Good morning and welcome to Moderna's Third 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 go ahead, ma'am.

Thank you, operator. Good morning, everyone, and thank you for joining us on today's call to discuss Moderna's third quarter 2021 financial results and business update. You can access the press release we 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; and Paul Burton, our Chief Medical Officer. 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 safety information for our COVID-19 vaccine, which has been authorized for emergency use in the United States and 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 Q3 2021 conference call. Today, I will start by quick business review of the quarter before David presents the key financials. Paul will then walk you through some real world evidence update. And Stephen will provide the clinical development update. I will then come back to close to share some thoughts about where we are heading. Let's start on slide 5 with a holistic pipeline update. First, respiratory vaccines. We are pleased to have filed the BLA for COVID-19 vaccines with FDA and have now received a priority review designation. We received our first full approval for Spikevax backs in Canada. We…

Okay. Thank you, Stéphane. We're providing today the analysis of actual 2021 third quarter results, along with an updated view of key drivers of financial performance going forward. Turning now to slide 11, starting with an overview of our sales performance before commenting more broadly on our financial results. Total product sales in the third quarter were $4.8 billion, representing 208 million doses delivered to our customers. This compares to sales of $4.2 billion and 199 million doses in Q2 and sales of $1.7 billion and 102 million doses in Q1 of this year. Sales to the US government were $1.2 billion in the third quarter, reflecting 73 million doses delivered, compared to $2.1 billion and 126 million doses in Q2 and sales of $1.4 billion and 88 million doses in Q1. Sales to the rest of the world were $3.6 billion in the third quarter, reflecting 136 million doses delivered, compared to sales of $2.1 billion and 73 million doses in Q2 and $0.4 billion of sales and 14 million doses in Q1. This reflects the significant manufacturing ramp up outside the US over the last two quarters. The relatively modest increase of delivered doses in Q3 versus Q2 was driven by the factors that Stéphane just explained. We continue to scale our production network and are working to achieve an increased quarter-over-quarter improvement starting in Q4. Turning to slide 12. The transformation of Moderna from an R&D-focused biotech to a commercial company continues to be very apparent when reviewing our financial results. The comparison of the third quarter of 2021 to prior year is not meaningful due to our significant growth, which is why we will primarily focus on the quarter-over-quarter comparison relative to Q2 on the slide. Total revenue was $5 billion in the third quarter of…

Thank you, David. And good morning, good afternoon, everyone. With more than 150 million people worldwide now having received two doses of our vaccine, we are humbled to be able to see the positive impact it is having on people's lives around the world. We are reminded of the fact that almost 250 million people have been infected with COVID-19 globally and 5 million people have lost their lives. Our profound thanks, as always, go out to those on the front lines, working tirelessly to keep us safe in this ongoing fight. Through numerous independent studies, time and time again, we see consistent findings showing that mRNA-1273 is highly effective in saving lives, reducing hospitalizations and reducing the risk of COVID-19 infection. I will highlight a few of these independently conducted studies this morning. In slide 18, I will begin with some of the data from the United States government. These data come from the CDC and show through September of this year the difference in COVID-19 cases between fully vaccinated and unvaccinated populations. An unvaccinated person has an 11-fold greater risk of dying from COVID-19, underscoring the importance of getting vaccinated plays in our protection and ending this pandemic. The data show that vaccination with mRNA-1273 provides the greatest protection, not only against COVID-19 infection, but also death due to COVID-19. In fact, even during the surge of the Delta virus variant during the summer months this year, Moderna's vaccine had the lowest reported deaths associated with breakthrough infection as the CDC data demonstrate. Approximately 160 million doses of the Moderna vaccine have been administered in the United States. And in the next slide, I want to show you some further government-generated data in a country where the Moderna vaccine has also had extensive use, and that country is…

