partial responses, and eight stable diseases. In the middle, you see data of patients with various solid cancers treated with either 3 or 6 mcg per kick ONC392 in combination with 200 mcg per kick PEMBRO. A data cut ONC392 showed PRs in 3 of 10 evaluable patients. The right panel shows data from IO or IO-IO experienced refractory resistant patients with advanced melanoma treated with ONC392 six mc per kick and pembro the 200 mc every three weeks out of the six first patients enrolled five had a partial response and one had stable disease based on these promising data phase two study value evaluating onc 392 in combination with pembro in platinum resistant ovarian cancer patients have started in 2022 a phase three study evaluating onc 392 as monotherapy where docetaxel in patients with metastatic non-small cell lung cancer who have progressed on anti-PD-1, PD-L1 antibody-based therapy is planned to start this year. Slide 19 highlights our infectious disease pipeline. In the past month, we started multiple first in human trials with our mRNA vaccine candidates, including next generation COVID-19, a combination of the COVID-19 and influenza mRNA, malaria, HSV-2, and shingles vaccine candidates. In addition, we expect to enter the clinic with a tuberculosis vaccine candidate this year. These programs build on our validated platform of nucleoside-modified mRNA LMPs with optimized backbone design to address diseases with a significant global need. Slide 20. As of December 2022, the original COVID-19 vaccine has been authorized or approved for emergency use or temporary use or granted market authorization in over 100 countries and regions around the world. Through rapid execution, we have broadened the label of our original and Omicron BA.4.5 adapted bivalent vaccine across different age groups. This included full marketing authorization for the original COVID-19 vaccine. The conversion applies to all existing and upcoming indications and formulations of the Comunati product group authorized in the European Union, including original Omicron BA.1 and BA.4.5 adapted vaccines as booster doses for individuals aged 12 years and older. In addition, we received EC approval for full market authorization for a free MYC dose of the original COVID-19 vaccine as a free dose series for children aged six months through four years and another EC approval for a fourth dose booster of the original COVID-19 vaccine in individuals 12 years of age and older at an interval of at least three months between the administration of the original COVID-19 vaccine and the last prior dose of a COVID-19 vaccine. In addition to the approvals of the original COVID-19 vaccine, we received several approvals and authorizations of the original Omicron BA45 adapted bivalent vaccine booster, including an FDA EUA and EC approval for 5 through 11 years of age, and an FDA EUA as a third free MYC dose in the free dose primary series, and a single booster dose at least two months after completion of primary vaccination with free doses of our original COVID-19 vaccine for children. six months through four years of age. In December 2022, BioNTech and Fossum Pharma received full regulatory approval of our 30 microgram original COVID-19 vaccine, as well as of a 30 microgram booster dose of our original Omicron BA.5 adapted bivalent vaccine in individuals 12 years and older in Hong Kong. We continue to monitor protection offered by the original and our original Omicron adapted by the land vaccines against emerging SARS-CoV-2 variants. Slide 21. In February this year, we and Pfizer announced the start of a phase 1-2 trial of our mRNA vaccine candidates against shingles, also known as herpes zoster. The mRNA shingles vaccine candidates encode different versions of glycoprotein E on the surface of a varicella zoster virus. The glycoprotein E protein is important for viral replication and the cell-to-cell spread after reactivation of the virus in the nerve cells. The Phase I-II multicenter randomized controlled dose selection study will evaluate the safety, tolerability, and immunogenicity of mRNA vaccine candidates against shingles. The study is aiming to enroll up to 900 healthy volunteers, 50 through 69 years of age, and is being concluded in the United States. Phase one will help select the optimal mRNA vaccine candidate, dose level, dosing schedule, and formulation for advancement to phase two. Participants in the study will be followed to determine how long protection may last. While there are currently approved vaccines for shingles, we and Pfizer aim to utilize our mRNA technology to develop a vaccine that demonstrates high efficacy, is better tolerated, and is efficient to be produced globally. I look forward to providing additional program updates in the coming months. I will now pass the presentation to our CFO, Jens Holstein, who will present our financial results.
