BioNTech Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2023

There are 15 speakers on the call.

Operator

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

Speaker 1

Thank you. Good morning and afternoon. Thank you for joining us today for Biogenics' 3rd quarter 2023 earnings call. As a reminder, the slides that accompany this call and the press release issued this morning Can be found in the Investors section of our website. On the next slide, you can see our forward looking statements disclaimer.

Speaker 1

Additional information about these statements and other risks are described in our filings made with the U. S. Securities and Exchange Commission. Forward looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. On Slide 3, you can find the agenda for today's call.

Speaker 1

Today, I'm joined by the following members of Viantic's management team: our CEO and Co Founder, Ugur Zaghin Susan Tureci, our Chief Medical Officer and Co Founder Jens Holstein, our Chief Financial Officer and Ryan Richardson, our Chief Strategy Officer. I would like to turn the call over to Uwe Sahel.

Speaker 2

Thank you, Victoria. A warm welcome to all those joining us today. I will summarize our Q3 highlights Before turning to my colleagues who will provide further details. Slide 5. Let me start by providing an overview of our strategic priorities and latest achievements.

Speaker 2

This quarter, we continued to build on our global COVID-nineteen vaccine leadership with first to market Omnicom XBV15 adapted vaccine launches across multiple regions worldwide. I thank our team and collaborators for their tireless efforts to make this accomplishment possible, again, in such a short period of time. Our COVID-nineteen influenza combination program, found in partnership with Pfizer, leveraging our proprietary mRNA technology, has also reported positive top line results. The Phase III study evaluating the safety, Tolerability and immunogenicity of co administered mRNA based vaccine candidates for COVID-nineteen And influenza among healthy adults 18 to 64 years of age when compared to a licensed influenza vaccine Demonstrated obvious immune responses to influenza A, influenza B and SARS CoV-two strains As well as a safety profile consistent with the safety profile of the company's COVID-nineteen vaccine. The pivotal Phase III study will be initiated in the coming months.

Speaker 2

Our second Our strategic priority is to advance our oncology platforms by initiating multiple trials with registrational potential. Joining me with our partner Duality Bio, we are initiating a pivotal Phase 3 trial To evaluate our next generation antibody conjugate BNT-three twenty three in patients with hormone receptor positive to low breast cancer, who progressed on previous standard of care, but are shemo therapy naive. Furthermore, during this quarter, we and our respective collaboration partners published original scientific papers and present new clinical data across several programs at International Scientific Congresses, including ESMO and SITC that will inform our development strategies and next step for these programs. Based on the successful results, We have expanded existing collaborations and made new deals with specialized developers, which add to our proprietary toolkit of technologies And strengthen our telepathic product candidate portfolio. This covers the in licensing Also have 3 targeted antibody blood conjugate for MEDIOLINK Therapeutics.

Speaker 2

And as announced today, our plan to bring forward Anti VGS anti PD L1 bispecific antibody in collaboration with our partner Biofield. Our first strategic priority is to initiate and accelerate clinical programs that target infectious diseases of unmet medical need. In the Q3, we initiated our 3rd 1st in human trial in infectious disease this year, a program Aimed at advancing mRNA based vaccine candidates for the prevention of mTOX, run-in partnership with the Coalition for Epidemic Preparedness Innovations. In summary, we continued our focused execution against our strategic priorities in the Q1 and look forward to additional progress in all three of these areas for the remainder of the year and into 2024. We will share more detail on our oncology as well infectious disease programs at our Innovation CS Day in Boston tomorrow, An event that I invite you all to attend in person or online.

Speaker 2

Slide 6, focusing on our marketed COVID-nineteen vaccine, Cominati. We continue to build on our global COVID-nineteen vaccine leadership with first to market Omicron XBV15 adapted vaccine launches. This was preceded by a robust and successful regulatory process. In late August, our PMA with Siemens Agency Recommended full marketing authorization for our monovalent XBV15 adapted vaccine. This was followed in September by the U.

Speaker 2

S. Food and Drug Administration authorizing the adapted vaccine for individuals aged 6 months to 11 years under emergency use authorization And for those aged 12 and above. The vaccines have been approved under supplemental biologics license Applications. 2nd, other national health regulators across the globe, including the UK, Japan, Canada and South Korea have also approved our monovalent adaptive vaccine. Within 2 months, we went from the 1st regulatory recommendations for an XB-1.5 adapted vaccine to our 1st shipment of the respective vaccine.

Speaker 2

The ability to execute with such speed was enabled by our continued surveillance and analysis of variants of concern, The strength of our mRNA technology, which allows for scalable production, rapid manufacturing and adaptation and our expertise at navigating the evolving regulatory landscape on the global scale. Historically, we have seen an increase in COVID-nineteen hospitalizations in the winter in line with other common respiratory diseases. On Slide 7, you can see independent on pharma projections across scenarios, assuming different vaccination recommendations And immune escape levels. Based on these, it is expected that weekly hospitalizations are likely to increase this winter And have a health care impact similar to last year. COVID-nineteen burden is currently lower than in previous years.

Speaker 2

However, the absolute number of hospitalizations and deaths is still high in certain regions with thousands of hospitalizations And hundreds of deaths each week. The emergence of new variants, coupled with the veining Of both vaccine and infection induced immunity indicates that susceptibility to infection Remains a concern and may increase over time. Moreover, the data shown here suggests that providing simple, Stable recommendations for updated doses could contribute to improved vaccine coverage over time, mitigating the risk associated with evolving COVID-nineteen variants. As shown on Slide 8, long COVID has a significant societal and healthcare system impact. The study is indicating that 10% to 20% of SARS CoV-two infected individuals may develop symptoms recognized as long COVID.