Thank you, Paul. And good morning or good afternoon, everyone. Today, I'll review the progress we've made across our vaccines and therapeutics pipeline. Let me start with our COVID-19 vaccine, mRNA-1273, for adult ages 18 and above where there are a number of important regulatory updates. First, we have announced that the FDA granted priority review to Moderna's COVID-19 vaccine BLA. In October, we also received an EUA from the FDA and the European Commission's approval for a booster dose of our COVID-19 vaccine at the 50-microgram dose level for the adult cohort ages 18 and above. Turning to the adolescents and pediatric settings. As a reminder, there are two clinical trials for each of these groups: TeenCOVE is our study in the adolescent population, 12 to 17 year olds, and KidCOVE is the study in the pediatric population, age 11 and younger. For the adolescent population, 12 to 17 years old, our vaccine is authorized in a number of countries worldwide, including the United Kingdom, the European Union, Canada, Switzerland, Japan, Thailand, Taiwan, Saudi Arabia, and Argentina, to name a few. We've submitted data from our Kid/TeenCOVE study to the FDA in the United States as well as to other countries. We were recently notified by the FDA that the agency will require additional time to evaluate our proposed amendment due to recent analysis of the risk of myocarditis after vaccination in some populations. The agency expects this evaluation may extend until January 2022. As Paul noted, Moderna's global safety database includes an estimated 1.5 million adolescents, who've received the Moderna COVID-19 vaccine, most outside of the United States. And to date, we have not observed a rate of myocarditis from those younger than 18 years in our safety database that points to an increased risk of myocarditis in…

[Operator Instructions]. Our first question comes from the line of Salveen Richter from Goldman Sachs.

For 2022, can you walk through the supply aspects. Are you still guiding to up to 3 billion doses here? And can you also speak to demand dynamics? Is there upside to the guidance that you've commented on today for future signed APAs. And then secondly, how confident are you that you can fix these supply issues and over what time frame? Stéphane Bancel: Let me take those different questions. Let me start with the short term. Yes, we really believe we can fix those short-term supply issues. As I tried to explain in my remarks, those are what I would qualify as teething problems of scaling up so fast. In Q1, it was all about making enough drug substance and we are literally now waiting to have enough drug substance to fill vials. And as the teams scaled very nicely, in Q2, the challenge we had internally was all about filling vials. And the complexity of Q3 has really moved to, I would say, the back end of the supply chain, which is releasing product and shipping products. And the complexity has been around just a number of markets we have to serve. Beginning of the year, it was mostly shipping to CDC in the US and Europe, and that was it. But then as we increased the number of countries to many dozens by now, the complexity is just increasing and it's even further now that we are serving COVAX. We need to go country by country. So, that's just the type of teething problems that we are experiencing right now. We have increased personnel. We have invested in digital to help the teams. So, I already expect this to be resolved like we resolved the drug substance challenges in Q1 and the drug product challenges in Q2.…

Your next question is from Matthew Harrison with Morgan Stanley.

Two for me this morning. So, first, can we just spend a moment on myocarditis. And I think the overlying question here is, why do you think the regulator is more concerned with your vaccine in younger age groups compared to Pfizer, which has obviously already been approved in younger age groups. And then related to that, how much of an impact is this having on uptake and distribution of your vaccine given that we see Pfizer continue to highlight potential differences and bringing that to government's attention? And then secondly, on flu, can you just comment on how you're going to interpret these results? Obviously, we're just going to get titer results. But I think it's your premise that you can achieve a much higher efficacy flu vaccine compared to traditional flu vaccines. So do you think there is a clear correlation in titers to efficacy? And what level of titers would demonstrate very high efficacy?