spk08: Thank you, Erslem, and a warm welcome to everyone who dialed in today's call. I'll start my section with key highlights for the 2022 financial year. During the 2022 financial year, we were able to again maintain a strong performance. I would like to underline this by diving into some of the key financial figures for the past year. Our total revenues reported for the 2022 financial year reached 17.3 billion euros, and mainly comprised 17.1 billion euros COVID-19 vaccines revenues, whereby we met the upper end of our updated guidance from November 2022. Based on our strong profits during the year ended December 31st, 2022, we generated an operating cash flow of 13.6 billion euros and generated earnings to share on a fully diluted basis of 37 euros and 77 euro cents. With respect to the company financial position, We ended the 2022 financial year with 13.9 billion euros of cash and cash equivalents. Subsequent to the end of the year, we have received 1.8 billion euros in cash from our collaboration partner Pfizer, settling our gross profit share for the third quarter of 2022. Let's continue with the next slide that presents the comparison between our actuals of the 2022 financial year to the guidance recently updated in our last earnings call in November 2022. As just mentioned, we recognized 17.1 billion euros COVID-19 vaccine revenues in reaching the upper end of our guidance of 16 to 17 billion euros. In total, we invoiced approximately 2 billion doses in 2022. I'll come back to the allocation of the COVID-19 vaccine revenues in more detail in one of the following slides. During the 2022 financial year, our R&D expenses reached 1,537,000,000 euros so that we ended the year around the upper end of our guidance for March of 2022. The expenses resulting from the pre-launch production of our Omicron-adapted bivalent COVID-19 vaccines contributed to our R&D spend. Our core R&D activities focused on broadening and accelerating our existing pipeline of product candidates in oncology and infectious diseases in line with our expectations. Moving to SG&A expenses, during the 2022 financial year, we recognized 544 million euros SG&A expenses and hence met our guidance for March of 2022. The expenses were mainly driven by supporting our rapid growth including accelerating our internal operating activities. Our 2022 financial year capital expenditures amounted to €363 million and included investments in infrastructure and production capacities. The spending remained below our expectations, mainly due to certain delays in finishing our various construction projects. During the 2022 financial year, we reached an annual effective income tax rate of 27% meeting our amended guidance. Certain current tax savings associated with the expenses from the share-based payment programs have been recognized in equity directly. Hence, those cost-effective savings did not have an impact on our annual effective income tax rate under IFRS. Considering this effect, though, the cash effective tax rate is about 24%. Let's now switch to the next page. The 2022 financial year COVID-19 vaccine revenues of 17.1 billion euros reached the upper end of our guidance, benefiting from stronger than expected revenues by our collaboration partners and some favorable U.S. dollar developments. Compared to the previous year, we saw a decrease in our COVID-19 vaccine sales, which corresponds with the demand of COVID-19 vaccines. Let me give you some more details on our revenue streams. As a reminder, on our COVID-19 vaccines collaborations, territories have been allocated between us, Pfizer and Fosun Pharma, based on marketing and distribution rights. Our COVID-19 vaccine revenues included 12.7 billion euros related to our share of gross profit from COVID-19 vaccine sales in the collaboration partners' territories. These revenues represent the net figure, meaning that we generate a 100% gross margin on 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. Our COVID-19 vaccine revenues from direct COVID-19 vaccine sales to customers in our territory reached 3.2 billion euros during the 2022 financial year. Revenues in our territory were significantly driven by shipments of the Omicron-adapted bivalent COVID-19 vaccine sales towards the end of 2022. Also included in our COVID-19 vaccine revenues were 1.2 billion euros of revenues from sales to our collaboration partners for the 2022 financial year. The sales under the collaboration with Pfizer are influenced from time to time by manufacturing variances such as expenses due to write-offs of inventories and costs related to production capacity derived from contract manufacturing organizations that became redundant. I'll be moving to our financial results for the fourth quarter and the full year of 2022. Having explained our revenues on the previous slide, let me move to cost of sales that amounted to 0.2 billion euros in the fourth quarter of 2022 compared to 0.6 billion euros for the comparative prior year period. This drop was mainly caused by the release of provisions in Q4. For the 2022 financial year, the cost of sales amounted to 3 billion euros compared to 2.9 billion euros for the comparative prior year period. The cost of sales included cost of sales from our COVID-19 vaccine sales, comprising the share of gross profit that we owe our collaboration partner Pfizer based on our sales. In addition, cost of sales was impacted by expenses arising from inventory write-offs and expenses for production capacities derived from contracts with contract manufacturing organizations that became redundant. The effects were driven by the introduction of a new COVID-19 vaccine formulation. The switch from the monovalent vaccine to our Omicron adaptive bivalent COVID-19 vaccine, and due to the accelerating internal manufacturing capacities during the year end, December 31, 2022. Research and development expenses reached €0.5 billion for the fourth quarter of 2022 compared to €0.3 billion for the comparative period in 2021. For the 2022 financial year, research and development expenses amounted to approximately €1.5 billion, as stated before, compared to €0.9 billion for the comparative prior year period. The increase was mainly due to expenses in connection with the development and production of our Omicron-adapted bivalent COVID-19 vaccine and from progressing the clinical studies for our pipeline candidates. The increase was further driven by an increase in wages, benefits, and Social Security expenses resulting from an increase in headcount as well as expenses incurred under our Share Based Payment Act. General and administrative expenses amounted to 0.1 billion euros for both the fourth quarter of 2022 as well as for the competitive period in 2021. For the 2022 financial year, general and administrative expenses were 0.5 billion euros compared to 0.3 billion euros for the comparative prior year period. The increase in G&A was mainly due to the increased expenses for IT consulting and IT services