Speaker 2

It is estimated that 36,000,000 people across Europe may have experienced complications arising from COVID-nineteen Weeks after infection commonly defined as long COVID from the start of the pandemic to date. Studies show that mRNA vaccination has a significant impact in reducing the development of long COVID by 10% to 45%, Depending on the criteria used to define symptoms. The protective effect of mRNA vaccination It's largely attributed to its ability to reduce susceptibility to infection. We continue to look closely at the role for mRNA vaccination in addressing the unmet need of long COVID. Slide 9.

Speaker 2

Studies have demonstrated that natural immunity acquired by SARS CoV-two infection is variable across individuals and the protection it offers Vaccination can restore and enhance infection acquired immune protection and further reduce the risk of reinfection. The risk of severe COVID-nineteen disease remains high in vulnerable populations and that vaccinations does To not only reduce the risk, but can also mitigate the risk of long COVID. And Preclinical data demonstrate that vaccination with XBB1 descendant lineage containing candidate elicits higher neutralizing antibody TUKAN is circulating variants of concern compared to the responses elicited by previously approved COVID-nineteen vaccines. Given all this and our current understanding of COVID-nineteen's seasonality and its burden on health care systems during Autumn and winter season, we anticipate the need for annual adaptive vaccines to be a long term future Of COVID-nineteen vaccination practices. With that, I would like to thank you all for your confidence in our success and your continued support.

Speaker 2

I will now turn the call over to Essela.

Speaker 3

Thank you, Ugur. Glad to be speaking with everyone. Today, we will provide a high level pipeline update. We will delve into the more advanced programs in greater detail at our Innovation Series Day event tomorrow. Starting with an overview of our infectious disease pipeline on Slide 11.

Speaker 3

In addition to our marketed product Comminati, we continue to pursue our multipronged innovation strategy to improve upon our vaccine with next generation approaches aimed at generating broader and more durable immunity. This includes our stabilized spike vaccine approach being studied in the Phase II trial and our T cell enhancing vaccine candidate in an ongoing Phase I trial. We believe that our COVID-nineteen vaccine has the potential to be combined with a seasonal flu vaccine. Across many parts of the world, people are currently receiving the Omicron XBB adapted vaccine boosters at the same time as their flu shots. A combination product has the potential to provide seasonal protection from both viruses with a single shot.

Speaker 3

We are working together with our partner Pfizer to develop an influenza combination vaccine, which leverages our mRNA technology. We recently reported Phase III results where our combination candidate showed robust immune responses to influenza A, Influenza B and VAS COV-two strains as well as a safety profile consistent with the safety profile of company's COVID-nineteen vaccine, which met the criteria for advancement to a Phase 3 trial. In addition to the previously mentioned COVID-nineteen and influenza vaccine programs, we started multiple first in human trials of our mRNA vaccine candidates in the last year that addressed shingles, HSV, TB and mpox. On Slide 12, as expected, SARS CoV-two continues to evolve. The Omicron XBB sub lineages Currently account for the majority of COVID-nineteen cases globally, including the XBB descendant, EG51, whose dominance is growing.

Speaker 3

Slide 13. We and our partner Pfizer Tested for potential effectiveness of an Omicron XBB15 adapted monovalent vaccine as a primary serious and booster in preclinical modules. You can see here the neutralizing antibody response In mice immunized with our Omicron BA.45 adapted bivalent vaccine as a booster After two doses of the original BMG162b2 vaccine, one group of mice again received the BA 4.5 adapted bivalent COVID-nineteen vaccine as a 4th dose and the other group received the new XBV-1.5 adapted Monovalent COVID-nineteen vaccine as a 4th dose. You can see a 4 to 5 fold increase of neutralization of several XBB related variants when dose 4 is the XBB15 adapted monovalent vaccine as compared to last season's BA.45 adapted vaccine. These preclinical data indicate that an XB.15 variant adapted monovalent vaccine In the pre vaccinated setting has the potential to induce broad cross neutralizing antibody titers against multiple XBB subdiminages.

Speaker 3

We can also see an increase in geometric mean titers of neutralizing antibodies across XBB lineages, including EG5.1 and BA286 when compared to the previous bivalent BA. 45 vaccine comparator. Slide 14 shows the design of our ongoing Phase IIIII clinical Testing the safety, tolerability and immunogenicity of our Omicron XBB1.5 adapted monovalent vaccine in 700 While data from this study will be reported in 2024, There's already clinical real world data shown on Slide 15 demonstrating that our XBB1.5 Adapted vaccine elicited significantly higher neutralizing antibody responses against XBB1.5, bb2.3, e. G.5.1 and BA286 compared to pre vaccination levels. Moving now to our oncology pipeline on Slide 16, which is grounded in our multimodality toolbox and is advancing for focused execution.

Speaker 3

We now have 1 Phase 3 study ongoing and a second Phase 3 expected to dose its 1st patient soon. Gottistobat, our anti CTLA-four monoclonal antibody, which we believe Offers differentiated safety profile, a Phase 3 clinical trial evaluating its efficacy and safety as one of European metastatic Non small cell lung cancer patients who have progressed on previous IO therapy has started in June this year and will enroll 600 patients. BNT-three twenty three, our anti hair 2 antibody drug conjugate also being studied in a Phase 3 clinical trial to assessing its efficacy versus investigators' choice of chemotherapy in patients with hormone receptor positive HER2 low chemotherapy naive breast cancer patients whose disease has progressed on at least Two lines of prior endocrine therapy are within 6 months of first line endocrine therapy plus CDK FOG inhibitor. We've also recently initiated 2 new Phase II trials, one in partnership with Genentech, in our individualized cancer vaccine candidate BNT122 in the adjuvant setting for patients with pancreatic cancer. The other in partnership with Genmab is evaluating our BNT311 bispecific conditionally PD L1-four-1BB agonistic Antibody is the 2nd line treatment for patients with endometrial cancer.

