Moderna, Inc.

Good morning and welcome to Moderna's conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that the call is being recorded. At this time, I'd like to turn the call over to Lavina Talukdar, Head of Investor Relations at Moderna. Please proceed.

Thank you, Operator. Good morning, everyone, and welcome to Moderna's second quarter 2020 conference call to discuss financial results and business updates. You can access the press release issued this morning, as well as the slides that we'll be reviewing, by going to the Investor section of our website. On today's call are Stefan Bonsal, our Chief Executive Officer, Kyle Zaks, our Chief Medical Officer, Stephen Hogue, our President, and David Malie, our Chief Financial Officer. Before we begin, please note that this conference call will include forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Please see slide 2 of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments. I will now turn the call over to Stéphane.

Thank you, Ravina. Good morning and good afternoon, everyone. I hope all of you are in good health and remain safe. Thank you for joining our future business update. We are committed to building mRNA as a new class of medicines, with Moderna's position to remain the leader in this field. As you know, we believe our mRNA medicines have a potential to address large unmet medical needs and to treat diseases that are not addressable by recombinant protein or small molecules. Due to the platform nature of mRNA, we believe our mRNA medicines provide a higher probability of technical success to commercial launch. and faster timelines to clinical trials and to the market relative to traditional medicines. We also believe that the manufacturing capital intensity of mRNA is materially lower than recombinant proteins, that our cost of manufacturing at commercial scales will be similar to small molecule injectables. Let me start by summarizing the key achievements of the company in Q2 on slide 4. mRNA 273 of COVID-19 vaccine candidates so the start of its phase two, and the team focused on the phase three design and preparation for July start. We signed a strategic long-term partnership with Lonza to have significant manufacturing capacity to make mRNA and formulate it at large industrial scale to complement our Massachusetts manufacturing site capacity in the context of the pandemic. We started the technology transfer to Lonza in Q2. We raised $1.3 billion on May 18, and as communicated in OS3, this capital was raised to enable us to scale up at risk for manufacturing capacity in anticipation of a potential approval for MRNet 1233. We started investing the proceeds for additional capital equipment at the Massachusetts plant, as well as the Lonza plant in New Hampshire and in Switzerland. ordering raw materials at large scale and hiring additional personnel to make mRNA-1273. In April, we finalized and announced an award from BARDA for up to $483 million for critical development costs for mRNA-1273. An additional award was also announced last week for up to $472 million, given the increased size of a Phase III to 30,000 participants. The total award is now up to $955 million. In a very difficult environment during the spring, given the many lockdowns across the U.S. due to COVID-19 outbreaks, our clinical team was able to continue to operate most of our clinical trials on schedule, and we remain on track to provide in Q3 the Phase 2 interim data for CMV vaccine candidate, mRNA-1647. The team continues to work relentlessly to start the Phase III study for CMV in 2021. We continue to believe that our CMV vaccine candidate annual peak sales could be $2 to $5 billion. And like mRNA-1273, our COVID vaccine candidate, we own the global commercial rights of mRNA-1647, our CMV vaccine candidate. Q2 marked a new growth phase for our company as we started to build and hire our commercial team. This is a historic moment for those of us who have worked at the company for many years since it was a breakthrough research enterprise working with small animal models. And now we are building commercial. In Q2, the team started discussions with several countries around the world about potential supply agreements for MRN1273. We saw our first deferred revenues book in Q2 on the balance sheet for $75 million of cash receipts from deposits for our first potential supply of MR-1273. As of July 37th, we have received approximately $400 million of cash deposits. For today's call, we will cover three main topics. First, Tal will review and update you on our clinical programs and share some new clinical data and our CMV and Zika vaccine candidates. Then Steven and I will share with you our value framework for vaccine COVID-19 candidates and our approach for delivering value during the pandemic. Finally, David will take you through the second quarter financials. Let me now turn the call to Tav.