increased expenses for purchase external services, as well as an increase in wages, benefits and social security expenses, resulting mainly from an increase in headcount. Our business development transactions also contributed to the increase in general administrative expense. Income taxes were accrued with an amount of 0.9 billion euros for the fourth quarter of 2022, compared to 1.5 billion euros for the comparative period in 2021. For the 2022 financial year, income taxes reached an amount of 3.5 billion euros compared to 4.8 billion euros for the comparative prior year period. The derived effective income tax rate for the 2022 financial year was approximately 27% and is in line with our expectations. For the fourth quarter of 2022, net profit reached 2.3 billion euros compared to 3.2 billion euros for the comparative period in 2021. For the year ended 31st, 2022 net profit reached 9.4 billion euros compared to 10.3 billion euros for the comparative prior year period. Our diluted earnings per share for the fourth quarter of 2022 amounted to nine euros and 26 euro cents compared to 12 euros and 18 euro cents for the comparative period in 2021. For the 2022 financial year, our diluted earnings per share amounted to 37 euros and 77 euro cents compared to 39 euros and 63 euro cents in 2021. Let's now move to the following slide and have a look at the return to our shareholders during the 2022 financial year. We believe that our shareholders should benefit from our strong performance. Following the annual general meeting in June 2022, special cash dividend of two euros per ordinary share was paid out to our shareholders which led to an aggregate payment of approximately 0.5 billion euros in addition in march 2022 we authorized the share repurchase program of ads allowing us to repurchase ads in the amount of up to 1.5 billion us dollars during the year 2022 and 2023. On May the 2nd, 2022, the first tranche of our share repurchase program of ADSs with a value of up to $1 billion U.S. commenced. And this tranche ended on October 10th, 2022. In November 2022, we authorized the second tranche of our share repurchase program of ADSs with a value of up to $0.5 billion U.S., which then started on December the 7th, 2022. During the period from May 2, 2022 to March 17, 2023, the date when the trading plan for the second tranche of our share repurchase program expired, a total number of 9,166,684 ADSs were repurchased, representing approximately 3.7% of our share capital. The ADSs were repurchased at an average price of US$142.04, for a total net consideration of approximately 1.3 billion U.S. dollars under the program. The repurchased ADSs were partially used to satisfy settlement obligations under our share-based payment arrangements. Before I provide our 2023 financial guidance, I would like to provide some of the key assumptions and considerations, which amongst others in our guidance are described on the following page, specifically on the expected full year 2023 COVID-19 vaccine revenues. We expect a transition from an advanced purchase agreement environment to commercial market ordering starting in 2023. In addition, our revenue guidance is based on the assumption that vaccine developers will be asked to adapt the COVID-19 vaccine to newly circulated variants or sub-lineages of SARS-CoV-2. Our COVID-19 vaccine revenues guidance reflects as well expected deliveries under existing or committed supply contracts and anticipate itself through traditional commercial orders. Currently, a renegotiation of the existing contract with the European Commission is ongoing with the potential for a re-facing of those deliveries across multiple years and or a volume reduction. While we expect the need for a new variant-adapted vaccine will increase demand, fewer primary vaccinations and lower population-wide levels of boosters are anticipated. We also assume seasonal demand will drive revenue generation significantly towards the second half of the year 2023. Let's now turn to the next slide. I would like to share with you the company's outlook for the 2023 financial year. Please note the following numbers reflect current base case projections, including potential effects caused by or driven from additional collaborations or potential M&A transactions to the extent they have been disclosed and are calculated based on constant currency rates. We believe that we and our collaboration partners Pfizer and Fosun are well positioned for the future as a leading COVID-19 vaccine provider. For the 2023 financial year, We estimate COVID-19 vaccine revenues of somewhere around 5 billion euros based on the previously mentioned base assumptions. Thanks to the company's continued strong financial performance, we've never been in a better position to accelerate the advancement of our diversified clinical pipeline and to invest into the further transformation of BioNTech. We aim to accelerate our late stage programs and expand our platform across our four drug classes. We believe the development, regulatory approval, and commercialization of our clinical pipeline is the basis for our continuing success. The responsible use of our financial resources generated from the sale of our COVID-19 vaccine is paramount to BioNTech as well. Broadening and accelerating our existing pipeline of product candidates and oncology infectious diseases, as well as expanding our capabilities in other disease areas, will be our focus. As already shown in the course of last week, we intend to invest in broadening our pipeline going forward. For the 2023 financial year, we plan to spend between 2.4 and 2.6 billion euros in R&D expenses. SG&A expenses are estimated to be in a range of 650 million to 750 million euros, as we plan to continue to invest in making BioNTech a global, fully integrated immunotherapy powerhouse. Capital expenditures for our existing business for the 2023 financial year are expected to be in a range of 500 million to 600 million euros. We are, for example, planning to further extend and enhance our R&D and manufacturing facilities and to invest in a state-of-the-art IT infrastructure to support our digitalization process in especially the R&D area. Finally, we expect the estimated annual cash effective income tax rate for the BioNTech Group at around 27%. Please be reminded that the financial guidance does not include impacts from further M&A activities or collaborations that the company might invest in during the calendar year of 2023. I would like now to take the opportunity to highlight our capital allocation framework. Three key areas are at the center of our activities. First and foremost, R&D. We have proven to the world that our science and the translation into novel medicines can really make a difference for people worldwide. We believe that our technologies and science can further improve people's health and how we cope with various diseases. Therefore, we intend to further accelerate our initiatives to create additional long-term value for patients, our shareholders, and society as a whole. This remains the key area of our investments going forward. Secondly, M&A and business development. To supplement our technologies and digital capabilities, we strive to extend and augment our expertise with synergistic acquisitions and collaborations. For example, in January 2023, we announced a strategic partnership with the UK government to provide up to 10,000 patients with personalized mRNA cancer immunotherapies by 2030. Also in January 2023, we announced an agreement to acquire InstaDeep Limited, a leading global technology company in the field of artificial intelligence and machine learning and a long time strategic partner. The transaction is subject to customary closing conditions and regulatory approval. On Monday of last week, We announced that we entered into an exclusive worldwide license and collaboration agreement with U.S.