Speaker 3

Also as part of our collaboration with Genmab BNT-three fourteen, a bispecific antibody designed to boost anti tumor immune responses through APCOM dependent 4 1BB agonistic is ready to move from preclinical to Phase I clinical testing with the 1st patient dose expected in the next few months. Within our bispecific portfolio, I'm excited about our expanded collaboration with Biophheres announced today. We've partnered to develop and commercialize PM8002, a bispecific antibody candidate targeting PD L1 and VEGFA in various Cancer indications. PM8002 is currently being tested in a Phase twothree study to evaluate the efficacy and safety of a candidate as monotherapy or in combination with chemotherapy in patients with non small cell lung cancer. PM8,002 may lead to reduced systemic toxicity by enriching anti VEGF activity in the tumor micro of Environment.

Speaker 3

Now moving on to our antibody drug conjugate portfolio. During the quarter, one of our and Duality's ADC's BNT324 and Touch Phase III basket trial. Furthermore, on the ADC front, I would like to note our latest addition, YL-two zero two, a candidate being developed in partnership with MediLink. We continue to broaden our access to ADCs because we believe this technology has the potential to replace highly toxic chemotherapy regimens to become a new commoditized combination backbone of cancer treatment. In summary, we can see a diversified clinical oncology pipeline and solid tumor indications of high Unmet medical need and more than 30 clinical studies.

Speaker 3

On Slide 17, I would like to highlight 5 across our Multiple platforms that have disclosed clinical data in recent medical conferences this autumn. In September, clinical data from the ongoing Phase III clinical trial evaluating BNT-three twenty three in patients with Advanced expressing solid tumors were presented at the ESGO Annual Meeting. BNP-three twenty three was shown to have a manageable It also demonstrated promising Anti tumor activity in patients with advanced recurrent or metastatic HER2 expressing endometrial cancer with an objective response rate confirmed and unconfirmed of 58.8% and disease control rate of 94.1%. Data at ESMO, we presented alongside our partner, Duality Bio, Clinical data from the ongoing Phase III trial evaluating our TROP-two targeted ADC candidate in patients with advanced solid tumors. The data suggests that a manageable safety profile at lower dose levels and encouraging efficacy signals We're observed in non small cell lung cancer patients with unconfirmed objective response rate of 46.2% in 6 out of 13 evaluable patients and an unconfirmed DCR of 92.3% in 12 out of 13 patients.

Speaker 3

We also reported data from the ongoing Phase III clinical trial with BNT-two eleven detailing the new dose escalation of Claudine VI CAR T cells with and without a Claudine VI encoding mRNA vaccine for the treatment of TRULIAN 6 positive relapsedrefractory solid tumors using an automated manufacturing process. BNT-two eleven demonstrated an encouraging anti tumor activity and in patients treated at a higher dose level, The addition of CAR VAC improved CAR T cell persistence. The rate of treatment dependent adverse events was dose dependent. After determination of the recommended Phase II dose, BioNTech plans to initiate a pivotal trial in germ cell tumors. Also at ESMO, we presented initial data from our 1st in human Phase I dose escalation trial evaluating BNT-two twenty one, our autologous fully personalized T cell therapy directed against selected sets of individualized neoantigens.

Speaker 3

Using our proprietary NeuStim technology on the patient's peripheral blood cells, we expand memory T cells and induce naive T cells with the aim of generating the strong polyclonal immune response to overcome antigen escape. The initial results Showed a manageable safety profile and tumor regression in several patients with anti PD-one and anti CTLA-four pretreated advanced or metastatic melanoma. This past weekend at WIDC clinical data was shown from the ongoing Phase I clinical trial evaluating BND116, our off the shelf mRNA based cancer vaccine candidate for non small cell lung cancer patients. The trial evaluates BNT116 alone and in combination with cemiplimab or dotcetaxel across multiple settings. BNT116 Gene was generally well tolerated with an expected safety profile as monotherapy and in combination with semiplimab.

Speaker 3

In heavily pretreated non small cell lung cancer patients, treatment with BNT-one hundred and sixteen with an optional addition of cimeklimab From cycle 3 onwards showed early clinical activity. These updates show the momentum across our cancer pipeline. This year and next year, we plan to advance our key programs into late stage development, including multiple programs towards the pivotal stage with the aim to deliver the next generation of oncology medicines. And with that, I now pass the presentation to our CFO, Jens Holstein.

Speaker 4

Thank you, Elslem, and a warm welcome to everyone who dialed in today's call. Before we go into the financial details for the Q3 and the 1st 9 months of 2023, I'll start by giving you an overview on some key financial highlights, which you can find on the next slide. Our total revenues reached €2,300,000,000 for the 1st 9 months of 2023 And we're significantly derived from sales of our recently approved Omicron XBB1.5 adapted monovalent vaccine, which started to pick up at the end of the Q3 of 2023 and are expected to accelerate for the remainder of

Speaker 2

the year.

Speaker 4

Our revenues during the 1st 9 months of 2023 were negatively influenced in the amount of approximately €600,000,000 Triggered by write downs and other charges reported by our collaboration partner, Pfizer. As a reminder, As part of our gross profit share arrangement with Pfizer, write downs and similar charges by Pfizer reduced the gross profit, which both parties generally share equally. And this ultimately impacts BioNTech's revenue figure. As part of this contractual model, we own and commercialize Combinati in Germany and Turkey. Commercialization costs remain with the party being responsible for its respective markets.