This is Stephen. I'll try and take those questions. So, first, look, I think it's most important to say that what we communicated and desired to be maximally transparent last week was that the FDA, unlike other regulators, has asked for some more time to review emerging recent data. And that might take until January. I think your question is how is that different vis-à-vis what happened with the Pfizer vaccine. I think the most important thing to recognize is that the Pfizer adolescent vaccine was authorized prior to any substantial discussion about myocarditis as a benefit or as a risk. In fact, the signal emerged a few weeks later just before we made our filing. And I think a prudent approach there was to – there was a VRBPAC conducted, there was ongoing discussions. But what we've continued to see over the last four or five months is that for both mRNA vaccines, there's a question of whether there's an increased rate of myocarditis above background in 18 to 24-year-old males, a relatively small population, but an important one. And I think it's in the face of those continuing emerging questions that the FDA has been diligent and appropriately conservative in their approach and making sure they have the time to review those. And they have continued to come out over time. And so, I think, principally, what we're seeing here as the difference is a function of timing, which is that the other vaccine had been authorized prior to this concern and there has been continued emerging data around that. We are very grateful to the FDA for that diligence. I would note that the same information are available to other regulators. And as I have said before, we are authorized for that population internationally. And fortunately, as…

Next question is from Ted Tenthoff with Piper Sandler.

My question has to do with the emerging orphan disease pipeline. And I've been really impressed by the progress that you guys are making there in these important patients. And I think the mRNA technology just suits ideally here. So, what do you see as sort of the plans over the next couple of years. Kind of take us forward a little bit. What could this pipeline look like? And maybe you can just give us a sense of where you think Moderna will be in the orphan disease setting in a couple of years.

I'll take that too. So, first, I think we're very excited about the programs that are already in the clinical space, either already dosing patients or about to start. And so, I think the most important thing is looking forward to next year, the demonstration, we would hope, of proof of concept in that rare disease modality. As you know, we are dosing quite a large number of folks in propionic acidemia and we've been dosing in methylmalonic acidemia. With the opening of the GSD1a IND, we'd hope to be following a short order there. So, all three of those are potentials for us to demonstrate the real proof that this technology can be used to correct inborne errors of metabolism in these populations. I'll also note that there's a quite a wide range of disease going down to as young as two years of age in some of the organic acidemias and also the older adults in some of the GSD1a program. So, we're going to be demonstrating quite a lot there. Crigler Najjar presents another opportunity for that proof-of-concept as well as the PKU program when that moves forward, but those are still in preclinical, as I said. So the question is what do we do on the back of that proof-of-concept from any one or all of those programs. What you've seen us do in respiratory vaccines and in vaccines generally is probably the best predictor of how we will respond, which is, as you know, there are a very, very large number of metabolic diseases that could be addressed to deliver through mRNA therapy. We could list off large groups, the urea cycle of disorders, other organic acidemias, so many beyond that. And even in moving into more broadly present metabolic diseases. So, what we would do is we would define that systemic intracellular therapeutic modality as a core modality, just like we did with vaccines a couple of years ago. And that would cause us to dramatically expand that pipeline. Now I can assure you we're looking at those programs in research right now, but we have held back on moving them into preclinical development and putting them on our pipeline until we've seen the modalities perform. So that is probably the most important thing for me, looking at the rare and orphan disease space over the course of the coming year, is when do we cross that threshold and then, ultimately, when do we expand dramatically that pipeline of programs.

I really appreciate seeing the new pulmonary disease areas.

We have a question from Michael Yee from Jefferies.

Two questions. One is just trying to clarify guidance. I think there's some confusion around guidance. So I would love to understand some clarification. You lowered 2021 a little bit, I think, by $5 billion, but raised 2022 by $5 billion. Is that a timing shift of deliveries? And how much of that is just option contracts as you think about 2022 because you've talked about APAs as firm commitments. I'm just trying to understand how much are commitments versus acceptances and how to think about those two. And then on flu. Following up on the flu question, I think people are looking at labels and looking at fold increases and seroconversion rates of four to seven times and 50 to 60% seroconversion rates. Are those accurate numbers? Are those numbers we should be looking at and comparing to? Maybe you could just help us qualify that because I think that's what people are trying to do. Stéphane Bancel: I'll take the first one and give it through to Stephen. So, I think you already highlighted some of the other drivers. So on 2021, so there's two things I think that is driving. First is, of course, the lower volume. And the second one is price. As you know, we are working very hard with several governments to send products that they have bought for high-income countries like the US to low-income countries this side of Christmas. And so, when you think about just the US, the US we see that publicly. When we announced our African Union partnership, the US decided to delay to Q2 the delivery of the December quarter. That volume is going to African Union at a low tier price. So, you have an impact on the turnover just by doing the math of a lower…