-based OncoC4 to co-develop and commercialize their next generation anti-CTLF4 monoclonal antibody candidates. Thirdly, we would like our shareholders to again participate in our success. Consequently, we'll start an additional share repurchase program of ADSs pursuant to which we may repurchase ADSs in the amount of up to $0.5 billion during the year 2023. 2022 has been a truly successful year for BioNTech. 2023 is expected to be a year where contractual agreements with governments are starting to move into a commercial and flu-like setting, first in the US, later in other jurisdictions. We rate this as an opportunity with more and more countries moving towards a standard commercial setting in the years to come. We believe to be well-placed given the favorable technology basis that mRNA offers for COVID-19 vaccines, and based on the commercial partnership with Pfizer that has been tremendously successful for both partners. We expect to financially benefit from our COVID-19 franchise in the next years and anticipate relevant and ongoing profit and cash flow contributions from our vaccine, given the existing relation of revenues and costs for BioNTech. And with that, I would like to turn the call over to our Chief Strategy Officer, Ryan Richardson, for an update on our strategic outlook for 2023 and concluding remarks. Thank you.
spk06: Thank you, Jens. To wrap up our prepared remarks, I'll provide a brief summary of the strategic outlook for our COVID-19 vaccine franchise and our broader infectious disease vaccine and oncology portfolios before concluding with a few important dates to mark on your calendars. Moving to the next slide. As Jens mentioned, we expect our first commercial market opening in the second half of the year in the United States. We expect this to follow strain selection in the May-June timeframe and subsequent booster rollout for the fall season. It will likely take a few years to fully transition from a pandemic to steady state market. As this transition occurs, in the midterm we see growth potential for our COVID-19 vaccine franchise driven by a continued shift to private markets globally. If successful and ongoing trials, our next generation COVID-19 vaccines and combination vaccine being developed with Pfizer could contribute to this longer-term growth potential. We expect data updates over the course of the year on these pipeline programs. Turning to the next slide. COVID-19 remained a major cause of hospitalizations and death globally in 2022, far outpacing the level caused by seasonal influenza. Last year, In the United States, there were approximately 264,000 deaths and 1.5 million hospitalizations related to COVID-19. In the same period, there were approximately 36,000 deaths and 450,000 hospitalizations due to influenza. Despite the significantly higher burden of disease, COVID-19 vaccine doses administered in the U.S., according to the CDC, lag those of seasonal flu. at approximately 171 million flu doses versus approximately 144 million COVID-19 vaccine doses. To note, these volumes include both bivalent boosters, which rolled out in the fall, and boosters administered earlier in the year. While not a perfect analog, we continue to believe that flu volumes represent a benchmark that is relevant for the mid- to long-term COVID-19 annual booster market. While overall volumes are likely to remain lower than flu in 2023, we believe that the disease burden and relatively high vaccine efficacy support increased uptake over time. Turning ahead to the next slide, we continue to advance our infectious disease vaccine portfolio outside of COVID-19, including two additional Pfizer-partnered vaccine programs and our growing pipeline of wholly-owned vaccines. Our focus here is on prophylactic vaccines against diseases of high global incidence and medical need. The diseases we are targeting with our technology platforms include those where no marketed vaccine exists, as in the case of HSV-2, or where there is room to improve on currently marketed products, as in the case of malaria. We anticipate multiple additional trial starts in the next 12 months. As you can see from the right-hand side of the slide, we also anticipate multiple data updates from these newer infectious disease vaccine programs over the course of the year. Turning to the next slide and our 2023 strategic outlook in oncology. As Ugar stated earlier in the call, we plan to initiate multiple registrational trials in the next 12 to 18 months. In parallel, we plan to accelerate the build out of our oncology commercial capabilities in 2023 and 2024 with the goal of commercial readiness in the United States, EU, and other selected regions to support first oncology launches from 2026 onwards. We anticipate further M&A and or product candidate in licensing will further complement our organic pipeline with synergistic programs. Finally, we expect several pipeline updates from our oncology pipeline in 2023, including from our individualized cancer vaccine program in first-line melanoma, BNT1-2-2, our Clawdon 6-CAR-T program, BNT2-1-1, and from several of our next-generation checkpoint programs, including BNT3-1-1 and 3-1-2. The next slide summarizes our pipeline news flow expected this year. Many of these points have been covered, so I won't go through them in detail again here. What is clear is that our pipeline of 26 clinical stage programs will lead to many readouts this year across a range of our technology platforms and also now across multiple therapeutic areas. We expect this broadening will continue as we look to accelerate selected programs towards registrational trials and ultimately the market. Before concluding and opening up the floor for questions, I would like to highlight on the next slide that we will hold our annual general meeting on May 25th and our next innovation series event on November 7th. We will provide further details in the coming weeks on both events. With that, I would like to thank our shareholders for their continued support, and I'll conclude our remarks and open the floor for questions.