Speaker 4

While we have impacted by Such write downs on the top line are sales and marketing expenses remain low. As we have outlined in earlier earnings calls, The revenue development for COVID-nineteen vaccines is expected to mimic a flu like setting. I will go into more details Concerning our financial guidance in the course of the call, but want to emphasize now that taking the Pfizer announcement and its implications onto the 2023 revenues into account, we have updated our 2023 COVID-nineteen vaccine revenue guidance of around €5,000,000,000 to somewhere around €4,000,000,000 for the full financial year 2023. During the 1st 9 months of 2023, we generated a profit before tax of €500,000,000 which, on top of our operating results, demonstrates our positive financial results generated from our strong financial position, Overall, resulting in earnings per share on a fully diluted basis of €1.94 We started into the financial year 20 with a total amount of €13,900,000,000 in cash and cash equivalents, which we significantly increased due to our steady cash collection. Hence, we have now ended the Q3 of 2023 with €17,000,000,000 This amount comprises approximately €13,500,000,000 reflected as cash and cash equivalents in our financial statements as well as approximately €3,500,000,000 partly current and partly non current security investments.

Speaker 4

Subsequent to the end of the quarter, in October 2023, we received €565,000,000 in cash from our collaboration partner, Pfizer, Settling our gross profit share for the Q2 of 2023. Our strong financial position is strategic advantage. These days, where financial stability is key for companies in this industry, the cash surplus is a tremendous asset. Our cash position offers us opportunities to invest in capabilities and assets to build highly innovative later stage R and D pipeline. Help me move into our financial results for the Q3 of 2023 as shown on the next slide.

Speaker 4

Our total revenues reported reached €900,000,000 for the 3rd quarter compared to €3,500,000,000 for the comparative prior year period and decreased corresponding with the lower COVID-nineteen vaccine market demand. The already mentioned write downs by Pfizer reduced our gross profit share in the Q3 by approximately €500,000,000 Let me move to cost of sales, which amounted to €161,800,000 in the Q3 of 2023 Compared to €752,800,000 for the comparative prior year period. For the 1st 9 months of 2023, The cost of sales reached EUR 420,700,000 compared to EUR 2,800,000,000 for the comparative prior year period. The change is in line with decreasing COVID-nineteen vaccine revenues. Research and development expenses reached €497,900,000 for the Q3 of 2023 compared to €341,800,000 for the comparative prior year period.

Speaker 4

For the 1st 9 months of 2023, research and development expenses amounted to €1,200,000,000 compared to €1,000,000,000 for the comparative prior year period. Our R and D expenses are mainly influenced by progressing clinical studies for pipeline candidates, the development of variant adapted as well as next generation COVID-nineteen vaccines and the expansion of our R and D headcount. General and administrative expenses amounted to €144,500,000 for the Q3 of 2023 compared to €141,000,000 for the comparative prior year period. For the 1st 9 months of 2023, G and A expenses reached euros 386,600,000 compared to €361,800,000 for the comparative prior year period. G and A expenses for the 1st 9 months were mainly influenced by increased expenses for IT services as well as expanding the G and A headcount.

Speaker 4

Our profit before tax amounted to €227,400,000 for the Q3 of 2023 compared to €2,400,000,000 for the comparative prior year period. As mentioned, this reflects the performance in our financial results derived from our strong financial position. Income taxes were accrued with an amount of €66,800,000 for the Q3 of 2023 compared to €700,000,000 for the comparative prior year period. In total, for the 1st 9 months of 2023, Income taxes were accrued with an amount of €50,500,000 compared to €2,600,000,000 for the comparative prior year period. The derived effective income tax rate for the 1st 9 months of 2023 were approximately 9 point 7%, which is expected to change over the 2023 financial year to be in line with the estimated annual cash effective income tax rate Somewhere around 21% for the BioNTech's growth.

Speaker 4

We recognized a net profit during the Q3 of 2023 amounting to 100 and €60,600,000 compared to €1,800,000,000 for the comparative prior year period. For the 1st 9 months of 2023, net profit reached €500,000,000 compared to €7,200,000,000 for the comparative prior year period. Our earnings per share on a fully diluted basis For the Q3 of 2023 amounted to €0.67 compared to a diluted earnings per share of €6.98 for the comparative prior year period. For the 1st 9 months of 2023, our diluted earnings Per share was €1.94 compared to €27.70 for the comparative prior year period. As mentioned in the beginning, please allow me now to address the inventory write downs and other charges related to Cominati recently announced by our collaboration partner, Pfizer, in more detail.

Speaker 4

Please note those charges were mainly triggered when the world moved from a pandemic environment into an endemic flu like setting. In this context, we announced on October 16 an estimated impact of up to €900,000,000 We have assessed the initially announced estimate further, particularly to address the question whether those inventory write downs and other charges indicated by Pfizer have already been reflected in our accounts. The good news is the charges which originated at BioNTech's end Have largely already been reflected in our 2022 financial results and to a smaller extent will continue to be reflected during 2023. Ultimately, the impact from our collaborations partners' charges onto our revenues have been identified to be roughly €600,000,000 for the 1st 9 months for the Q3 of 2023. To explain the partnership mechanism in respect of write downs In comparable charges, please remember that risks are borne by both partners equally.

Speaker 4

As part of our shared responsibilities, Both partners are responsible for manufacturing activities. Hence, Pfizer is responsible for a certain level of inventories and so are we. If, for example, Pfizer writes down inventories under its control, those charges reduce the gross profit that is shared with us. As a result, we are affected by half of those charges. Those charges lead to a decrease in our revenues according to IFRS accounting rules.

Speaker 4

In cases where we have to book charges for EG write downs, at our end, those charges lower the gross profit that we share with Faiza. Let me now turn to the next slide. As stated before, based on what we know of the expected market development and our partners' guidance for their markets, We update our estimated COVID-nineteen vaccine revenues from previously around €5,000,000,000 to somewhere around €4,000,000,000 for the full 2023 financial year. Our guidance is influenced by the mentioned write downs and charges on the Pfizer side in the amount of €6,000,000,000 As well as our partners reduced expectation on 2023 COVID-nineteen vaccine sales. We at BioNTech reacted on the volatility around the COVID-nineteen vaccine market and adapted our cost base in the course of 2023.