Thank you, Stefan, and good morning, everyone. Let me start with our prophylactic vaccines portfolio. A quick overview of the programs is on slide seven. MRNA-1273, our vaccine against COVID-19, has made very significant progress. The interim results of the Phase 1 trial have now been published in the New England Journal of Medicine. The Phase 2 trial was fully enrolled, and importantly, we recently started the Phase 3 trial of 30,000 volunteers in the U.S. A CMV Phase 2 dose confirmation study remains on track for interim data in the third quarter of this year, and the Phase 3 trial is expected to begin in next year. The Phase 1 trial for Zika is fully enrolled, and I'll share some data from the 100 and 250 microgram dose cohorts shortly while we're preparing for Phase 2. Our Phase 1B HDS collision study with our combination HMPV-PAV3 vaccine remains on pause with enrollment suspended due to COVID-19 disruptions. And finally, the Phase 1 study with mRNA-1172 against RSV led by our partner Merck is ongoing. So the news today is additional data from our CMV and Zika Phase I programs. For CMV, these include 12 months immunogenicity data from dose cohorts 30, 90, and 180 microgram, and the safety data from the 300 microgram dose cohort. For Zika, we have disclosed data from the 10 and 30 microgram cohorts, and today I'll show you the safety and immunogenicity data for the 100 and 250 microgram dose groups. So starting with CMV, on slide 9, you will see a table of the solicited adverse events after the third and final vaccination in the highest dose we tested, 300 micrograms. The safety and reactogenicity data from this dose is displayed side by side with the other lower dose cohorts from the trial. At the 300 microgram dose level, solicited adverse event reaction showed a trend towards increases with the higher dose and were higher in seropositives. This is consistent with what we've seen in the other doses as we move from 30 to 90 and 100 in AV micrograms. The most commonly reported adverse events were pain at the injection site, headache, fatigue, myalgia, and chills for seronegative participants, with fever and arthralgia as more common adverse events in seropositives. Importantly, at the 300-microgram dose, there continues to be no related serious adverse events reported and no unexpected safety findings. Moving to the 12-month immunogenicity data for the full 30, 90, and 180 microgram dose cohorts in the Phase 1 CMV trial, we're happy to report that six months after the last vaccination with mRNA-1647, we have durable neutralizing antibody responses out to the 12-month time frame. Slide 10 shows the data in the same format we reported previously. At the top part of the table, you see the geometric mean neutralizing antibody titers against epithelial cell infections or the pentamer at the 12-months mark, as well as the fold increases above the seropositive benchmark of 5917. At the 90 and 180-microgram doses, the fold increase in geometric mean titers above that seropositive benchmark were 3.6 and 3.9-fold higher, respectively. In the bottom of half of the table, figures for the geometric mean antibody titers against fibroblast infection, or the GD antigen, for the same doses can be seen. And the geometric mean titers against fibroblast cells in the 90 and 180 microgram were 0.7 and 0.9-fold, or zero positive benchmark level of 1449. Slide 11 is the graphical representation of the geometric mean antibody titers against epithelial cell infection relative to the seropositive benchmark geometric mean titer. And the scale is a log scale. You can see the seronegative participants by the solid lines and the increase in neutralizing antibody titers for each of the doses after each vaccination. The 90 and 180 microgram doses are shown in solid blue and orange. and they're well above the benchmark seropositive level at the 12-month mark. This is six months after the last vaccination, so the persistence of neutralizing antibodies is encouraging. Seropositives are represented by the dashed lines. These participants entered the trial with neutralizing antibodies, as you can see from the start, and they also saw their neutralizing antibody levels further increase with each vaccination, remaining above the geometric mean titer for neutralizing antibody levels to the 12-month mark. CMV is an important unmet need, and we're encouraged and excited by these 12-month data. We're currently running the Phase II dose confirmation study, where we're testing a narrow range of doses at the 50, 100, and 150 microgram. 252 seronegative and seropositive adults have been enrolled, and we remain on track for an interim readout in the third quarter of this year. We continue to plan for the Phase III trial in 2021, pending further regulatory interactions and feedback. The primary endpoint, as we have previously reported, is anticipated to be prevention of primary infection in seronegative women of childbearing age, and we expect to include less than 8,000 participants in the U.S. and Europe. Let me now move to mRNA-1893, our vaccine against the Zika virus, where we've seen additional data at the 100 and 250-microgram dose levels. Both of these dose levels were generally well tolerated, with a trend towards more observations of local erythema and swelling at the injection site with the higher dose levels and after the second vaccination. Consistent with what we've seen across our vaccine platform, there's a trend of more solicited systemic adverse events noted with 250 microgram dose levels, particularly after the second dose. There were no related serious adverse events. You can see some of the 30-microgram data have been updated from our Vaccine Day presentation back in April. In terms of the immunogenicity response, both the 100 and 250-microgram dose level induced a strong neutralizing antibody response in both seropositive and seronegative participants. The table on the left-hand side focuses on the seronegative participants and the data for the 10 and 30-microgram cords have been previously shared. All seronegative participants in the 100-microgram dose cohort seroconverted after the second vaccination, similar to that seen with the lower 30-microgram dose cohort, but now with higher geometric mean titers, as depicted graphically on the bottom. We did not see any further increase at the 250-microgram relative to the 100-microgram dose. Now, on this page, you can see the data for participants with preexisting flavivirus immunity or the seropositives. where mRNA-1893 was still able to mount a Zika-specific neutralizing antibody response. Here, the first vaccination is comparable to a booster response, and the response was similar between all dose levels, although, of course, I would note that these are very small numbers. We are reviewing the data and will make dose selection decisions in preparation for the Phase 2, and this program continues to be supported by BARDA. So let me quickly review at a high level the data generated to date with mRNA-1273, our vaccine against COVID-19. The Phase I clinical data published in the New England Journal show that 100% of the participants vaccinated generated neutralizing antibodies, and the geometric mean titer level at day 43 were 4.1-fold higher than those seen in convalescence here from three representative COVID-19 patients. As published recently in the New England Journal of Medicine, the non-human primate vaccination with the two-dose regimen of mRNA-1273 led to rapid protection against infection in both the lungs and nose of the animals. Finally, a preprint from a mouse challenge model had shown consistent protection in the lungs and noses of those animals as well. And this morning, we're happy to hear that Nature published this study, and it is available online today. So we've been able to show protection against viral replication in every species we've tested so far, and the levels of neutralizing antibodies that correlate with this protection are roughly similar to those we achieved in humans in Phase 1. So we look forward to the data readouts expected in the coming months, which will include the older and elderly cohorts in the Phase 1, the safety and immunogenicity data from the Phase 2, and the potential for interim safety and efficacy analysis from the Phase 3 code trial. Let me now quickly review our other clinical programs. In the systemic, secretive, and self-surface therapeutics, I'm happy to report that the additional two cohorts in the phase one trial for mRNA-1944 have recently completed enrollment. As a reminder, in this program, the mRNA-1944 encodes for an IgG antibody against the Chikungunya virus. The two additional cohorts are testing an IV infusion of mRNA-1944 at the high dose of 0.6 mg per kg with steroid premedication as well as two doses of 0.3 microgig without steroid premedication given a week apart. The randomized phase two trial of our personalized cancer vaccine in combination with Keytruda versus Keytruda alone, which is partnered with Merck, is ongoing. And we've also made progress with the intratumoral immunooncology programs. Our Ox40 ligand program has expanded into a Phase II dose expansion study in combination with durvalumab in patients with ovarian cancer and is actively recruiting patients. The Phase I program with our triplet of Ox40 ligand IL-23 and IL-36 gamma is ongoing, and data were recently presented at ASCO. You can find the link for the data at the bottom of the slide. Within our systemic intracellular therapeutics modality, both MMA and TA studies remain on pause due to COVID-19 disruptions. Finally, our partner-led programs, including the mutant K-Rest vaccine with Merck and IL-12 and VEGF as the pandemic continues. Slot 18 is a snapshot of our development pipeline with mRNA-1273 in Phase 3 and CMV in preparation for a Phase 3 start in 2021. We have four trials now in Phase 2 and two preparing for Phase 2. and 10 development candidates in phase one, with a further nine in preclinical studies. So, with such a broad development pipeline, we anticipate many readouts and next steps in the near term, and they're listed on slide 19. These include, as I mentioned, the phase one results from the older and elderly age cohorts, phase two, and interim analysis for phase three for mRNA-1273. The phase two results from CMV in the third quarter. and the compliance phase one data from the additional cohorts from our antibody against the chikungunya virus. With that, let me turn the call over to Stephen. Thank you, Sal.

I'd like to start our discussion on mRNA-1273 value by, on slide 21, just recapping the scale of the loss that we've all been facing. It is remarkable that this pandemic has harmed millions of people already, and our hearts go out to those who've lost loved ones or been made sick themselves. Given the scale of devastation, it is hard to believe that just seven months ago, none of us had ever heard of SARS-CoV-2 or COVID-19. Globally now, over 18 million people have had confirmed infections with the virus, and almost 700,000 have died. In the U.S., that looks like 4.7 million confirmed cases and 150,000 deaths. And the estimates are that by year-end in the U.S. alone, there could be up to 400,000 deaths in this country. What we're learning about the virus almost every day is that it may have a number of long-term sequelae beyond the short-term impacts of the disease. So beyond the pulmonary infection, pneumonia, acute respiratory distress syndrome, and pulmonary embolism that we see, there have been increasing reports of other coagulation disorders, cardiac injury, and long-term sequelae. as well as disturbing reports of potential long-term neurologic complications and potential inflammatory syndromes in children. Clearly, we're learning more and more every day about the terrible devastation of this virus, and it's absolutely imperative that we and others advance the vaccine to try and blunt this pandemic and control these long-term sequelae. So, in slide 22, in trying to assign value to a vaccine during a pandemic such as this, there are a number of approaches. but one of the most established is using incremental cost-effective ratios. Using a health economic assessment framework, you usually look just at healthcare costs, really the direct medical costs associated with caring for the disease. Through the ICER analysis, we look at the incremental change in cost divided by the incremental change in health outcome. And the health outcome, the value of that improvement, is measured based on willingness to pay thresholds. generally $50,000 to $150,000 per quality adjusted life years. On slide 22, I'm presenting a recently completed analysis by Quadrant Health Economics looking at an ICER at a $50,000 quality threshold. This analysis looked just at the short-term benefits of vaccination during a pandemic. And what I mean by that is just the value created in the first year after rolling out broadly of a vaccine. Now, scenarios depend on which populations you're looking at, and the value also depends upon the epidemiology of the virus that's ongoing. But looking at a current trajectory of infection in terms of epidemiology and vaccinating all adults, meaning those 18 plus, the ICER 50,000 value of the vaccine would be approximately $300 per course. If you focus vaccination just initially in the high-risk populations, say those over the age of 65, That value expands substantially, not surprisingly, given the high burden of disease in that population. Obviously, as transmission increases, the potential value of vaccine significantly increases beyond that. Now, on slide 23, it's important to note the limitations of these iSearch-type analyses. So, while there is obviously a lot of value in a vaccine in directly impacting the healthcare costs, Such analysis does not look at the long-term sequela and long-term disability potential of a disease like COVID-19. It also does nothing to capture the social disruption that's having a huge impact on all of our lives, nor does it do anything to reflect the economic loss that is rampant across our economies globally. And with that, I'd like to turn it over to Stefan to talk to our approach.