I'll try and clarify that answer on seroconversion rates. It is a Phase I study. And so we are looking at a range of doses and I have not got access to the data. So, I don't want to presuppose the specific answer yet. As soon as we have the data, we will provide our thorough interpretation of it. However, as you point out, generally seroconversion is defined as a fourfold rise in titers above baseline, and we've done that in some of our other studies. And we will be looking at that from the percentage of people who've achieved that seroconversion. And most important to me, we'll be looking at consistency of that percentage across ages. In particular, the older adults where you often don't achieve the type of the same level of immunogenicity, but we believe with our platform will. There are other endpoints as well in terms of seroprotection defined as absolute titers, again greater than 40 is accepted. We will look how high that goes because that can also be reassuring. But I don't think right now we're ready to guide on a specific target that we will declare success other than looking again at that fourfold rise for measuring seroconversion across the range of agents that we'll be studying in the study.

Next question is from Gena Wang from Barclays. Your line is open.

I have two regarding the COVID vaccine. And the first question is, given the supply restraints, do you see 100-microgram doses being used as 250-microgram doses. And then also, any hesitance due to safety concerns? We did see a few countries put a cautionary action on Moderna vaccine. And my second question is, in the US, if we do the math, you completed delivery of 300 million doses and then US exercised total doses of 410 million for 2021 and the 90 million doses in first quarter 2022. So, just wondering how much of the remaining 110 million doses in 4Q 2021 will flow through next year.

I can try and take the first question, although invite Paul as well. So, I think in terms of -- you referenced some of the more recent communications that happened from public health officials, for instance, in the Nordics and elsewhere. I would note that those same communications, literally often the same documents, include reference to the fact that there's very strong efficacy for the Moderna COVID-19 vaccine. And in fact, some of those Nordic country communications include reference to the fact that it looks to be potentially greater in terms of protection as emphasis for why the vaccine not only is still recommended in many of those jurisdictions, but ultimately provide very favorable benefit risk. And so, we continue to believe that whole picture looking at the benefit and quantifying that benefit, which we think is substantial and larger than any risks contemplated here is really important. And we, again, look to those communications that clearly state that. Paul, anything you would add to that?

Only, Stephen, that recently, I think last week, the WHO gave updated guidance continuing to endorse the vaccines in mRNA-1273. And I think as they are doing their analysis of these data sets, have said that they need to think about potential biases that occur in general practice, looking at the primary vaccination schedule, the difference in timing. We know the vaccines are used differently sometimes, and that may account for these. But I think clear standing behind the data.

Just as a closing comment, I would just reference, we have entered in some of these markets into a very interesting phase of the pandemic, which is that we are in the lower risk population and we are providing vaccination to them as appropriate. So, as we do that, we're looking at benefit/risk in increasingly cautious ways, and that's appropriate. But as we look forward to next year and we start thinking about boosting, and particularly, the seasonal market of protecting those that are highest risk, I think that calculus obviously changes pretty dramatically. And so, I think we are in a period of time where we are, again, looking at the lowest risk populations. And I think that is transient period time ultimately because it is high risk populations that are of greatest concern looking forward from 2022. Stéphane Bancel: Maybe just to add just a bit of color. I've had a chance to speak with a couple of health ministers across the world in the last week or two. And I think people are very clear that the risk is low, that it's very manageable, as Paul said, and it's only in the male 18 to 24. And those health ministers were clear about going back to the risk profile that Stephen just mentioned. They care about having a winter where they don't have hospitals exploding again. And this is driven by the 50 and above, the 40 and above where they know the vaccine, as Paul mentioned, with the data from the US or Switzerland or many other countries that 1273 vaccine seems to be a vaccine providing the longest protection of efficacy, and that's what they care about. And so, I think that people are getting educated and looking at the data. They're just trying to look at the facts and figure out, in a very practical way, how do they keep the economies running, how they keep people out of hospitals and are very focused on the high population. As you know, in many countries, the boosters are not approved in the younger population, whereas they are being really advertised and promoted in the older population, so that people get boosted and don't get sick and hospitalized this winter. On the US government, Gena, we don't comment on volume. US government is a private contract to the government. But indeed, there are some shift from Q4 to next year, both Q1 and Q2.