Speaker 4

Our strategic collaboration model with big pharma supports drug development and delivery at scale, but also provides us additional financial flexibility by leveraging the global clinical trial network of our partners as well as their commercial network and their internal resources. In comparison to other models, this collaboration setup allows us to accelerate our development initiatives while having a lower level of expenses. Our updated financial outlook for the 2023 financial year excludes effects caused by, but not limited to, events like in licensing arrangements, Collaborations or M and A transactions that might take place until the year end. As summarized for you on this slide, We reduced the initial 2023 R and D expense guidance range from initially between €2,400,000,000 €2,600,000,000 Between €1,800,000,000 2,000,000,000 including the R and D costs identified from our latest publicly announced M and A activities. We also update our SG and A expenses and narrow the initial 2023 guidance range from between €650,000,000 750,000,000 Now to between €600,000,000 €650,000,000 Lastly, we reduced our spending for growth and maintenance CapEx for operating activities from the initial 2023 guidance range of between €500,000,000 600,000,000 to between €200,000,000 €300,000,000 Comparing the initial 2023 guidance to our updated guidance announced today, we are significantly decreasing our spend As we effectively manage our expenditures as part of our ongoing cost review procedures.

Speaker 4

Nonetheless, let me clarify here as well That we further intend to invest in our capabilities and our pipeline of product candidates as those will create the value of the company in future. As noted before, we have updated our group estimated annual cash effective income tax rate in Q2 from around 27% to around 21%, excluding potential effects from share based payment settlements in the course of 2023. And with that, I would now like to turn the call over to our Chief Strategy Officer, Ryan Richardson, for the corporate overview and concluding remarks. Thank you very much.

Speaker 5

Thank you, Jens. I'll now provide a brief summary of the outlook for our updated COVID-nineteen vaccine franchise and an overview of our latest progress in oncology before concluding with our We're making good progress on our 3 main strategic objectives. Regarding our COVID-nineteen vaccine franchise, We look forward to advancing our COVID-nineteen influenza combination vaccine into a Phase 3 trial in the coming months. If successful, we believe simplifying immunization For healthcare providers to positively impact compliance and help reduce the burden of these diseases and its impact on healthcare systems. In immuno oncology, we are building a unique and powerful portfolio of complementary therapies.

Speaker 5

We expect to start multiple trials with registrational potential over the next 12 months to 18 months, while continuing to generate data that inform our go, no go development decisions. And in infectious diseases, we plan to broaden our pipeline with new therapies that target high medical need indications. Now moving to the next slide on the ongoing global rollout for adapted vaccine. In the 2.5 months following regulatory recommendation for an XBB 1.5 adapted monovalent vaccine, We and Pfizer have shipped vaccine doses to more than 40 geographies around the world. Across key markets, we continue to benefit from a strong market position.

Speaker 5

In some regions, such as Europe and Japan, we have gained considerable share. In the U. S, where we leverage our partner Pfizer's commercial capabilities, We are seeing approximately 50% of vaccines going through the retail channel. We expect that vaccine uptake will continue to increase through the end of the year. A recent national immunization survey in the U.

Speaker 5

S. By the CDC published last month, more than 30% of adults reported to have received or plan to receive An XBB.1.5 variant adapted vaccine. We believe this data reflects the potential baseline demand for an annual vaccination. As outlined in the next slide, we expect our Comirnaty franchise will be a long term source of revenue. We expect to enter 2024 with the manufacturing base, which has been reset to serve the future endemic market.

Speaker 5

In the next 2 years, we expect the continuation of several market shifts to play out. Those include the continued opening of private markets and the shift to commercial pricing globally, Along with the continued transition from multi dose vials to single dose vials and prefilled syringes, which could bring upside opportunity to the franchise. We also expect the combination vaccines, if successful in late stage trials, could present growth opportunities for the franchise from 2025 onwards. We see the potential for increased vaccine uptake from a potential combination flu and COVID vaccine by connecting protection from COVID to a well accepted paradigm of annual flu vaccination. We will continue to invest for the long term in next generation COVID-nineteen vaccines with the aim of increasing robustness and durability of immune response.

Speaker 5

Now turning to the next slide. I'd like to wrap up with a snapshot of the progress we're making in accelerating our innovative oncology portfolio toward the market. So far in 2023, we and our partners have initiated 11 oncology trials, including 6 Phase II or III trials. We plan to continue this trend through the initiation of additional late stage trials in the next 12 to 18 months. We will continue to look for additive bolt on BD and M and A opportunities that fit with our strategy, while reinvesting to build world class capabilities and accelerate our growth.

Speaker 5

We remain as optimistic as ever on our ability to continue to create long term value for patients, our shareholders and society. Before concluding, I would like to remind and invite you all to attend our Innovation Series event tomorrow starting 9 am Eastern Time, where we will provide further details on our pipeline and corporate strategy. With that, I would like to thank everyone for their continued support and open the floor for questions.

Operator

Thank you. We will now begin the question and answer session. Meistam. Thank you. We'll now take our first question.

Operator

This is from the line of Dana Graybosch from Leerink Partners. Please go ahead.

Speaker 6

Hi, thank you. I have 2 financial questions. One, you have many programs going into Phase 3 and that's certainly going to increase your R and D expenses. And I wonder, Jens, if you can give us any guidance on sort of the near to midterm on how much R and D we should expect in our model. And the second one is Whether you could help us at all with any inventory write down, understanding more predictability behind how we might see that next year and in future years after that.

Speaker 6

Thank you very much.