Thank you, Stephen, for this value framing. I think it is most appropriate for me to start with Moderna's mission. We set out nearly 10 years ago now with a mission to deliver on MRNA science to create a new generation of medicines for patients. Our mission has been of compass for almost a decade and will continue for the long term. On slide 45, I want to share our approach to delivering values during the COVID-19 pandemic. During this pandemic and throughout the development process of mRNA-1273, our promise to deliver for patients has never been clearer. We have a responsibility to do everything we can to develop a safe and effective vaccine. We have invested in manufacturing, at risk, ahead of approval, to ensure supply if our COVID-19 vaccine candidate is approved. We are working with governments around the world and others to ensure the vaccine is accessible regardless of ability to pay. And it will be responsible on price, well below value during the pandemic. Let me now turn to slide 26 and give you some more specifics. First, as we thought about a responsible pricing, we concluded it is important to consider different time horizons. We are currently under a pandemic as defined by the WHO. At Moderna, like many public health experts, we believe that SARS-CoV-2 virus is not going away and that there will be a need to vaccinate people or give them a boost for many years to come. So we think about two time horizons, the pandemic period as defined by WHO and the endemic period. During the pandemic period, we have priced well below value with pre-approval supply agreements mostly to governments. To date, smaller volume agreements have been executed between $32 and $37 per dose. Larger volume agreements, under discussion, will be at a lower price for higher volumes. In the endemic period, pricing considerations will follow traditional dynamics and market forces, including vaccine efficacy and the competitive landscape. We will look to price in line with other innovative commercial vaccines. We expect traditional approaches to vaccine purchase and distribution in the endemic phase. With this, let me now turn to David for him to work you over the financials.

David? Okay. Thank you, Stéphane. Turning to slide number 28, in today's press release, we reported our second quarter unaudited 2020 financial results. We ended Q2 2020 with cash and investments of $3.1 billion compared to $1.7 billion at the end of Q1. The increase is driven by the capital raise in May of this year. Net cash used in operating activities was $130 million for the first half of 2020, compared to $253 million in 2019. The decrease in 2020 is mainly due to deposits of $75 million received as of June 30th for potential future supply of mRNA-1273. Net cash used in operating activities for the first half of 2019 also included $22 million of in-licensing payments to sales script to sub-license certain patent rights. Cash used for purchases of property and equipment was $25 million for the first half of 2020, compared to $18 million in 2019. Total revenue was $66 million for Q2 2020 compared to $13 million for the same period in 2019. Total revenue was $75 million in the first half of 2020 compared to $29 million for the same period in 2019. Total revenue increased for both the three- and six-month periods in 2020 due to increases in collaboration and grant revenue. The collaboration revenue increases were mainly attributable to an increase in revenue in the second quarter, particularly from AstraZeneca. The increases in grant revenue were primarily due to our BARDA agreement related to the development of our vaccine candidate mRNA-1273. Research and development expenses were $152 million for the second quarter of 2021. compared to 128 million for the same period in 2019. Research and development expenses were 267 million in the first half of 2020, compared to 258 million for the same period in 2019. The increases for both three and six-month periods in 2020 were mainly due to increased headcount and mRNA-1273 clinical development activities. Overall, in both periods, we saw a significant increase in expenses for prophylactic vaccines modality as a result of our focus on mRNA-1273. While expenses related to the rest of the portfolio were stable, general and administrative expenses were $36 million for Q2 2020 compared to $29 million for the same period in 2019. Expenses were $61 million for the first half of 2020 compared to $56 million for the same period in 2019. The increases for both periods were mainly driven by increases in personnel and legal expenses. Turning to cash flow from net operating activity and purchase of property and equipment on slide 29. Cash used in operating activity and for purchase of property and equipment was $118 million, excluding the $75 million for deposits received as of June 30th for potential supply of mRNA-1273, in line with previous trends. On a reported basis, including the mentioned $75 million deposits, cash used in operating activities and purchase of PP&E were 43 million for the quarter. Turning now to updated guidance for 2020. Our guidance today maintains the metric of net cash used in operating activities and for purchase of property and equipment. We will adopt additional guidance metrics in the future as the business progresses towards commercialization. As always, we'll be interested in any advice you may have on how we can be clear, concise and comprehensible. On an overall basis, the net cash used in operating activities and purchases of property and equipment in 2020 will increase to $0.65 to $0.85 billion from the prior guidance of approximately $0.5 billion for the year. Updated guidance for 2020 reflects ongoing investments in Moderna's broad mRNA clinical and preclinical pipeline, as well as the significant activities associated with our efforts to advance our mRNA-1273 COVID vaccine toward approval and launch. With regard to the ongoing investment in our base business, we remain on track to prior plans. where we continue to expect net cash used in operating activities and purchases of property and equipment to be approximately $0.5 billion in 2020. Turning now to the financial impacts of our rapidly advancing mRNA-1273 COVID vaccine. First, expenses that fall under the scope of our BARDA agreement These are primarily research and development activities to drive a COVID vaccine to licensure and scale up activities on the technical development and manufacturing side. As we expect a relatively close matching of expenses and reimbursement, we do not expect these activities to materially impact our cash flow. And hence, these are not shown separately on slide 29. Next, looking at the COVID vaccine related non-reimbursable investments, primarily for manufacturing of product to be commercialized in the U.S. and internationally. We expect the net, the cash impact of COVID related investments to be between $0.55 to $0.75 billion in 2020. This includes approximately $0.2 billion in capital investments with the balance of the expenses related to raw materials and production activity in our network. Additionally, this investment includes initial commercial infrastructure buildup. The sum total of net cash used in operating activities for all of Moderna's business is expected to total $1.05 to $1.25 billion before consideration of customer deposits. Also included in today's guidance are the deposits we have received to date for potential future supply of our COVID vaccine. Deposits as of July 31 total $0.4 billion, including $75 million received during the second quarter. We remain in active discussions with a number of potential customers and will update the status as the market evolves. In summary, on a net total company basis, we update our 2020 guidance for net cash used in operating activities to 0.65 to 0.85 billion for 2020. We expect this number to reduce as we receive further deposits. As we progress towards approval and commercialization of mRNA-1273, there is heightened interest in several areas of accounting that will increasingly impact our reported results as we move forward. Slide 31 highlights several of these items. Costs associated with pre-launch inventory are expense to R&D in the period incurred. We will capitalize our inventory when regulatory approval and subsequent commercialization is determined to be probable, and we expect future economic benefits from sales to be realizable. Customer deposits for potential supply of mRNA-1273 are recorded as deferred revenue and will be recognized as revenue when revenue recognition criteria are met at a future date. Accounting for the BARDA grant follows a reimbursement model where we will recognize revenue as we perform services and closely match expenses as they are incurred. For purchase and supply agreements, we disclose the aggregated amount of the purchase obligation that is fixed and determinable as per GAAP accounting requirements. This is regardless of whether these obligations have been recorded as actual cause in our financial statements in the current period. With that, I turn the call back to Stefan for closing remarks.

