Good morning, and welcome to Moderna's Second Quarter Earnings 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 would like to turn the call over to Lavina Talukdar, Head of Investor Relations at Moderna. Please proceed.

Thank you, operator. Good morning, everyone, and thank you for joining us on today's call to discuss Moderna's second quarter 2021 financial results and business update. You can access the press release issued this morning, as well as the slides that we'll be reviewing by going to the investors section of our website. On today's call are Stéphane Bancel, our Chief Executive Officer; David Meline, our Chief Financial Officer; Stephen Hoge, our President; Paul Burton, our Chief Medical Officer; Corinne Le Goff, our Chief Commercial Officer; and Jackie Miller, our Senior Vice President, Therapeutic Head of Infectious Diseases. Before we begin, please note that this conference call will include forward-looking statements made pursuant to the safe harbor provisions of Private Litigations Reform Act of 1995. Please see Slide 2 of the accompanying presentation and our SEC filings for important risk factors, that could cause our performance and results to differ materially from those expressed or implied in these forward-looking statements. On Slide 3, please see the important indication and information for our COVID-19 vaccine, which has been authorized for emergency use in the United States and in many countries around the world. I will now turn the call over to Stéphane. Stéphane Bancel: Thank you, Lavina. Good morning or good afternoon, everyone. Welcome to our Q2 2021 conference call. Today, I will start by a quick business review of our quarter before Corinne walks you through the commercial update. David will present the key financials. Stephen and Jackie will provide the clinical update, highlighting new human data about the final analysis for COVID-19 vaccine Phase 3 COVE study and human data for COVID-19 booster candidate Phase 2. I will then come back to close to share some thoughts about where we are heading. Let me start with Moderna COVID-19 vaccine…

Thank you, Stéphane, and good morning or good afternoon, everyone. I am happy to share the productive quarter, the commercial organization has had in the second quarter that continues into today as we ramp up our efforts to supply the Moderna COVID-19 vaccine or Spikevax to countries around the world. Let me start by recapping the advanced purchase agreements that we have signed for delivery in 2021 on Slide 11. Since the last quarterly call, I am very happy to highlight that we have signed APAs with COVAX for 34 million doses this year, an additional 110 million doses to the USG, bringing the total of doses for the United States to about 400 million doses and 10 million doses to Australia for delivery in 2021. In total, we anticipate up to $20 billion in sales from these agreements as we deliver against them throughout the remainder of the year. We are proud to distribute our vaccine directly or through our network of partners across all continents, and most importantly, to ensure access to our vaccines into all countries regardless of their income level, notably through the COVAX facility structure. I also want to mention that we are doing our utmost to -- in supporting the U.S. government to execute the donations of Moderna doses of vaccines. Slide 12 list outs signed APAs for deliveries in 2022 and even in 2023. The construct of the APAs signed for 2022 and 2023 include both confirmed orders, as well as options to be triggered at the future date. To date, we have already contracted for 22 product sales of $12 billion and an additional $8 billion in options. Some of these APAs are for primary series vaccines and others are for potential boosters. In light of the possibility of needing booster vaccines…

Okay. Thank you, Corinne. We're providing today the analysis of actual 2021 second quarter results along with an updated view of key drivers of financial performance going forward. As in previous quarters, we are presenting our results primarily on a U.S. GAAP basis. In some cases, we also provide additional detail to provide greater clarity on underlying trends. Turn now please to Slide 15. The transformation of Moderna from an R&D-focused biotech to a commercial company is very apparent when reviewing our financial results. The comparison of the second quarter of 2021 to prior year is not as meaningful due to our dynamic growth, which is why we'll primarily focus on the quarter-over-quarter comparison relative to Q1 on this slide. Total revenue was $4.4 billion in the second quarter of 2021 compared to $1.9 billion in Q1. The increase of total revenue is primarily resulting from the sale of the company's COVID-19 vaccine. Product sales in Q2 were $4.2 billion compared to $1.7 billion in the first quarter, an increase of 142%. Cost of sales were $750 million or 18% of the company's product sales in the second quarter compared to $193 million in the first quarter. Research and development expenses were $421 million in Q2 2021 compared to $401 million in Q1 and $152 million in the same period in 2020. The higher spend versus prior quarter and prior year was driven by increased COVID-19 vaccine clinical development activities including our announced efforts around booster, variant-specific and multivalent vaccine candidates. Selling, general and administrative expenses were $121 million for Q2 compared to $77 million for the prior quarter. The growth in spending was driven by commercialization of our COVID-19 vaccine globally with the biggest increases being in personnel and outside services. Provision for income taxes was $283 million in…