Speaker 4

Yes. Thanks, Dana. Thanks for the question. And let me start with the second one maybe. First with the inventory write offs.

Speaker 4

As I stated in my speech, I think this €600,000,000 that we had a phase on Pfizer this year has been really a reflection of the situation that we moved from the pandemic into an endemic situation. Going forward, of course, we have to with new variants coming up always have some sort of write offs to be on Pfizer side or on our side. So there will be something, but not at all at that magnitude That we have seen now with the shift in 2023. So I think from our perspective going forward, The magnitude is a fraction of what we had to announce unfortunately for 2023. Then in terms of the R and D expenses, Ryan was alluding to additional clinical trials, further late stage trials.

Speaker 4

Of course, That means that our R and D expenses are expected to go up. That's something that we They envisage and want because we believe strongly that we have valuable compounds that we need to invest money in. So those numbers will go up. In terms of the magnitude for the next couple of years, you got to bear with us a little bit until we give our guidance. But we have and I think we have highlighted that in terms of all our costs for 2023 that we are Carefully looking at how much money do we want to spend or do we need to spend.

Speaker 4

But first and foremost, we want to create value with the Cash position that we'll have and that of course goes hand in hand with increased R and D expenses going forward.

Speaker 5

Yes. And maybe Diana just to add one point to Thanks for his remarks on the R and D line. I think it's important to remember as well that on a number of these pivotal stage or near soon to be pivotal We do expect to share R and D expenses with a partner. So that's the case in the Pfizer collaboration, of course, where we share R and D expenses fifty-fifty. And we talked We mentioned today that we expect a couple of pivotal trials to start with combination vaccines that could become a mid term growth driver if successful.

Speaker 5

Similarly on the oncology side, we have a number of programs that are partnered as well where we share expense.

Operator

Great. Thank you. We'll now take our next question. This is from the line of Tazeen Ahmad from Bank of America Securities. Please go ahead.

Speaker 7

Okay, great guys. Thanks so much. Good morning. I have a couple of questions. It was encouraging to see that the safety profile in general for the COVID and flu combo vax resembles what you saw just for the regular COVID vaccine.

Speaker 7

But I'm wondering if you could just provide Any additional data, particularly on what reactogenicity might have looked at and what you found, for example? And then secondly, a financial question. On R and D, can you elaborate on whether at least some of your expenses have come from Be prioritizing certain programs and if so, can you talk to us about what programs those were? Thanks.

Speaker 5

Umer, do you want to take the first one or Asim?

Speaker 3

Yes. We were struggling with unmuting. Thank you, Tazeen, for the question. The first one was about reactogenicity profile For our variant adapted vaccine. And that is in principle More or less equal to the wild type We have developed to the BA.

Speaker 3

IV, BA. V adapted version and to what we see With the flu mRNA vaccine in the respective dose levels, And that supports that the safety profile, including the reactogenicity, is a platform characteristic. So with that regard. Yes.

Speaker 2

So the combo vaccine with regard to the safety and reactogenicity profile does not Differ from the dose dependent reactogenicity profile of the COVID-nineteen vaccine. The first answer and the second question goes To the Piotr's programs? No. I think you want Yes. You want to say something?

Speaker 2

Otherwise, Shall I jump in, Ugo? Yes. You can jump in, Jens. Yes?

Speaker 4

I'll jump in. So I mean, there is it's a couple of activities that we undertook during our review of activities. We have prioritized the few programs, Earlier stuff as well. Of course, we'll keep you updated in terms of Update if they are of relevance in terms of our later stage program that but there's nothing that I can report at this point in time. We have also in terms of the collaboration with Pfizer on the programs had a very close look as for other programs of How much money do we really need to spend to come to the desired outcomes?

Speaker 4

So that's another part That plays a role. A little bit of shifting from 2023 to 2024. So as always, there are a couple of things, but those costs, I wouldn't call it something where you save money, the prioritization as well as maybe being able To run clinical trials at a cheaper scale is something that we take as real cost savings. And that has been a big chunk of what we have what we can explain for the cost reductions.

Speaker 7

Okay. Thank you.

Operator

Thank you. We'll now take our next question. Please standby. This is from the line of Chris Shibutani from Goldman Sachs. Please go ahead.

Speaker 8

Thank you very much. Good morning and good afternoon. Two questions, if I may. First, on the oncology program, BNT122, the INEST cancer vaccine, ongoing melanoma study, but we noticed that there was an absence of commentary in the Should we still expect the study to report top line results by year end? And perhaps you can comment on what your expectations are for this program and if they've changed?

Speaker 8

My second question is on the COVID flu combination data. To make sure in terms of immunogenicity, The press release mentioned titers generated by lead formulations were compared to concomitant administration of COVID And flu vaccines. And is that the immunogenicity comparison that the FDA will be evaluating in Phase 3? Or are they looking for Tires compared to monotherapy vaccination of COVID and flu separately. Thank you.

Speaker 5

Yes. Thank you, Chris. Maybe I'll take the INS question first and then turn it over to Uwe and Aslan for the flu COVID. So on BNT122, actually on our last earnings Paul, we provided revised guidance that we did not expect data this year. As you remember that the trial is randomized and has a PFS threshold to trigger the PFS analysis, which we had not been met and which we didn't anticipate would be met this year.

Speaker 5

We do plan to provide a trial update this year, but we're not expecting data this year.

Speaker 2

And the second question was related to the

Speaker 3

To the comparator to the flu combo vaccine. Do you like what that trial?

Speaker 2

Yes. Yes. This is So we are comparing both. We are comparing flu mRNA, Code mRNA is comparator as well as established flu vaccines That are based on proteins or inactivated flu vaccines. Both comparisons will be in this study.

Speaker 8

And that's what the FDA will be evaluating in the Phase 3?