Thank you, David.

In closing, Let me share with you a snapshot of Moderna today. The company continues to progress its clinical pipeline and got closer in Q2 to becoming a commercial company. We have our first Phase 3 program with our COVID-19 vaccine, but we're also preparing the Phase 3 for CMV vaccine. We have three programs in Phase 2, CMV, personalized cancer vaccine, PCV, and VEGF. And we're also preparing Phase 2 for Zika vaccine and Oxford C. ligand development candidate in immuno-oncology. We have eight programs in Phase 1. We have had 12 positive Phase 1 readouts across five different technology modalities. The program lead development includes seven vaccines for unmet medical needs, which, if approved, could be first-in-class vaccines. This includes our vaccines against COVID-19, CMV, HMPV plus PRV-free combo, RSV in older adults, and RSV pediatric population, Zika and EBV. We have five immuno-oncology programs in clinical studies. We have four rare disease programs in both MMA and PA. We have two autoimmune disease candidates with IL-2 and PD-L1 in preclinical studies. The foundation of Moderna has never been stronger. We have over 2,000 healthy volunteers and participants enrolled in our studies. As of the end of July, And that number will grow considerably over the coming weeks as we continue to enroll our 30,000 participants, face-free, co-study, or COVID-19 vaccine candidates. We have over 1,000 employees. We have a fully integrated GMP site in Massachusetts and a strong, experienced manufacturing partner in Lonza. Our biopharmaceutical partners are leaders in their specific fields and include Merck, AZ, and Vertex. And finally, with a strong balance sheet at the end of June, we have the ability to invest $3.1 billion to create value. We have entered a new growth phase for our company. MR-81273 is now in phase three. We have received approximately $400 million of cash for customer deposits for potential supply of MR-81273 as of July 31st. And we continue to discuss with many governments around the world were interested in getting access to mRNA-1273. The last six months have been extraordinary by many measures for our company. The next six months could see us have our first product file for BLA approval. We know that we have a special opportunity, and we are committed to delivering on the promise of our science to bring forward a new class of medicines for patients. That is why we started this company. That is why we work hard every day. mRNA-273 is the head of the sphere. We have a large pipeline with more than 20 development candidates. Since our founding, we have believed that it makes no sense that Moderna will be one medicine company. It will be zero if we fail to make mRNA science work. or it would be many medicines if the first one gets to market thanks to an FDA approval. That is because mRNA is an information molecule which makes Moderna a unique biotech platform company. I would like to end our remarks by thanking the many people who participate in our clinical studies, including patients, healthy volunteers, physicians, and nurses. I would like to thank our partners at the NIH and BARDA and in our biopharmaceutical partners. I would like to say a special thank you to Moderna team. They have done a remarkable job in Q2 during a very complex time, scaling Moderna quickly while managing lockdown and many personal disruptions. I'm very proud of the team achievement in the first seven months of 2020. With that, I'm happy to take any questions. Operator?

Thank you, sir. As a reminder, to ask a question, you would need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. I show our first question comes from the line of Matthew Harrison from Morgan Stanley. Please go ahead.

Great. Good morning. Thanks for taking the question. I get two from me this morning. First, On manufacturing for 1273, can you give us an update on how much inventory you've built so far and where you are in terms of scaling to that 500 million dose per year run rate that you previously highlighted? And then second, I was hoping you could comment on some media reports we've seen over the last day or two about FDA potentially convening a panel for vaccines in October and and I guess also comments that there's going to be real-time review of vaccines and what exactly that means given the timelines potentially for your phase three study. Thanks very much.

This is Carl. Let me maybe take the second question first, and then I'll defer to Stefan to take the first one. Look, I can't comment on media reports. I think that we have been working very closely with the agency, as I'm sure my colleagues have from other companies, to make sure that we're lockstep and give them the greatest, best visibility we can to our data as it emerges. We continue that dialogue as our phase three is now enrolling. The phase three trial has pretty clear, if you will, interim analyses and the statistical robust fiscal plan that we had described in the past, but obviously with the level of unmet need and more and more data emerging to substantiate the potential for benefit as we continue to accumulate safety data on the phase three, I'm very happy to see that FDA continues to take a very proactive stance in evaluating the totality of the clinical data as it emerges. And, you know, as soon as I have any more insights than that, I'll be more than happy to share it.

Thank you, Tal. And, Matthew, on the first question around manufacturing, we will not share, you know, inventory numbers at this time. What I can tell you is that as we speak, Our teams are making commercial products, assuming the potential approval of MR-1273. So we are literally making products and stockpiling at risk. In terms of capacity, I'll confirm what we have said before, which is for 2021, the $500 million per year continues to be our base plan, meaning the team has a good sense of how to execute toward that plan. And the team continues to work really hard over many different approaches, from new process, equipment, to the bottleneck, to find a path to a billion doors, which we still consider at this date as an upside. So the base of 500 million is still our base case, and the team is still working hard to figure out how we can get closer to a 1 billion capacity for 2021 output.

Great.

Thanks very much.

Thank you.

Thank you. Our next question comes from the line of Ted Tenthoff from Piper Sandler. Please go ahead.

Great. Thank you very much, and good morning, everyone. Question with regard to assumed infection rate for the Phase 3. Obviously, this is going to be somewhat dependent, you know, on sort of where you're enrolling and things like that. So what can you tell us about the general assumed infection rate and kind of how many infections you may need to see to be able to power the phase three study of that size. Thanks so very much. I'd say that's all.

It's a great question. The challenge is that I don't know how to build those assumptions given the huge wide variability we see in actual infections rates. The number of infections you need to see correlates to the number of cases required to pass the interim, and as we've disclosed, it's roughly a little over 50, a little over 100, and 150-some for the first and second interim, and then the final. That's the number of cases, and I think the advantage of running a 30,000-subject trial with 15,000 of them getting active vaccine and the rest as a placebo is is that, you know, the larger that cohort, the more likely you are to see those cases early, but it's, of course, a direct function of infection rates. I think the sort of, if you step back philosophically, we designed with our partners at NIH such a large trial with the initial goal not knowing at the time what the infection rates were. You kind of just take a, you know, a cross-country average. You figure you're going to be able to enrich it somewhat and you make it broad enough so that it's representative of the diverse population. I think what we've seen is an anticipated acceleration of the timeline to cases, not just by us, but I think by many people out there, recognizing that infection rates currently in the U.S. are actually higher, certainly in the areas in which we're doing this trial, than maybe we would have thought three, four months ago. So, I think the initial projections, and people smarter than me have sort of made them, was that we had expected to see the cases come in towards the end of the year, or by the end of the year. I think with higher infection rates currently, there may be an acceleration of that, but it's extremely hard to predict. We, like everybody else, sort of follow these on a daily and weekly moving average, I don't think I've got a better crystal ball than anybody else in that domain.