Yes. Good morning good afternoon everyone. My name is Jackie Miller and I lead the therapeutic area for infectious diseases. And it's my pleasure today to give you an update to the ongoing accumulation of data in our Phase III clinical study and also to talk about some of the publications of real-world evidence that have occurred outside of Moderna with the use of our COVID-19 vaccine. So on Slide 24, you'll see the top line updates to our COVE efficacy trial. And these are efficacy data that have now been followed through four to six months after subjects received their second vaccination of either mRNA-1273 or placebo. Recall that at the time of our EUA submission, our primary efficacy analysis demonstrated efficacy to COVID-19 of 94.1%. Now four to six months after second dose, we see a maintenance of that efficacy of 93.2% with a lower limit of the 95% confidence interval of 91%. We continue to maintain efficacy against severe COVID-19 disease with updated vaccine efficacy of 98.2% and currently have 100% of efficacy against deaths caused by COVID-19. So unfortunately, there were three deaths in the placebo group and up till now none in the mRNA-1273 group. We continue to see consistency in our subgroup analyses including analyses by gender, by race and by preexisting medical conditions. Our safety profile continues to be consistent with the Phase 3 data over the longer period of safety follow-up and also continues to be consistent across population subgroups. Next slide please, on Slide 25. You'll see the efficacy data broken out by time interval. And so what you see at the top of the table is the overall efficacy we just discussed. According to the primary endpoint, we start measuring vaccine efficacy at 14 days after dose two. And again…

Thank you, Jackie. So moving on to Slide 28. I want to start with an update of our perspective on COVID-19 and how it's impacting our strategy for boosters. So, first our emerging perspective. We believe today that the increased force of infection, that's resulting from the delta variant, fatigue with non-pharmaceutical interventions and the seasonal effects of moving indoors, will eventually lead to an increase in breakthrough infections in vaccinated individuals. In fact there have been reports of that already. While we see durable Phase 3 efficacy through six months, which Jackie just described, we do expect that neutralized hydros will continue to wane and eventually that will impact vaccine efficacy. So given this intersection between a rising force infection and waning immunity, we believe a dose three of a booster will likely be necessary to keep us as safe as possible through the winter season in Northern Hemisphere. So how has that informed our booster strategy? Our primary approach, since early this year, has been to advance that portfolio of booster candidates, against all of the potential emerging variants of concern, and so we have a large number of ongoing clinical studies, and I'll provide some update on some today. Those boosters are being evaluated often at two different dose levels, 50 micrograms and 100 micrograms. And they fall broadly into three categories. First is our prototype vaccine mRNA-1273, for which Jackie just described, the primary efficacy data out of our Phase 3 study. Second, we are looking at various specific booster candidates, beta and now a new delta variant-specific candidate. And third, we are looking at a multivalent platform, combining different variants into a single vaccine, first our mRNA-211 program and now a new mRNA-213 program, which includes the delta antigen. The goal of the multi-valent platform…

[Operator instructions] Your first question comes from the line of Salveen Richter from Goldman Sachs. Your line is now open.

Good morning. Thank you for taking my questions. Could you walk us through the dynamics for 2022 and beyond in terms of APAs for Spikevax essentially demand in the context supply of the 2 to 3 billion doses for 2022, and then how we should think about the years beyond 2022 and pricing? And then secondly, with regard to external BD, how are you thinking about integrating areas like gene editing and gene therapy with your platform?