Operator

Thank you. We'll now move to our next question. This is from the line of Akash Tewari from Jefferies. Please go ahead.

Speaker 9

Hi, this is Amy on for Kash. Thanks so much for taking our question. So just 2 from us. Number 1, we've seen Pfizer reduce In the space of reducing COVID vaccine demand, while at the same time we're seeing Moderna increased costs. When you think about BioNTech's plan spend over the next 3 to 4 years.

Speaker 9

How willing are you to eat into the cash generated during COVID? Should we Expected to decline on an annual basis or will the team aim to sustain R and D solely off of residual vaccine demand? And then number 2, on the COVID flu program, Given the economics between you and Pfizer are 50% right now and may drop to potentially in the 30% range, if this program does become a success for BioNTech, Do you anticipate it being net positive, net negative or breakeven for BioNTech's cash generation? How should we think about the increased demand potentially being offset by lower economics. Thanks so much.

Speaker 5

Amy, can you just clarify the second question you asked? Was that in reference to a combination vaccine?

Speaker 9

Yes, yes, the COVID flu combo vaccine.

Speaker 5

Okay. So I'll take the first one and maybe Vidal

Speaker 2

will chime in. Jens can chime in.

Speaker 5

Yes. So we see that we're in the midst of a transition period right now. Our COVID vaccine franchise is transitioning from pandemic to endemic market. This is of course happening this year, but we also expect that transition to continue next year. And we're also transitioning to become a commercial stage oncology company.

Speaker 5

We've outlined Some of the programs that we think are going to drive that transition. As we go through this transition, we think it's an immense asset to the company to have a strong balance sheet. And we're very happy with our ability this year if we meet revenue guidance to maintain profitability. That's an important point for us. As we go into the next couple of years through this transition, we expect to continue to maintain a very strong balance sheet and that's going to continue to be a priority for us.

Speaker 4

Yes. Ryan, you've raised it very nicely. It's not much to add. I mean going forward, of course, with the collaboration, We first and foremost got to invest in these combination trials currently flu COVID, flu COVID RSV. Those settings will eat up some cash, but we're very positive in terms of our expectations on the profitability share that we will get out of the Collaborations and those combinations.

Speaker 4

In our view, this will that will create new markets And we'll secure, of course, the existing part and business that we have for COVID. So we think Economically, that should be something of great value for the company going forward. And to your question on

Speaker 5

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

Speaker 5

And we think that from a timeline perspective, if successful That those vaccines could be start to have an impact for us from 2025 onwards.

Operator

Thank you. We'll now move to our next question. Please standby. This is from the line of Yaron Werber from TD Cowen. Please go ahead.

Speaker 10

Great. Thanks for taking my question. I have a couple. Just on 1046, The PDL combo, you mentioned moving to a second line endometrial study in combination with pembro. Just any update and I'm not trying to front run tomorrow, but just any update on the checkpoint experience non small cell lung cancer cohort And is that still sort of in the cards?

Speaker 10

And then secondly for BNT323, on the HER2 low side, How do you define HER2 low? Is it histology? Do they have to have any expression at all? And why do you think you're confirming activity In a population that sort of failed KETCILO before. Thank you.

Speaker 2

Yes. To your first question, 1046, Yes. The lung cancer cohorts are continuing, and we will most likely report data on this cohort in the next This year, mid next year, yes. And is there a target for

Speaker 4

follow-up? The target of interest.

Speaker 2

So a habit of interest in lung cancer for BNT-three twenty three. Yes, HER2 low is defined As staining, which is And 2 plus without any amplification and activity of this ADC compound In this patient population, which is clearly better than casuzumab alone, is based on the highly potent ADC activity and on the bystander activity allowing not only to remove antigen positive tumor cells, but also

Operator

Thank you. We'll now move to our next question. This is from the line of Jessica Fye from JPMorgan. Please go ahead.

Speaker 11

Hey, good morning. Thanks for taking the questions. Can you outline what key pipeline updates we should expect between now year end? You mentioned an update on the INEST melanoma trial. What else should we be looking forward to whether from the 4 1BB programs or otherwise?

Speaker 11

And then related to INEST with the new trial starting in adjuvant pancreatic cancer, can you talk about what drove that decision? And was it based on something you're seeing? And then lastly, just a financial question. You lowered OpEx guidance again this quarter, but also suggested that from here R and D will likely grow to What about SG and A? That guidance didn't change as much.

Speaker 11

Is there less flexibility in that line if expenses need to be cut again. Thank you.

Speaker 2

I think that's it. Okay. Ryan, please go ahead. Please go ahead.

Speaker 5

On the pipeline update, I was just going to say on the pipeline update that we do expect data on BNT116 at SITC just around the corner. And of course tomorrow, we will have we do expect to give a pretty wholesome

Speaker 11

And then what about on the New INS trial in adherent pancreatic. Can you talk about what drove the decision to start that up and the SG and A flexibility question?

Speaker 3

Maybe I can take this one. We will also talk about that trial tomorrow in our Innovation Day Set up, we have an IIT, an investigator initiated trial, a small one which, however, showed very promising results in terms of The immune responses and the magnitude of immune responses In pancreatic cancer patients, which are traditionally always seen as Immune suppressed, we also could see that the success of inducing immune responses in half of this population Was correlated with prolonged time to recurrence, and this data has motivated us to now set up a Phase II trial, which has already dosed first patients.

Speaker 4

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

Speaker 4

So that will be something where we have to invest going forward, some money.

Operator

Yes. Thank you. We'll now move to our next question. Please standby. This is from the line of Bill Morn from Canaccord Genuity.

Operator

Please go ahead.