Okay. That's helpful. Thank you very much, Sal.

Thank you. Our next question comes from Salveen Richter from Goldman Sachs. Please go ahead.

Good morning. Thanks for taking my questions. And so with regard to the volume agreements that'll be executed at a higher price point for smaller versus larger volume orders, how are you delineating between the smaller versus larger in terms of volumes? And then secondly, if two different companies developing vaccines for SARS-CoV-2 both use, let's just say the print 50 assays, are those assays identical? So could you actually look at these programs head to head?

Thank you. Good morning, Salveen. So let me take the first one and I will turn it over to Tal for the second one. On the volume agreements, We are not discussing a very precise cutoff because, as you can appreciate, there's a lot of different components that go into getting those increments to a finish line with potential customers. I think, you know, small is more kind of in the millions, and large, as you can imagine, for bigger countries, will be a very different ballpark. Stephen, you want to... Paul, talk about the PRINCE50 assays.

Yeah, this is Paul. I'll take a run at that. It's a great question. I think all of us are trying to look at them and understand the assays. There are big differences because those assays are not standardized, and you've seen a range of PRINCE50s. You've seen assays against live virus, pseudovirus neutralization. What's clear is that all of these correlate with each other pretty well. But there also are differences, and I think if you look across, that's why everybody is trying to sort of report it out as a ratio to the convalescent plasma. The challenge there is, again, there is no standard panel for what the convalescent plasma is, so everybody's using different panels of serum. I think the ballpark estimates are probably roughly comparative. My sense is sort of between half a log and a log of each other for sure, maybe even tighter than that. But it's hard to drill down and get confidence that you're really comparing apples to apples and they're certainly I don't think identical. People try to set them up in identical ways, but you're going to have minor variances. There's also variability in the preclinical models reported. You can see different, especially in the NHP, you can see people using different inoculums or inoculum levels, so different severity of infections in the different models and then reporting out protection or not. So, unfortunately, we're still relatively in the early days. I think the good news is that you've seen for our data, pretty robust titers in every which assay you measure as it relates to convalescent plasma. I'm happy for all of us that I think we're probably not alone. There are going to be other vaccines that also seem to be getting close to that. And so, ultimately, we'll all get wiser when we see the phase three results. Over.

Thank you.

Thank you. Our next question comes from Michael Yee from Jefferies. Please go ahead.

Thanks. Good morning. Appreciate all the updates. Two quick ones for me. First, you're seeing or the market is seeing a lot of contracts being deployed both in UK this morning, also another U.S.

contract deployed to J&J. Could you just put into some context for us how we should think about Moderna's position here and a presumption of a diversified stockpile, and maybe why or why not. There hasn't been anything to announce just yet. Maybe just make some broad comments about that. And then the second question, I guess, is since you've reported data, there has been obviously a lot of other platforms with data that have come out, both Adno and Protein last night. Maybe just make a comment about how to put that into perspective and the market's enthusiasm or people's enthusiasm about those data sets. Thank you.

Good. Thank you, Michael. Good morning. Let me talk a bit about contracts, and then I will hand over to Kyle. So, as you know, Michael, to get to a contract, you need two parties to agree on terms. As I said in my remarks, you know, we are discussing with governments around the world. As you know, we have a longstanding relationship with the U.S. government through different, you know, agencies, you know, The contractors have been signed so far, contractors that are actually literally around the world in all the key regions. And so as we get to the right place, of course, we will make the right announcement as appropriate. Our understanding has been said publicly that different governments have different strategies. Some of them want to build a portfolio to manage risk because, of course, at this stage, Nobody knows, you know, which vaccine will get approved. Nobody knows the different efficacy, which will be most probably very important, especially for the population at risk, you know, the elderly, people with commodity factor. To them, the difference in efficacy might be very, very important. And so I think what we're seeing is the government's doing what I think we would do or you would do if you were running the country or trying to get take care of the health of a large group of people, which is to build a portfolio, thinking about both risks of success, performance of a product, and also covering the country. So as you see, a lot of those agreements have options built into them, which I think, again, makes a lot of sense. As we said, we want to be part of a solution and make sure that we can be helpful. As we've said, we are cautiously optimistic about the good clinical data so far of our vaccine. And we want to make sure we can help as many people as we can around the world, as many governments as we can, to help protect as many people as we can to kind of stop this pandemic. Tom, can I come over to you for the second part of the question from Michael?

Yes. It's a great question on how the platforms are starting to stack up to each other. I think... You know, we – I think our data continues to be as good or better than anything anybody's reported, both in terms of what we're able to show in neutralizing antibodies and in terms of the challenge we've given the non-human climate and the ability to completely eradicate or eliminate the viral replication in both the lung and the nose. It's been nice to see Pfizer validating our data in a way with the BioNTech contract, of course. we're still very curious to see what they're taking into phase two and three, because, uh, reportedly they're taking a different construct than the one for which they've shown data. I think the Adno vectors writ large, uh, uh, it's been an interesting story. Uh, initially it's pretty clear that, um, there's less expectation for their ability to boost, uh, given the nature of their platform and indeed, uh, The first one I don't think boosted at all. The AstraZeneca Oxford data I think are encouraging in that they can get with a boost apparently two levels of convalescent plasma. Hard to say. Very early data that I think even though they dose more than 1,000 subjects, they showed data for 10, which they gave a prime boost. So I'm encouraged by those data, and I hope that that's enough. I suspect that if that ends up being the case, then hopefully for all of us, you will see them sort of be able to reach the minimal bar. But I'm encouraged by our data and expect that they will translate into, I'm optimistic that they'll translate into higher point estimates for efficacy. We saw Novavax data last night. I think any of us who's been following the field of vaccines anticipated that a a recombinant protein done the right way with a strong adjuvant could be effective. I think certainly their neutralizing antibody data are encouraging. And ultimately, I think the Phase III results are going to be required now to really understand fully the point estimate for SXC as well as a better understanding of the reactogenicity and safety profile of these various approaches. So, in summary, I think the mRNA platforms are clearly there with our data looking great. I think Novavax did a very nice progress, and I think the adeno vectors, I hope they get there, but I think they're going to struggle to boost, and I think anybody who's done a boost or is able to show a boost is able to show, as immunology would anticipate, A very nice potentiation with the booster shot. Over.

Thank you. Thank you.

Thank you. Our next question comes from the line of Jenna Wang from Barclays. Please go ahead.