Maybe I'll start on the answer on 2022-2023. So, as we said, right now, we're -- we've announced that we're increasing our capacity. We see very strong demand continuing in the context of the pandemic well into 2022. And hence, we've given you the range of 2 to 3 billion doses depending very much on whether our customers are still purchasing for primary series or if they're looking at boosters and then depending on the eventual dosage for booster. So I think it's really going to evolve as to exactly what that looks like in terms of dosage. Going beyond 2022, as we said, we are starting to see now the forward-planning countries that are looking beyond the very near-term. We're starting to then have contract discussions and, in fact, have agreed some contracts into 2023. But I think it's early to really know as to how this is going to evolve in terms of the transition from pandemic to the endemic phase. In terms of pricing, I think, it's helpful to start with where we are in 2021 to have a context for understanding pricing going forward. So really three buckets of pricing in 2021, we have the U.S. government where the first 100 million doses was priced at a little over $15. The subsequent 400 million doses were contracted at $16.50. And that pricing was considering a couple of things. One is the BARDA funding we received to underwrite our Phase 3 trial and also the size of the contract, the 500 million dose contract, which is very large. The second category is the higher-income ex-U.S. countries, where as we've said in the past, we start with a price range of $32 to $37 a dose. And there are some cases where we offer discounts based on volume for high volume. And then, the third category is low and middle-income countries, which have received the lowest tiered pricing, including those sales to COVAX, which are considerably lower than the price to the U.S. government. So if we start with that framework for 2021, what we can say is that, the contracts that we've signed now for 2022, the pricing constructs are very consistent with that framework that we've had in 2021. And so we see a continuation in the context again of the pandemic with the pricing framework. If you look at the average price that you calculate in your model, of course, that's going to depend on the mix across these categories. And, of course, we're expecting to see, significant sales to the middle and low-income countries and that increasing in 2022. So it shouldn't be surprising, if the average you see some declines. And then, finally, I would just comment that as we move into a post-pandemic period, then we would expect as we've said in the past to market forces to impact our price negotiations. So hopefully, that answers your question.

And Salveen, I'll maybe just pipe in at the end with your first question on gene editing, which is -- how we see intersecting. Look, I think we have been, as you all know, the innovator in mRNA and lipid nanoparticle delivery in therapeutics for a while. And we've watched the space quite interestingly or quite significantly in terms of ways that we could help with delivering gene editing cargoes across a range of different tissues where our lipid nanoparticles systems have been shown to go even in humans. And we think it's the right time for us to start to expand in that direction. If there's a general convergence, I think out there in the gene editing space is that messenger RNA and lipid nanoparticles are perhaps the way to go. And that's something we strongly agree with, having spent the last decade working in the technology. So you'll be looking for us to bring new payloads, new capabilities, new enzymes into our existing technological capabilities, which we think are best-in-class.

Thank you.

And your next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is now open.

Great. Good morning. Thanks for taking the questions. A couple of related questions on boosters, if I may. I guess, first question is, maybe you could just put in context some of the information we're hearing from the FDA or the CDC, especially ACIP on their position on boosters and how you would expect that to evolve over the coming months. Second, could you comment on the potential for a multivalent booster? And how you might be thinking about that in the context of the data you presented today, especially just on using a third dose of the existing shot? And then, third, could you maybe just comment on your views of long-term virus evolution? Obviously, typically, viruses tend to evolve towards more infectious, but lower virulence. And so I'm wondering what your thoughts are on the long-term booster market obviously versus the sort of near-term booster market when infections may still be quite high? Thanks.

Sure. Thank you, Matthew. So let me try and take the first question, first. So I think we are going to always defer to what's happening with the public health officials in terms of when they think the appropriate time to recommend a booster vaccine is necessary. Where we see the data ourselves, I can't speak to the challenges they face. But what we see is the potential for waning immunity. In fact, if you look at -- back at our Vaccines Day, we had Professor Davenport come in and present work that he's done at University of New South Wales in Australia, showing what he predicted back in March would be the picture for waning immunity from the vaccine. It was recently published in Nature Medicine. I had a chance to open and it's looking remarkably prescient because the prediction he was making about the relative strength of the different vaccines suggested that small differences in efficacy would start to emerge to be larger differences in efficacy at about 200, 250 days as neutralizing antibody titers wane. And that may be what we're starting to see. And if you play that forward if you assume he's been right about those predictions, then that picture continues and continues through a year with continued declining -- neutralizing antibody titers over that time. And eventually, we therefore believe a real increase in breakthrough infections and disease even with vaccinated -- even with mRNA-1273. So, we continue to want to be vigilant because that trend and those predictions we think will come to four. And I think the Delta variant has cost us to also be incredibly humble in the face of the virus' ability to fight back and increase its transmission. I mean I think most of us would have thought SARS-CoV-2…

And your next question comes from the line of Ted Tenthoff from Piper Sandler. Your line is now open.