spk14: Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, if you would like to ask a question, please press star 1 and 1 on your telephone keypad.
spk02: We will now go to our first question. One moment, please. And your first question comes from the line of Tazeen Ahmed from Bank of America.
spk14: Please go ahead. Your line is open.
spk13: Hi, good evening, or good afternoon rather, and thanks for taking my questions. One point of clarification, maybe this is best for Ryan to answer. On issuing your 5 billion euros in revenues to expect from the COVID franchise, can you walk us through what the drivers were that you used? It does seem to be a slightly lower number than perhaps the street had been expecting. And can you tell us what of those drivers could still be variable that could still be potentially a reason to have to adjust, let's say, later in the year? And then secondly, you talk about M&A. I'm just wondering, what are the types of candidates that BioNTech would think to be most beneficial? Because you are in several clinical trials planned and already started. What would be the most complementary to what you're trying to do? Thanks.
spk06: Yeah, thank you, Tuzin. I'm going to turn it over to Jens, actually, for the first part of the question, and I'll come back to the second.
spk08: Yeah, Tuzin, thanks for the question. So just maybe jumping back to the one slide that I had mentioned in my speech. Of course, you know, what we will see is that there is a shift from this typical structure of delivering to governments, as we have seen it in the last two years, towards the commercial part, commercial setting. And that will... that will offer us some opportunities going forward. 23, you know, from our perspective is a little bit of transitional year in that respect, because there are still some doses with governments that we expect will be moved into the market. And therefore, you know, we expect further upside in the time to come thereafter. And of course, looking at the opportunity beyond that, you know, new variants, and we are expecting new variants coming up in the future. of course, will then require additional vaccines that the mRNA technology is capable of delivering. On top, of course, you know, when you have a commercial setting, and that will start from our perspective in the US in the second half of this year, we'll then also jump over into other jurisdictions, as I mentioned before. So, and the speed here is very difficult to anticipate. You know, Europe probably, we will see that in Germany and some other jurisdiction in Europe. And then you will move away from the multi-dose vials towards single-dose vials. And, of course, pricing for those will be very different, too. So we got to wait. You know, we're very positive in terms of the further development of our franchise. And, you know, I've highlighted as well that if you look into our cost structure versus, you know, other cost structures of players in the market, we do quite well because of the cross-profit share that we have with our partner Pfizer. So overall, you know, we are very positive in terms of our COVID-19 vaccine franchise development going forward. And Ryan, you want to add?
spk06: Yeah, I would just second the point that, you know, one of the factors underpinning the approximate 5 billion euros of revenue guidance is the European Union contract, which, as you know, is our largest contract. And as we stated here, Again, on this call, it is subject to ongoing renegotiation. So, again, just a testament to the fact that demand on the ground does matter. And so that's something that we'll continue to provide updates as we have them. But that's been factored in, anticipated update to that contract has been factored in to these numbers.
spk12: Okay.
spk06: The M&A part of your question. You know, I think you asked what's the sweet spot and what are we looking for. I think first and foremost, you know, we're looking for synergistic assets that could complement our BioNTech proprietary pipeline. And I think a good example of that sort of sweet spot is this novel anti-CTO4 molecule that we've developed. that we've just announced and expanded on today. It appears to have a differentiated profile. We think it could have potential as a monotherapy and potentially expand treatment possibilities with an IO mechanism, but also could also potentially synergize with their own pipeline down the road. So I think that's a good example. Phase two, about to be phase three. So mid to late stage assets. And we've got a number of those still in the deal pipeline, some at more advanced stages.
spk13: Is there a dollar number, Ryan, that would be an upper limit of how much BioNTech is looking to spend right now?
spk06: So our sweet spot, I think, as a normal course would be a sub $1 billion. And I think we certainly like the proposition there. of this deal, this Onco C4 deal, where we pay $200 million up front, and then there are some success-based milestones and royalties, but where we share some development costs, but we take control of the asset and can really direct the development. I think that's really what we're looking to do. There could be some variation depending on the asset in question, but I think we really like that sort of approach. We will look at larger deals, but I think the sweet spot for us is the sort of product-centric, product-focused, in licensing and or M&A.