Thank you for taking my questions. I have two questions. So the first one is regarding the Phase 3 primary endpoint. Just wondering, how do you count infection? I think according to the clinicalchild.gov, it's basically number of participants with the first occurrence of COVID-19 starting 14 days after second dose. Just wondering, is there a time cutoff so that every patient will have the same time exposure, or will you report it as event per 1,000 patient years? And the second question is regarding the phase one, phase two data update, hopefully this month or next month. So will we see more meaningful number of convalescent serum from severe patient using PRINT, either PRINT50 or PRINT80?

So let me take those. I'm not sure we're going to see... significantly additional data on convalescent plasma. We're going to look at that when we report out the Phase II, so I think it's premature for me to say one way or another. Regarding your question on Phase III, I'll make two points. The primary analysis is just the number of cases. It's not really, you know, it's a slightly different method statistically, but you end up with the same place as I think what you're referring to as the Pfizer methodology. You will see the number of cases and then the split in those cases. And of course, we'll describe the timeframe. In terms of counting those cases, you are correct in that the formal counting of cases where you want to see the distribution occurs 14 days after the booster shot. That's the definition of the primary endpoint. There is, however, a secondary endpoint that will look at the totality of cases that emerge once people start the trial. And of course, I think that could be further supportive evidence, especially if infection rates are so high that indeed we start to see some cases even in the first six weeks. The case definition for us is symptomatic disease. Again, there may be some minor variations between sponsors. I'm not sure everybody is fully harmonized to the same definition. We've been very transparent with the exact definition of our endpoint so that people can draw their own conclusions and comparisons.

Over. Thank you.

Thank you. Our next question comes from the line of Corey Casimow from J.P. Morgan. Please go ahead.

Hey, good morning, guys. Thank you for taking my questions, too, from me as well. First one is on pricing. I appreciate all the thought and detail that went into your prepared comments on the value proposition this morning, but I guess what I'm wondering is if we see other companies out there currently agreeing to contracts with various governments with price points that appear to range from low single digits to nearly $20 per dose, doesn't that make it inherently more difficult for you to try to charge something materially higher than that? And then second question is probably for Tal. I'm wondering how difficult is it to maintain the integrity of a Phase III blinded trial when you would suspect a large proportion of the mRNA-1273-treated patients are expected to get common vaccination adverse events like fever and other systemic events where presumably that wouldn't happen with placebo. Does that matter much in the end in your view? Thanks.

Morning, Corey. So, Stéphane, I'll take the first one on pricing, and then I'm sure Tal will take the P3 question. So, I think like in any discussion, Corey, many factors go into arriving or not to an agreement I would say first the totality of the data that is available at the time of the discussions, you know, preclinical model, clinical data. Again, given also we have a platform, we have the possibility to share, you know, public information that has been shared before on other kind of data sets. So I think data is an important one because I do not think all products are equal. And as Tal said, we would, of course, learn much more. We will face free data in the fall. Another consideration, of course, is volume, as we, you know, indicated in our remarks. And then, you know, another factor that is important is time of payment, you know, how is the risk distributed between, you know, companies. But as we discussed in our remarks, you know, like us, I've started to make products at risk, not knowing if 1273, in our case, will be approved or not. And there are many more considerations as well. So I think when you look at the totality of the data, as we've shared, you know, we've signed a number of agreements already for potential supply in the $32 to $34 range. As we also said, you know, as volume will increase, we'll, of course, integrate that into the analysis. So we'll work with the markets. but we also know what we have in terms of product. Tom, you want to take the T3 question?

Yes. So, Corey, some astute observation, and we and our partners at NIH have thought about this one long and hard. I think at the end of the day, you're right, especially after the second dose. First dose, probably people still won't know it. The second dose, people may intuit whether they've got the active one or not. I think the important piece here is that the endpoints are pretty hard endpoints in that I don't think that you're going to be less likely to report significant symptoms if you've got the placebo or not and the measurement of the PCR test is a PCR test. We have put in place measures to ensure that there's no sort Courts of the unblinding, for example, we're going to be testing by PCR everybody both on dose one and when they come in for the second dose just to make sure that if they do see some mild flu-like symptoms, they're clearly attributable to the vaccine or it is an infection and we're not biasing by measuring more frequently in those that got the vaccine. I think beyond the first couple of days, I don't expect them to be significant symptoms in anybody, so I don't think there's going to be biasing of any testing. In terms of the asymptomatics, we're going to look retrospectively anyway and call that based on serology, and everybody will get tested. So I think by making sure that all the objective measures are done on both arms at the same time points, I think we should be in pretty good shape here. Okay. Thank you. Appreciate the talk.

Thank you. Our next question comes from Jeff Mecham from Bank of America. Please go ahead.

Hey, guys. Good morning, and thanks for the question. Just had a few. So what we've learned on the value of 1273 is that T cell responses are important as are antibody titers. And so when you look at the new data today for Zika or for CMB or really anything going forward, do you think you'll place more emphasis on optimizing T cell responses just with respect to the, to the platform. And then just to follow up on 1273 pricing, you know, when you look at the phase three data, is there a single element that you would say justifies differential pricing, you know, via T cell or B cell or safety profile, you know, things like that. Thank you very much.

So let me take Jeff, the first question and let's define answer the second. Um, I think a lot of hay has been made out of T-cell responses. Look, T-cells are near and dear to my heart, being a medical oncologist. They're required to cure cancer. I'm not quite sure they're as important to cure COVID-19, frankly. I think what they are is a measure of the quality of the response. So, if you will, they... The fact that we see the right kind of TH1 helper, I think, makes everybody feel good about the antibody responses. But at the end of the day, the best measure of the immune response you're getting is look at the ability to boost after a prime. That tells you that the immune, even after one dose, once you get the boost, you can see the antibody levels, you know, come up quickly. They come up to high levels. They come up with good neutralizing activities. which is the best predictor that should you get infected, the immune system will trigger again in a similar manner, and that's how the immune system works. I think we've had plenty of data from other infectious diseases demonstrating that whenever you try to find a correlative protection, and, you know, Merck has done that with Dostoevac years ago, and that's even a disease where you think T-cells matter more. The correlative protection comes up time and again being neutralizing antibody, not T-cells, T cells are an adjunct sort of measure of the quality of the response when it comes to these kinds of viruses. And I think the totality of the data that we've seen with SARS-CoV-2 in terms of all the animal models, you can passively transfer antibodies and get protection. So I think that there's been a lot of variability on the T cell side in terms of people reporting assays, and I think people are trying to read into the T link and assume something about the quality of the response But to me, that's a more distal measure of what matters when you've got the most obvious proximal measure of what we think is the correlates and the thing that will translate to benefit, which is introvert antibodies. So it's a bit of a long-winded way of saying that I don't think it matters as much. And certainly when you look at optimizing our platform, look, we know our platform is optimized to generate T cell responses. We've seen this in the cancer T cell space where we just – All we do is raise CD8-positive T-cells by putting in concatenated, you know, CD8-positive epitopes. We get some CD4s, but that is an innate function scientifically of the ability to translate the antigen from within the cell with an mRNA. So I don't think it would be fruitful to try and optimize to T-cells. I don't know that it matters, and I wouldn't know how to do that. And by the way, we already have something that seems to do that based on the fundamental science of what our platform is doing. Let me start here and transfer just the phone.

Thanks, Todd.