Great. Thank you very much and thank you for all the thorough information just on spike that, but also on the pipeline. I guess my first question has to do with capacity and really trying to understand a little bit more fully what goes into continuing to grow capacity, especially overseas. And I guess the second question would be with respect to the worsen disease pipeline which is, I think you guys normalize events just in terms of application for mRNA. How can we be moving faster there? Again appreciating that you guys have a pandemic you're trying to address. But it seems to me like everything is set to go there. And just curious what we can be doing to maybe accelerate some of those important programs. Thank you so much for taking the question. Stéphane Bancel: Yes. Maybe I…

Go ahead. Stéphane Bancel: So Ted, I'll take the capacity and then Stephen will talk about rare disease. So as you recall said, we've announced -- I think it was in February that based on the market feedback of the countries given the high efficacy of our vaccine. So there was a lot of demand, and so if you recall we decided to make very significant manufacturing capacity increase 50% addition in the U.S.. It's all at our U.S. site for drug substance in our wood and then the doubling of the OUS capacity at Lonza and Rovi. Our goal is to, as I said in my remarks, depending on the booster dose, which until we have final say by the regulator and until we see the 100-microgram data for 1273 dose, as Stephen described we won't know for sure. But if you model both the prime series APs that have already been ordered, which will be of course at 100-microgram. If you model what we anticipate in the mix between prime series and booster vaccines for Spikevax, if the booster dose was 50 micrograms, we could have up to $3 billion of supply. And if the booster dose were 100-microgram that could take us up to €2 billion of supply, so it's a bit hard to think about it. But we're trying to do is to not have the challenge we're having this year, which is a happy problem. As I said in my remarks, we are still tracking for 800 million to 1 billion dose this year. But I've also said that we are not taking any more orders for 2021, because we are totally maxed out. And of course, we would want to be in a position where we can answer to any countries wanting more vaccines. And so by doing those investments we really are hoping that next year we can make sure that we can fulfill all the demand we're going to get from the market. And as Corinne mentioned, while we have already signed 12 billion of APAs for next year and with those countries and additional 8 billion on top of the 12 billion of options that those countries have, there are still a lot of discussions ongoing. And so what we want to do is to maximize the penetration of Spikevax around the world. And I believe that the new data of this morning showing that the efficacy -- the final efficacy of the cost study is holding very nicely. I think we'll just be yet another argument for countries to want to vaccinate as many people as we can in that country with [Indiscernible].

That's helpful. Stéphane Bancel: Stephen, do you want to talk about acidemia?

Sure. Yeah. I mean -- so I said I think you know we've had a long-standing commitment to these populations and that's as strong today as ever. And we hear and want to do everything we can to accelerate these medicines for them. It's important to say this is fast to the finish is the goal, not the fast at the start. And while we're pleased with the start of the propionic acidemia program and hopefully shortly MMA and others in the clinic, our goal is obviously to rapidly move through those Phase 1 studies that find the right dose and hopefully then rapidly move into pivotal studies. And as you know that can happen very quickly. And so particularly in rare diseases, particularly with some early positive clinical data. And so that's what we're trying to do right now is anticipate that positive data, expand and build out our team in that therapeutic area and begin the more foundational preparations for closing very quickly, if we can get some encouraging positive clinical signs. But we're working every day to try and get the -- to accelerate the time that those are incurring early data as well as I said prepare for that future.

Fair enough. Thank you gentlemen. Stéphane Bancel: Thank you.

Your next question comes from the line of Michael Yee from Jefferies. Your line is now open.

Hi. Good morning. Thanks for the questions. Two questions. One on boosting. Do you guys have a good sense of what you think the regulatory view or hurdle is to support boosting? You show that great data on Slide 30 showing the waning of the antibodies. And I think we all see that could be a problem and how the third dose gets you way up. But what do you think that specific data is or put another way the tighter level for correlative protection would be to support boosting for the fall or the winter? That's question one. And then question two, a little bit similar. On flu with that data coming up later this year is it your view that significantly higher levels of antibodies will be to significantly higher efficacy and that would just a larger loss to be supportive of a launch I think you said in 2023? Thank you.