spk14: Okay, thank you. Thank you. We will now go to our next question. And the next question comes from the line of Dana Graybosh from SBB Securities. Please go ahead. Your line is open.
spk11: Yeah, I have a couple oncology pipeline questions. First, and you just hinted at it, Ryan, I'm really interested in how you are planning to expand the ONC392 development now that you have it in your hands. And should we expect any head-to-head studies with ipinivo to really prove out the broader therapeutic window and potentially better efficacy? And then a second program is, a second question, sorry, is now that you have a really large portfolio, I'm really interested in the criteria you're using for go-no-go and In particular, in this presentation, you highlighted focus programs in oncology. And I wonder why these programs and what did they show to reach that focus program bar? And what does it mean for those programs that aren't focus programs? Thank you.
spk02: You want to take that?
spk01: Yes, I can take that. Hi, Dana. Thanks for the question. So first of all, to Ong392. So the key differentiator that we believe is important for ONC392 is the ability, the larger therapeutic window and the ability to induce higher exposure and prolonged exposure to the anti-CTLF4 mechanism, particularly by the anticipated mechanism of depletion of T-Rex in the tumor microenvironment and compared to the approved anti-CTLF4 molecules preserving peripheral and lymphatic TREC function. We are not planning to go into any head-to-head studies for the proof products. We are exploring, we are going to explore explore two types of applications. One application based on the single compound activity of ONC392 observed, for example, in ovarian cancer. And we will also report about single compound activity in non-sensory lung cancer patients. allowing us without site-to-site control to go into indications in which ipilimumab or other anti-CTLA-4 antibodies are not authorized to fund. The second is indeed using this as a combination partner. We believe that anti-CTLR4, if well-tolerated, is also an excellent combination partner, particularly for our cancer vaccine pipeline. demonstrated in the past synergy of our personalized vaccines with entire PD-1. But we believe that particularly for some type of vaccine, we would also see synergy with anti-CTLA-4 mechanism. So the third question that you have addressed is how we define focus. We define focus in the setting that we would like to address two key goals with regard to personalized cancer immunotherapy. On the one side, personalized cancer immunotherapy increasing the overall response rate and activity in a single indication, but also in the second way, personalized cancer immunotherapy allowing to provide clinical benefits with our portfolio to patients along their disease journey, meaning from the very beginning of the disease as well in the late stage. And this is what drives the selection of the compounds. Compounds, as Ryan said, one key aspect is the compound going to add additional closed gaps in our portfolio. And the second is the compound going to increase the impact of our compounds by synergistic effects.
spk02: Great. Thank you. Thank you. We'll now go to our next question.
spk14: And the next question comes from the line of Matthew Harrison from Morgan Stanley. Please go ahead. Your line is open.
spk03: Great. Good afternoon. Thanks for taking the question. A couple of PCV-related questions for me. First, just on timing, I just wanted to confirm previously I think you had talked about first half of 23 for that data on the slide that says 2023. I just wondered if there was a shift in the timing or not? And then second, as we think about the outcome of the study, could you just talk sort of broadly about, you know, how we should, what kind of expectations we should have for that study and what you would deem as a positive result? And I ask it sort of in the context that for some mid-stage trials, a p-value that's greater than 0.05 can also be deemed as something you might move ahead with. So could you just talk about that? Thanks very much.
spk06: Thanks, Matt. So I'll take the first part, and then perhaps Ugar can take the second part on the interpretation of the data. In terms of the readout, so you're correct that we have broadened – actually, JPMorgan, we broadened the readout timing expectation to full year 2023. So I think it's fair to say that that could come in the second half.
spk01: The second question is related to how to interpret the outcome. The clinical trial is intended to evaluate the potential activity of a personalized cancer vaccine in combination with PD-1. in advanced metastatic stage setting. We would assess the activity of the compound, of course, for melanoma. The melanoma went from a single AIO indication into a constellation there. And now several combination compounds are approved. And so that means a potential positive result would be seen also in the context of what is the residual medical need in this indication and how big is the bar to continue in the first-line melanoma setting. The second indication is that a positive trial in the first line metastatic setting would also trigger potential additional indications in the first line in combination with checkpoint blockade.
spk02: Thank you. We will now go to our next question.
spk14: And the next question comes from the line of Akash Tiwari from Jefferies. Please go ahead. Your line is open.
spk12: Hi, this is Ivy. I'm for Akash. We have a couple if we may. So maybe start with the first one, your COVID guidance. I think Pfizer right now is guiding for full vaccine-like penetration of COVID vaccine in the second half of this decade. I think they are guiding around 100 to 150 billion, sorry, million global dose per year going forward. That's why we're now saying like the market is breaking in a much lower demand for vaccines at the current valuation. So I guess just what's your thoughts on Pfizer's assumptions? It looks like there's divergence between your 2003 guide and Pfizer's, which is like $5 billion versus, I guess, $6.5 billion implied by Pfizer's guidance. I guess then it's just like with the increased OPEC spend you guided this year from around $2 billion in 2022 to greater than $3 billion in 2023. Is it fair for us to assume that COVID business may not be cash generating this year? Thank you.