So on the face-through pricing, so safety, of course, is really important, but I would say it's important for us, the sponsor, for the regulators, obviously. And that would be kind of an important consideration to look at the totality of the data, especially for approval of a product. So assuming a good safety profile, we believe that one important parameter, of course, is efficacy. Because, again, I think efficacy has different dimensions. There's efficacy that is important to reach herd immunity at the population level. But there's also efficacy, if you look at it in the eyes of whoever received the vaccine, because you can appreciate a vaccine with, you know, 50% efficacy or a vaccine with 90% efficacy will be very different than what it means to you, potentially, just statistically, in terms of you getting protection or not. And then I would say the self-population. I mean, of course, you know, healthy adults is what has been mostly reported so far. It's a very important population, obviously. But we all look forward to looking at the data in the elderly. As we all know, as Stephen described again, you know, during the remarks, the elderly are very vulnerable to this virus. And so understanding, you know, antibody titer, understanding efficacy in the elderly, we believe is going to be important. So, you know, diversity, we talk about ethnic groups. It has been widely reported that some ethnic groups, you know, are impacted very differently by the virus. And so getting an understanding of that through the study, as you know, we have paid a lot of attention and we talked about it recently in one of our calls, of all the effort that the team is going through to ensure a good representation across ethnic groups. And then I would say comorbidity. This is very important, again, because of who is being heard the most by this virus to understand if there are different comorbidity groups for different vaccines. So as you can see, I mean, there's going to be a lot of pieces to the efficacy picture. Again, some public failures in some countries might be willing or not to pay for a different efficacy for a different efficacy group. The private market might have a very different inclination. And again, in places where it's out of pocket, you will have potentially people having also making very different type of decisions. The other dimension, of course, is duration of protection. which obviously will take time for all the vaccine manufacturers to really understand at large scale, you know, in the clinical setting. But as you heard us say, you know, we believe, like many of our health experts, that this virus is not going away. We believe it's going to be an endemic market once the pandemic is declared over by the WHO. Duration will be an important factor. as you can appreciate, if a vaccine provides one-year protection versus, you know, six months versus two years versus four years, that will all play into the equation. So those are some of the factors that we will carefully think about, again, both in the pandemic setting where we said, you know, we will make sure that we price the product at a big discount to value and in the endemic setting when we look at, you know, all these different product performance and market forces to determine what we believe is the most optimal price for the product.

Okay. Thanks, guys. Thank you.

Thank you. Our next question comes from from Oppenheimer.

Please go ahead. Great. Thank you for the questions and for all the work. Just a couple quick questions off the topic of COVID-19 vaccine. One is, can you just go over quickly the CMV Phase III program, the initiation, the development, and when, you know, you'd expect that to read out and potential approval for that sort of product. And then secondly, you know, in some of our calls with pulmonologists that treat cystic fibrosis, there seems to be a lot of excitement around mRNA therapy for treating cystic fibrosis patients. The belief right now is that it could only treat a minority of those patients, but Our calls seem to suggest that it could treat a majority of the cystic fibrosis patients. Could you talk a little bit to that and where exactly are you with your Vertex collaboration? Thank you.

So, let me start with the Phase III elixir fund talk about the Vertex collaboration. The Phase 3, as we had previously articulated, I don't think anything has changed. The trial should follow participants for at least a couple years. It will probably take around 18 months to enroll, and then you wrap up the data. So, that sort of gives you a sense of the overall duration. We're on track to start next year. I think what should be obvious to everybody is once we have the Phase 2 data, It's going to require some regulatory interactions and the phase two meeting and so forth. We had gotten feedback in the past from FDA about the primary endpoints, which I think reassured us that it was feasible because we're looking to prevent primary infection in women of childbearing age, not directly looking at outcomes in babies. At least not as part of the phase three program. That being said, obviously, it will require much more detailed discussions with them on the phase three design and the dose and alignment with them prior to start of the phase three. So I hope that that gives you some additional color. I can tell you my sense on Vertex as a scientist, I'm super excited by the potential for mRNA to you know, not be limited by any particular mutation, just from the fundamental science of it, but I'll let Stéphane speak to the overall status of the collaboration.

Over. I'll let maybe Stephen talk about it, given his team is doing all the work.

I think Stephen had to jump off our call.

Yeah, sorry. Thank you. So, on Vertex, so as we communicated, you know, I think it was in a Q1 call, Vertex decided to expand the collaboration with Moderna on CF. The joint team's discovery have done a really remarkable job in the last few years in terms of delivery. As you can imagine, given you know us well, making a CFTR mRNA is not that complicated given all the things we have done and the current state of the platform and the technology. It is obviously the challenge entirely in delivery. We look forward to sharing some data soon. Again, it's a partnership, so we need, of course, to align with Vertex on what do they believe is the right timing. But as Tal said, the teams on both sides, I think, Vertex and Moderna, are very excited about the progress. about the possibility of what it will mean for patients. And as we discussed before, if we can find the technology to deliver safely into the lungs mRNA, obviously we will be able to use that for other diseases of the lung. And just to remind everybody, the Vertex collaboration is focused on the CFTR gene, and so the other applications will belong to Moderna from a commercial standpoint. Thank you.

Great, thank you.

Thank you. Our next question comes from Alan Carr from Needham & Company. Please go ahead.

Hi, thanks for taking my questions. Just following on the theme of programs other than COVID-19, you mentioned before that enrollment in a few of these programs is still paused or suspended because of COVID-19. I'm just kind of wondering if... And if you're able to still, I guess, prioritize and move forward some of your programs, such as the rare disease programs, do you feel like you can still keep your eye on the ball in terms of the rest of the non-COVID pipeline at Moderna?

This is Paul. Let me maybe take a stab at that. I think the answer is absolutely yes, and I think it's evidenced by the progress that we continue to show for the rest of our pipeline. We've expanded the development team quite significantly to go after the COVID-19 vaccine so that I think we've got very capable teams that are pushing everything else. The fact that we continue to enroll in oncology, it's seen a little bit of a slowdown similar to others, and it really depends on the individual center status of who's enabled and when to treat patients. I think on the rare disease, not only is our eye on the ball, I think we've, as we have alluded to in the past, we're actually using the time to kind of step back and engage deeper with both investigators and patients and advocates to make sure that when we do restart those programs, because the kids can finally come back in, those programs are better optimized so that we can perform better in terms of recruitment and analysis of data on the study. So we're continuing to execute across all the fronts. And I think you'll see as hopefully the pandemic recedes or as centers figure out how to, despite PPE and social distancing, to continue or restart clinical activities, then we should come back online across the board.