Speaker 12

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

Speaker 4

Thank you. I can

Speaker 2

take the question. So with regard to the evolution of SARS CoV-two, We have to consider 2 rough mutational patterns. We have That typical mutation of an existing variant, which is continuing in More or less changing of single spike protein amino acids in various positions. And this is what we have observed for the alpha beta variant and now observing for the Omicron variant. But there is also a second mutational pattern, which is which are variants that evolved With dozens of additional limitations, we have seen that for the first time But we have also seen it most recently with a variant which is called BA286, Which is actually covering more than 30 additional mutation as compared to the Omicron strain, it is still called Omicron, but if we look closer, it is Actually, really a new variant.

Speaker 2

And this is something that we would also expect in future, yes? So this pattern will Continue also in future. And we asked the mutations based on Single changes will not foster the generation of a new Variant adapted vaccines. I expect that the major changes

Speaker 4

The fire

Speaker 2

variant adapted vaccines. And we have also to consider That the antibody titers decline over time. So we have 2 mechanisms. 1 is the erosion of the immune response itself, Yes, which is associated with a higher rate of infections and also associated with a higher severity. And the second is the evolvement of new variants.

Speaker 2

So in short, yes, we expect And that also in future, we will we have to have 2 variants and These patterns, the space might differ from season to season like we are seeing that for Flu infections. And the second question was about our interest in ADC Technology and whether we would like to combine that with our Expertise in target identification and antibody generation. And the answer is yes. Yes, this is something we are working on.

Speaker 5

Thank you.

Operator

Thank you. We'll now take our next question. Please stand by. This is from the line of Simon Baker from Redburn Atlantic. Please go ahead.

Speaker 13

Thank you very much for taking my questions. Two very quick ones, if I may. Just going back to R and D spend. From what I can gather from what you were saying, It sounds like essentially you're doing the same for less rather than delaying or deferring. But I wonder if you could just give us a little bit more color on CapEx, And whether that's savings driven or whether there are some defils in there.

Speaker 13

And then secondly, on PM8002, you Highlight the non small cell lung indication, but that molecule is in, I think, about half a dozen other tumor types. So I was just wondering what your Interest in the other tumor types is for PM802. Is that something you're looking to develop? And do you indeed have rights across or Tumor. Thanks so much.

Speaker 4

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

Speaker 2

Can you shortly repeat on which compound you referred in your question In the first part? In the first part.

Speaker 13

Yes. It was the BioThius PM8002.

Speaker 2

Yes. The biopsy PM002 is a bispecific antibody, Which combines a neutralizing anti VGS arm With a blocking PD L1 arm, the antibody has been evaluated in more than 500 patients and Shows a very favorable safety profile and has shown activity In multiple indications also combination therapies with shimer therapy. And we see this molecule indeed As an opportunity new generation IO, which combines bispecific activity for multiple indications. And we are seeing particularly an opportunity to combine this with our ADC portfolio. It is well known that anti VEGF treatment is synergistic With chemotherapy by improving the penetration of chemotherapy and modifying the tumor microenvironment and thereby increasing the efficacy of chemotherapy.

Speaker 2

And this is something that we are also expecting the Canadian partner for our ADCs.

Speaker 13

Thanks so much.

Operator

Thank you. And we will now take one more question. Please stand by. The last question is from the line of Ellie Merler from UBS. Please go ahead.

Speaker 14

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

Speaker 14

Thanks.

Speaker 5

Yes. Thanks, Ellie. I'll start and then Jens can come in. So I think the short answer is that we expect the COVID vaccine Franchise to continue to be highly cash generative and highly profitable on a product basis for us going forward. You rightly point out the shift to endemic market that we've talked about today.

Speaker 5

You have to remember that because we share gross profits fifty-fifty with Pfizer and the bulk of our revenue comes in the form of a Pfizer gross profit share from countries outside of Germany and Turkey, which are our revenue reporting regions. Because of that, we don't expect the direct shifts to single dose vial and prefilled syringes to have a significant effect on our gross margins, Because it's already most of that revenue is already coming to us net of cost of goods. It's rather the mix between Germany and Turkey, the relative contribution of Germany and Turkey The total that would affect the gross margins.

Speaker 13

Yes, you

Speaker 2

want to?

Speaker 4

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

Speaker 14

Great. Thanks.

Speaker 4

Did

Speaker 5

that answer your question, Amy?

Speaker 4

Yes. Okay. Thank you.

Operator

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

Speaker 5

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

Operator

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

Powered by Quartr

Key Takeaways

  • Strong global launch of Omicron XBB.1.5–adapted monovalent vaccine, with rapid regulatory approvals in the US, UK, Japan, Canada and South Korea and shipments to over 40 countries within two months.
  • Positive Phase III data for the mRNA COVID-19/influenza combination vaccine with Pfizer, demonstrating robust immune responses to SARS-CoV-2 and influenza A/B and a safety profile matching the standalone COVID-19 vaccine, triggering a pivotal Phase III trial.
  • Advancing a diversified oncology pipeline with Phase III initiation of BNT323 (HER2-targeted ADC) in HR-positive, HER2-low breast cancer, ongoing Phase III for an anti-CTLA-4 candidate in NSCLC, and new bispecific collaborations (e.g., PD-L1/VEGF with BiophoreS).
  • Q3 2023 revenues of €900 million (down from €3.5 billion LY), updated full-year COVID-19 vaccine revenue guidance to ~€4 billion (from €5 billion) following Pfizer write-downs, while ending Q3 with €17 billion in cash and lowering 2023 R&D to €1.8–2.0 billion, SG&A to €600–650 million and CapEx to €200–300 million.
  • Execution on strategic priorities across infectious diseases (first-in-human mRNA trials for mpox, shingles, TB and HSV), oncology registrational trials and next-generation COVID-19 vaccines, with further pipeline details at Innovation Series Day.
A.I. generated. May contain errors.
Earnings Conference Call
BioNTech Q3 2023
00:00 / 00:00