spk06: So, I'll start and I'm sure Jens will chime in here. So, in terms of the comparison to the Pfizer guidance, you know, I would just say that First on the market, I think there was a market part of your question. So I think consistent with what Pfizer has disclosed, we believe that 2023 could be a trough year for the COVID market as it transitions over the course of a couple of years to a sort of steady state, more commercially driven market. And so you've hopefully heard that reflected in our comments today. That won't happen fully this year because we still have a number of countries, in fact, a majority of countries, that are still under government contracts that are still, let's say, a relic or a follow-on from the pandemic, right? We do expect some commercial markets to open this year, but that process, again, the transition period will take time. That transition period, we expect, could lead to potential for increased volumes as we transition to that and also increased prices. But again, that could also take some time. And we've noted today a couple of drivers, potential drivers over the midterm that could contribute to that growth potential. Namely, enhanced uptake of COVID-19 vaccines, but also potential follow-on vaccines. Our next generation vaccines, for example, that are in phase one and or combination vaccines could be important midterm contributors to that. And maybe on the guidance, again, the guidance comparison point to Pfizer, you know, you've highlighted the sort of 12 billion rough Pfizer estimate. Maybe Jens can speak to how that's, you can't just split that in half when you compare our guidance to Pfizer's.
spk08: Yeah, it was awfully difficult to understand you, actually, due to the line. But, you know, what we could understand is, and Ryan was referring to this, I mean, of course, as you know, our revenue guidance is coming from three different areas, basically from the the Pfizer part, the profit share that we have with Pfizer. And, of course, profit share means that you have a revenue figure from Pfizer, and you've got to take into account that there are COGS there of some magnitude that are reducing that revenue figure to come to the gross profit. So if you assume something like, and you see, if you look into our figures, you see something like a COGS figure for the full year of 82.7, sorry, a gross profit figure of 82.7%, you have to assume a certain percentage for Cox's. So if you take 12 million euros that you mentioned and you take some 80% gross margin, you're coming to something that makes already sense in that respect. We also have some revenues that we are generating by selling the products to Pfizer. They have a very little contribution, revenue, very little profit contribution. Sorry, I'm mixing up here. And then, of course, we have our revenues towards Germany and Turkey, and here we have a profit share with Pfizer. And if you take all this into account, you know, the $5 billion to the $13.5 billion that Pfizer has guided for 2023, I think that fits quite well with what you've seen in 2021, and it fits quite well to what you've seen in 2020.
spk06: Yeah, I think maybe to the last part of your question about profitability, I think what you've heard from us today in terms of our guidance is that we do expect to remain profitable this year. And more importantly, to your point about COVID profitability in the years to come, while we're not issuing guidance today, I think our expectation, as Jens mentioned in his speech, is that COVID, because of the cost structure of our partnership with Pfizer, where we can keep our fixed costs very lean, we expect the product to be highly cash generative for us.
spk08: That's exactly what I said. So if you take the five, round about $5 billion as a guidance, the revenue figure as a guidance, and you take some 20% for COXs that we have reported in the past, and that's sort of ballpark, 15% to 20%, and then you take our $2.4 to $2.6 billion for R&D spend and the $650 to $750 SG&A spend, you see that based on our current plans, on our current development plans, so not adding any additional M&A or collaboration impacts onto those figures that for 23 we expect to be profitable. And going forward, as Ryan said, you know, this COVID franchise will contribute further profits in the years to come. That's our anticipation for the future.
spk12: Got it. That's super helpful. One quick follow-up, if I may. It's just, when should we expect to see bivalent VAE data, and will you top-line the data when it is becoming available? Thank you.
spk06: Sorry, just to clarify, your question was, when will we see bivalent data, or when will there be a bivalent ?
spk12: Yeah, when should we expect to see bivalent VAE data, and will you top-line it when it's available?
spk06: Yeah, so we're not guiding to VE data for bivalent. We have published safety and immunogenicity data last year. Our focus at this point for the vaccine is actually looking forward to strain selection for the fall season. And we expect that that, we're in discussions with regulators around that. Our expectation is that that will be based on safety and immunogenicity data. Um, there are further discussions to be had over the coming months, but our expectation is that the new strength in major. I don't know if you want to.
spk01: I'm not sure that the data referred to to call it or the call with flu combination. Yes, the process for updating the vaccines will be most likely as it was last year based on immunogenicity data and safety data in a smaller cohort of subjects. No VE data.
spk12: Got it. Thank you very much.
spk14: Thank you. We'll now go to our next question. And the next question comes from the line of Yaron Verba from Cowan. Please go ahead. Your line is open.
spk04: Great. Thanks so much for taking my question. I just have a couple. The first one is on BNT211. What solid tumor data do you anticipate having this year? Is it going to be something outside of the testicular and ovarian and sort of what comes to mind? And then secondly, just to go back on BNT122, the PFS should have potentially read out second half next year. So as you're thinking about releasing data in the second half of this year, is it that you're waiting for the survival data? Or sort of what are the gate marks that you're waiting for to release that data? Thank you.