Over. Yes, and maybe just to add to Tal's important comment, when, you know, things started to, you know, look bad from a global basis in terms of the spread of SARS-CoV-2, we spent quite a long time, I would say in the February timeframe, with the board and with the team, to think about how do we structure the company, how do we resource the company to 12.0, so that we can do both. It was very clear that a lot of focus and energy was going to be required to march at a very fast pace without compromise to safety for 12.0. But at the same time, Moderna has always been a platform company. It has always been about managing risk through a very diverse pipeline across different traffic areas, across different modalities of technology for those on the call that are not used to Moderna. And so it was really important for us, given the inherent risk of developing a product at 1273. Again, we feel much better now given the data we have seen, but I'm talking back in February. And so we recruited quite a large number of very experienced development professionals in clinical, regulatory, clinical operation to be able to actually do both. That was one of our big challenges. And I have to say the team has really done a remarkable job to both, you know, push 1273 as safe as we can, as hard as we can, because we know that every day does matter. and at the same time continue to execute on the pipeline. It has been very challenging given the lockdown, given our focus on safety. Some of the studies were easier to keep rolling. Some of the studies, because involving children, we wanted to make sure, especially those children with very severe disease, that we didn't take the risk to expose them to infection by going to clinical trial sites or their caregiver, their family. And so we have not lay down an inch on the focus on the pipeline outside of COVID.

Great. Thanks for taking your questions.

Thank you. Our next question comes from George Farmer from BMO Capital Markets. Please go ahead.

Hi. Good morning. Thanks for taking my question. I'm quite struck by the fact that neutralizing antibody titers don't really seem to emerge until after the second boost. whereas antibodies in general seem to be elicited after the first injection. How do you think about this? I mean, it seems to be across the board, not just with your vaccine, but with these other vaccines. And importantly, how would such patients be treated in the phase three should they come down with COVID, say, after the first injection because of not having a sufficient titer going into the second injection? Thanks.

Thanks, George.

It's Paul. Yes, it is interesting. I think it kind of speaks to basic immunology, which is if your immune system thinks it can clear an infection easy, it doesn't try too hard. If you come back later and basically show that, no, the infection isn't gone, then it tries harder. And that's usually manifest with affinity maturation improvement in the antibody qualities as well as the absolute titers. And so I suspect what you're seeing is a subtle manifestation of that. Now, the question is, though, what happens after just the prime? Yes, you don't have neutralizing antibodies, but clearly the immune system now reacts differently once it sees the antigen because you get the boost. And so it's an interesting question. Well, what happens if the boost happens not with the vaccine but with the natural infection? I would suspect, based on sort of first principles, that you should see some benefits, probably not the full benefit you would see if you get infected after the boost, but just by nature of the boosting, you would expect that an infection would also boost in the sense that the immune response would react quicker and more vigorously, and maybe you won't prevent infection, and maybe you won't even prevent disease, but hopefully you would prevent the more severe manifestation of disease, because disease, at least as we understand it in the first phase here, is a balance between your immune response and clearing the infection. So it will be very interesting, I think, both for us and for other platforms that use a prime boost to do that secondary analysis of understanding whether we've seen any cases in that first month or six weeks and what the distribution of cases are between placebo and your – you're treated. The last piece I'd say that I think also gives me some hope here is the non-human primate, where a single dose in the non-human primate can, or at least the mouse models, the experiment with the non-human primate is ongoing. But in the mouse models, we clearly see that even though you don't measure the neutralizing antibodies just yet, you are already able to limit viral or abrogate viral replication of the lung. And so I think that gives you sort of an immunological readout on the phenomenon describing. Over.

Okay. And then along those lines, do we have a view on durability yet? I mean, following both the non-human primates and maybe the mice, if they live long enough, do you have a sense for how durable the vaccine effect could be?

Yeah, I do not. I would make two points on that. First, I don't think any of us yet understand your ability. What is emerging is that if you have mild infections, you're more likely to have lower level of antibodies and they're more likely to wane. That kind of goes with the quality of the immune response that I described previously. It's also, I mean, let's not mistake the ability to measure antibodies over time as the sin qua non of having a memory and an immune response, right? Otherwise, by the time you were my age, you'd be walking around with your blood thick and clotting with antibodies against every infection you've ever seen. And yet, I am immune to many things that you are not going to necessarily see high levels of neutralizing antibodies in my blood. It's more about the memory decels and the persistence. I think that initial level of neutralizing antibodies is what gives us the confidence that we've got the right quality of the response and the magnitude is as high or higher than what you can see with disease, with real infection in convalescent plasma. Now, all that being said, I think it's obviously reassuring to see the quality of a response by maintaining high neutralizing antibodies. I think if you look at what the platform is able to induce, it's pretty evident from the CMV data I described earlier this morning that certainly in that instance, with a third boost at six months, you know, look out to a year and you see levels that are still higher than what you had targeted. I think as it all boils down to the utilization in the context of a pandemic here, if what we have is 12 months of durability, I think that's a great starting point for us to start protecting the population. And we'll worry about what happens in year two, three, and four when we get to 2022, 2023 on the other side of this pandemic. Over.

Okay. Thanks, Paul.

Thank you. Our last question comes from Manny Faruha from SP Learing. Please go ahead.

Hey, guys. Thanks for taking the question. A couple from me. One quick one from an investor. Could you lay out the economics you guys receive on any commercialized vaccine, how to think about percentages paid out to academic partners, any NIH commercial economic interest, et cetera, just breaking it out as we try to understand what unit margin might be. And then secondarily, as we look at pricing, it's been commented by a couple people here, a couple analysts regarding pricing in the low single digits to up to just below $20, for example. in larger volume contracts, it sounds like we should think as somewhere in that range as par for larger contracts for you guys during the pandemic. But as you talk about the endemic environment and potentially higher pricing, could you lay out how you expect to realize that pricing in a setup where demand will likely decline as the severity of COVID-19's impact globally is reduced during an endemic versus a pandemic period, in a setting where perhaps a half dozen or more vaccines being commercialized by large established players with commercial experience in tender markets such as these will be actively competing on price and volume. So, if you could lay out how you expect to substantially increase your realized price in a setting of increased competition, increased supply, and reduced demand, that would be really helpful. Thank you.

Thank you. Good morning. This is Stefan. The first one is going to be quick because we are not disclosing unit margin for product. On the endemic market, clearly, as we said in our remarks, the competitive dynamics are going to be important. We continue to believe that when you look at the totality of the data, not only across 1273, but across 1273 to data to public and around the platform, that You know, efficacy is going to be an important parameter. You know, we've hired people and we continue to hire people in the commercial world that comes from large established vaccine players who have relationships with governments, who have relationships with people in the channel. And so we believe that we should be able to establish good commercial presence based on the performance of the product.

Great. And as a follow-up, when you talked a couple things about the CBA T cell response, T cell biology, just to clear up, the comment that across your platform you've shown effective T cell response, that was directed regarding constructs in your cancer portfolio, right, and not at this particular vaccine where we haven't seen a CBA T cell response yet. of any measurable level as described in your non-human primate or human disclosures thus far. You were talking about the cancer vaccines, right? You weren't talking about any prophylactic vaccines, so I'm going to CD8 T cell response here.

So, this is Paul. That is correct, although I have to go back because we did disclose some T cells for CMV. I don't recall whether they were CD8 or just CD4, frankly, off the top of my head.

Yeah. Awesome. Thanks, Paul. Thanks for correcting me there. That's really helpful. And thanks for taking the questions, guys. Pleasure.

Thank you. I should know for the questions in the queue. At this time, I'd like to send the call over to Stefan Bonsdell, CEO, for closing remarks.

Well, thank you very much, everybody, for joining today. Stay safe, and we'll speak soon.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.