Next question is from Cory Kasimov with J.P. Morgan.

Two for me as well. So, first of all, in terms of the 2022 APAs that you outlined, are the $17 billion worth of existing contracts constructed as firm commitments or do countries have – the contracts have optionality embedded in them wherein countries don't necessarily have to take the full amount depending on the evolution of the pandemic. And then, my second question is, given your comments on the call about potentially moving into the endemic phase by the second half of next year, should we think about 2022 revenue as being weighted towards the first half of the year? Stéphane Bancel: Thank you, Cory. So let me take this apart. The APAs do not have options. When we say $17 billion of APAs, those are firm orders, signed orders and all our APAs have upfront payments. David did a nice job walking you through the cash upfront we are receiving for those contracts. It's one of the way that we are conducting our business. We want people to be very committed and to have a material upfront of the total value of a deal when they sign. The options components that we characterize as up to $3 billion as of today, those are true options, meaning people are reserving capacity. And sometimes it's for financing rhythm because, again, as I said, we do not do APAs without upfront. And one of the best example that's today public is COVAX. We had to do a quarterly option with COVAX. As I said, it just exercised that Q2 option at the end of Q3. But Q3 2022 and Q4 2022 COVAX are still options and it's mostly because of a funding issue. They don't have the cash. They get cash from their different funders, which are mostly government and foundation,…

Next question is from Geoff Meacham from Bank of America.

I just had one more on the flu program, maybe for Stephen. It's highly likely that you'll see an increase in antibody titers. I was just thinking for the combo study, though, with 1273, what other factors do you need to address to de-risk that study? And just, I guess, I'm trying to determine how to optimize the regimen by things like dose titration or even selecting the population by more urgent need for the COVID booster side of things.

What we're going to be looking at in the combinations are actually the things that you just pointed to. And so, in particular, we do believe the – most of the value of respiratory vaccination in the near term boosting will be in older adults, 50-plus or 60-plus depending upon how you want to look at it. Very similar to the RSV population, certainly for the flu population and recommendations globally. And we think COVID moves that direction as well. And so, as we look to the first part of the question, where do we intend to optimize that ratio in immunogenicity, it really is towards those higher risk populations that do need, we think, a respiratory booster every year. When it comes to looking at the – what are the combination of things that we're going to be doing in selecting that ratio in dose, obviously, it's mostly going to be immunogenicity and the tolerability profile. Fortunately, these vaccines have been very safe to date in these older adult populations. None of the concerns that we're having about myocarditis really exists in the 50 plus, 60 plus populations. And so, we feel very confident on the overall safety profile. But the question will be, where are we in optimizing the immunogenicity against endpoints that are pretty well validated now in COVID, and where are we against the immunogenicity against endpoints that are also broadly accepted in influenza. We will be doing this for a range of different – it's a four-strain, seasonal strain vaccine. And so, we'll want to make sure there's no interference between those and that we're able to achieve strong balance immunity across the four flu strains plus the COVID vaccine. I think we have approximate targets based on the immunogenicity we saw from Phase III…

We have a question from Joseph Stringer from Needham.

Two from us. Just curious on the guidance for – the 2 billion guidance for the US fall 2022 booster market. Can you help us understand what assumptions are sort of built into that number? Is that based on sort of your internal expectations around a relative percentage of individuals that would – fully vaccinated individuals that would get a booster or just trying to handicap what the variance could be around that. And then, for CMV, can you give us a sense for the relative timelines for enrollment of that Phase III trial and when we could see the initial data from that? Stéphane Bancel: On the fall of 2022, so the commercial team has spent quite a lot of time modeling different assumptions in terms of volume of people who want the booster, market share, and, of course, pricing. I cannot comment further for competitive reason right now, especially on the pricing piece, but we will do that in due time. But indeed, it's typical commercial analysis that the team that has done many times before in other companies have run through the last few months.