spk09: Thank you for your question. BNT211, we have a clinical trial ongoing which recruits patients who have Claudine 6 positive cancers, specifically testicular cancer. And as you have already pointed out, we have already reported some of that data. We will have a larger cohort of testicular cancer patients. And this will be one part of the data we will report this year. On top of that, the clinical trial is continuing to enroll patients with ovarian cancer, with endometrial cancer, other rare Claudine 6 positive cancer types like gastric and small cell lung cancer, for example, so that also this indication will be reported.
spk11: I didn't get the other one.
spk01: BNT122, maybe I can take the question. So we are indeed collecting objective response data, PFS data, as well as documenting OS data. And potential readout in the second half of 2023 will be most likely limited to PFS and ORR data.
spk02: Thank you. We will now go to the next question.
spk14: And the next question comes from the line of Chris Shibutani from Goldman Sachs. Please go ahead. Your line is open.
spk05: Hi, this is Steven. I'm for Chris. Thank you for taking our questions. Two for me. So currently in select territories, BioNTech and Pfizer have a 50-50 gross profit share. Can you speak to what the economics of that might look like for a COVID food combo vaccine, if that's proven in the future? And then with the renegotiations with the European Commission, where there's potentially lower volume and potential re-phasing, could you elaborate on what that might mean for price? Could we see a higher price going forward with that contract? Thank you.
spk08: Yeah, maybe let me start with this and then Ryan can chime in. So for the combination of COVID flu, you know, we can't give you any details. This is confidential in the discussions with our partner Pfizer. And then in terms of the EC, of course, I mean, these are also ongoing discussions, as you know. You know, we wanted to make sure and be transparent that these Outcomes could be the case that the existing 450 million doses contract that we have with the EC could be split over several years or that potentially a certain volume could go down overall. But on the details in terms of pricing, you've got to bear with us. Yeah, we can't give any details here. We're in the middle of negotiations, so we can't give any more details than what I just said.
spk06: Yeah, and I would just add – the point that, as you know, Stephen, for the COVID vaccine, we have a 50-50 gross profit share with Pfizer. We only carry SCNA expenses or S&M expenses in those BioNTech commercial territories, Germany. So the vast majority of sales and marketing expenses is with Pfizer and outside of our collaboration, which means that Our effective economics on the product are well above 50%. I think on flu, that's different. On the flu mono program, we had licensed that to Pfizer back before COVID-19, as you may recall. So it's more of a licensing agreement. We don't bear any of the development costs for the flu mono program. So it's a very different structure. We are eligible to receive milestones and royalties on flu mono. So I think Until we can disclose more on the combo economics, I think it's safe for you to assume that it's somewhere in between those two and that we do think it would be economically meaningful to us from a P&L perspective, but that's all we can say at this point.
spk05: Okay. Thank you very much. Appreciate it.
spk14: Thank you. We will now take our last question for today. And the last question comes from the line of Jessica Fay from JP Morgan. Please go ahead. Your line is open.
spk10: Hey, guys. Good morning. Thanks for taking my question. Forgive me if this seems a bit redundant, but I just want to follow up on an earlier question or two. I just want to confirm that the comment that an anticipated update to the European contract has been factored into your numbers means that any apparent disconnect between the guidance you're providing and that that Pfizer gave earlier this year is not solely driven by a disconnect on assumptions around gross profitability of the COVID vaccine business, but is also driven by just different overall revenue or assumed doses delivered. Thank you.
spk06: So, Jeff, I'll start and Jens should jump in here. So, we obviously work very closely with Pfizer on multiple levels in estimating market potential, estimating uptake of the vaccine, et cetera. There are a number of factors that do impact the two companies' communications. It's not only expectations around the EU contract. We also have different financial calendar years. which Jens can probably best speak to, which also may have an impact. I think also you have to differentiate between contracted doses, which I think is perhaps what you may be referring to in terms of the Pfizer disclosure, and estimated revenue from full contracted doses versus our guidance today, which is based on our estimate, our best estimates of expected revenue for the year, which factors in, does factor into your point some potential changes to the EU contract. I don't know, Jens, would you?
spk08: Yeah, no, you basically mentioned it, Ryan. I mean, of course, we can't comment on the way our Pfizer is communicating. They've done that a while back, a few weeks back, when they gave out their guidance. At that point in time, as well as at our point in time today, you know, there is no conclusion on how the contract with the European Union will look like. what sort of volumes we're talking about, what sort of spread over several years we're talking about, or pricing or anything of this kind. Every company got to do their own sort of guiding. I believe if you compare the figures, and I tried to explain that a little bit before, We're not far away, actually, if you compare that. If you really do the math, I think you come to the conclusion that Pfizer and ourselves, in terms of that COVID business, are very well aligned, also in terms of the number that we have presented and that Pfizer has presented.
spk02: Thank you.
spk14: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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