Sure. So I'll try and take the first question which was -- so and you pointed well, we do not currently have a correlative protection in the world unfortunately for any of the vaccines. And so it's very hard to say objectively, what tighter, what level is this sort of the minimum level, which is why in our minds and subject to the regulators to developing their own perspective. But in our mind, the right way to benchmark this has been, let's look at that really consistent high durable efficacy in Phase 3, let's look at the neutralizing titers, let's support that. And let's do that. Let's get above those titers, because if we can exceed those titers and where we were just after the primary vaccination series, then it should stand to reason that we should be able to provide durable protection at or above the levels that we saw before. Now of course the virus is evolving and that's where you see delta and we have to be humble about that. But the good news is -- it looks like in the real-world data that the vaccine 1273 is holding up against delta even with partial vaccination as Jackie mentioned in her slides and with some of those references. And so we do think that getting at or above those levels, should hold up quite comfortably. How much above those levels? Is it 1.0? Is it 2.0? Is it some other number? I think that's ultimately going to be a sense that we want to have between ourselves of the data that we have, the benefits of the different dose levels 50 microgram, 100 microgram. And again, the data we've already seen in terms of Phase 3 and then a dialogue with regulators about how they see that benefit risk. But as it stands today, we think the 50-microgram data that we presented really looks encouraging and likely meet that standard. But we want to hold off, we look at the 100-microgram data in just a few weeks here and decide no that's the right call. We've got to the levels we need to. And we think we can reset immunity in a vaccinated person with a third dose at or above the levels that have been driving this durable protection to date. I'm sorry I missed the second question. Could you just repeat it?

Yeah. Similar I guess in flu that when you have data later this year, I suspect you believe the tighter levels will be extremely high. I think there's some better understanding based regulatory guidance documents that for flu there's some acceptable levels and you could certainly compare it to approved products that high levels there would be supportive of a larger study and a faster market?

That's right. Yes, thank you for reminding me. So we -- obviously, we haven't provided guidance on when we expect the -- to be able to get through those subsequent studies and ultimately, with that regulatory path is because, we have to engage in that discussion with the FDA and global regulators and those are ongoing. And so, it's really subject to them agreeing. But I would agree with your characterization, it's certainly our hope and view that because it's a well-understood market, with things like the HAI titers that even a new platform like messenger RNA might be able to leverage some of that thinking in terms of immunogenicity and safety, as we think about moving forward to approval. We'll ultimately have to show efficacy and real-world efficacy as well, because that's what's going to be of interest for payers. But again, the regulatory path is going to be subject to discussions with regulators that are ongoing. So, I can't provide more guidance at this time.

Thanks.

And your next question comes from the line of Gena Wang from Barclays. Your line is now open.

Thank you. I have three quick questions. The first one is, if boost turned out to be 50 microgram, should we still expect similar price range among the three buckets during pandemic phase? And then number two is, could you walk through the clinical trial development path for a single shot vaccine against COVID flu and RSV. And the third question is regarding the external investment opportunities. You mentioned that expanding to two new modalities, lung and hematopoietic stem cells, with gene editing with liponanoparticle delivery, currently focusing in the liver. Does that mean you are willing to expand to liver diseases? Stéphane Bancel: So let me take the first question, Gena. On the boost, the price is not linked to the mass. So we anticipate the price of boosting to be set up and not related to those. I'll let Stephen talk about the second question. Is that okay?

So I'm happy to take that question, Stéphane. This is Jackie. And it's around the clinical development plan for a booster combination vaccine. And the good news is, there have been multiple combination vaccine developments in the past, maybe not for this kind of a groundbreaking indication. But typically, what we do is license the initial components first, and you know that we are working on our BLA for COVID. We're preparing Phase 2/3 for flu and for RSV. And then, we would look to license the combination vaccine through immunobridging.

Thank you, Jackie. Stéphane Bancel: And I would…

Go ahead, Stephen. Stephen, go ahead.

I was going to take the gene. I think unless you want to step on. One comment to on Jackie's point, we already do have combination vaccines like the HPV, we have three vaccines. So we're we -- hopefully, we do have some experience there technically. On the gene editing question, we do have, as you know, programs that target the liver. But as we've presented at previous science days and even today, we have a platform technology that also we think allows us to get in broadly into the immune system and particularly hematopoietic stem cells. And so what you'll -- where we imagine our strong suit to be is in delivering nucleic acid technologies to those areas. And of course, as we look to expanding in gene editing, you'll see us look to those technologies that we've got the most experience with first and then bringing a range of different payloads to -- into our capabilities.

Thank you.

This is 25 minutes past the hour. So I would hand it over back to Stéphane Bancel to make closing remarks. Stéphane Bancel: Thanks, Lavina. Sorry, everybody, if you're still hearing us with the technical problem. We will work with -- we'll provide -- we'll figure what happened. If you have any follow-up questions, please don't hesitate to contact Lavina, who will make sure to reply to you quickly. Thank you for coming in today, and we look forward to talking to you at the latest for R&D Day on September 9. Thank you, and have a great day. Bye.