And on the enrollment of CMV, thank you for the question. The answer from our target perspective is as fast as we can because we ultimately think there's just such a huge unmet need here, and we're excited to get the study going. There are some caveats that I should put around that, which is it probably won't be as fast as we did in COVID, which was obviously in a couple of months because we are targeting a population at high risk of disease. And in this case, we're looking for women of child-bearing age who are exposed to seroconversion with CMV. And that is often those that are exposed to children because that's the primary vector for those infections. And so, we want to make sure that we get the right population. And that matters because this is a case-driven study. As we're kind of familiar with based on COVID-19, it's the number of cases that we achieve that will ultimately dictate those interim analyses that we're looking for in the time ahead. And so, it makes sense to try and enrich for the at-risk population. So you might see a slower enrollment curve or it might go really fast. We're going to work as hard as we can to go very fast. But the most important thing is that we need to be enrolling those that are at highest risk because we think that will ultimately generate the cases that accelerates the interim readout. Because it is an interim readout that's driven on the cases, I can't predict when that will happen. What I can do is I can try and enrich for those cases in the way I just described.

Next question is from Emmanuel Papadakis from Deutsche Bank.

We can go to the next question, operator.

And next is from Mani Foroohar with SVB Leerink.

A couple of quick ones. Can you give us a sense of when we might see, if any, the impact of pricing shift to increase deliveries to low and middle income countries that Stéphane mentioned. Is that something that we'd start to see a little bit of early next year? Is that more of a 4Q phenomenon in terms of the budgetary timing and sort of quarterly contract that Stéphane talked about. Secondarily, I have a few small piggy jack question on the numbers. On slide 15, the $6.7 billion in deposits, that presumably all for APAs for 2021 or 2022? Or does some of that apply to APAs for delivery – for contracts for 2023. Thirdly, your CapEx guidance a little lower than it was last Q. Is that $50 million to $150 million that you took out of that, is that absolute savings? Or is that just going to get pushed into next year as some of the contract revenues were? And then finally, a little more substantive of a question. How much perspective can you give us on you potentially compete for share on contracting in EU, the competitor Pfizer/BioNTech locked in pretty large contracts on volume for the next two years? Is there an opportunity for you guys to start capturing more share [indiscernible] relevant in the EU? And last, and finally, we talked on the last quarter about potentially access to China market where you guys are essentially not existing at this point. And you have mentioned going there via JV. Can you give us an update on status of your ability to access that market, discussion of the JV to compete with BionTech/Fosun? Sorry for the barrage of questions, and thanks for taking the questions. Stéphane Bancel: I'll take a few and, David, if…

In terms of the deposits, the $6.7 billion we have in hand, I would just say the preponderance of those deposits are for deliveries either in 2021 and in 2022. There may be some small amounts in 2023, but it's pretty early in terms of the contracting there. Secondly, in terms of CapEx, I think the answer is yes, you can expect, as I said – we're going to see a notable increase in our CapEx next year. But generally, in terms of the reduction this year, it's a combination of things moving into the first quarter of next year and also we're running, in some cases, at or below the estimated investment requirements. So it's a combination of those two.

On potential China JV, I know you guys have mentioned it in the last call, I don't know if there's been any progress? Stéphane Bancel: Yes. So nothing to announce today, but [indiscernible] in China.

There are no further questions at this time. I would now like to turn the conference back to Mr. Stéphane Bancel. Stéphane Bancel: Well, thank you very much, everybody, for joining us. And if you have any further questions, you know where to reach Lavina and the team. Have a great day. Bye.

This concludes today's conference call. Thank you for joining. You may now disconnect.