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Good day, and thank you for standing by. Welcome to the Moderna Fourth Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Lavina Talukdar. Please go ahead.

Thank you, Kevin. Good morning, everyone, and thank you for joining today's call to discuss Moderna's Fourth Quarter and Full Year 2024 Financial Results and Business Updates. You can access the press release issued this morning as well as the slides that we'll be reviewing by going to the Investors section of our website. On today's call are Stephane Bancel, Chief Executive Officer; Jamey Mock, Chief Financial Officer; and Stephen Hoge, President. Before we begin, please note that this conference call will include forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please see Slide 2 of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. I will now turn the call over to Stephane.

Thank you, Lavina. Good morning, or good afternoon everyone. Thank you for joining us. I will start with a review of 2024, Jamey will present our financial results and outlook, Stephen will review our clinical programs. I will then come back and share key priorities for 2025 before we take your questions. In 2024, we recorded revenue of $3.2 billion. The team has worked hard to generate cost savings of $2.6 billion or 27% down from 2023. We reported a loss of $3.6 billion. While we anticipated to end the year with $9 billion in cash, thanks to the team's work on OpEx, CapEx, and also working capital, we ended the year with $9.5 billion of cash and investments at the end. In September 2024, we announced our focus on 10 high-value programs for which we expect potential approvals over the next three years, driving sales growth and diversifications from our topline from COVID. This program includes in respiratory vaccine, next-gen COVID, combination flu plus COVID, RSV 18 to 59 at high-risk adult, seasonal flu, in Latent and other, CMV and Norovirus, in rare disease, PA and MMA and in oncology, INT for adjuvant melanoma. In addition to driving sales growth, the prioritization of these programs will allow us to reduce our R&D expenses in this time frame. From a pipeline standpoint, it was a year of strong progress. In 2024, we became a multi-product company with the approval of mRESVIA. Along with Spikevax, we now have two commercial products on the market. We reported positive Phase 3 results in four of our respiratory vaccine program, and we filed for FDA approval on next-gen COVID or combination flu plus COVID and RSV vaccine for high-risk 18 to 59. And our seasonal flu vaccine is currently in the Phase 3 efficacy trial. We also reported additional progress across our programs for the Phase 1/2 for vaccine against norovirus, EBV, and V

Thanks, Stephane, and hello, everyone. Today, I'll walk through our financial results for the fourth quarter and full year 2024, providing insights into the key drivers behind our performance. I'll also outline our 2025 financial framework as we continue to optimize our operations and position the company for long-term success. Let's begin by reviewing our commercial performance on Slide 8. For the fourth quarter of 2024, net product sales were $0.9 billion with $0.2 billion in the United States and $0.7 billion outside the United States. For the full year, net product sales were $3.1 billion at the lower end of our revised guidance. US sales were $1.7 billion for the year, benefiting from a $0.2 billion favorable adjustment related to a prior period return reserve reversal. Excluding this adjustment, sales volume saw a decline compared to last year, primarily due to lower vaccination rates, lower market share and increased competition. However, we observed signs of stabilization, and believe that COVID market will remain durable over time. Outside the US, product sales were $1.4 billion, aligning with the midpoint of our guidance. This includes approximately $400 million from advanced purchase agreements that will not recur in 2025. The vast majority of our sales were from Spikevax. While we launched our second product, mRESVIA, in the third quarter, sales were only $25 million for the full year. While early RSV sales were limited, we see long-term opportunity to expand our presence in this market, both in the US and internationally. Moving on to Slide 9, I will now walk through our financial results for the fourth quarter of 2024. Total revenue for the fourth quarter was $966 million, down 66% from the same period last year. As expected, sales were impacted by the earlier launch of our updated COVID vaccine in the US with FDA approval granted three weeks earlier than the prior year. This allowed us to meet demand sooner, shifting a portion of sales into the third quarter. International sales were also lower year-over-year, reflecting the ongoing phase-out of advanced purchase agreements. Cost of sales for the quarter was $739 million, including $45 million in third-party royalties, $193 million in inventory write-downs, and a non-cash charge of $238 million from the termination of a contract manufacturing agreement. The contract termination is part of our continued effort to optimize our manufacturing footprint, following the strategic resizing initiative launched in 2023 to align with the transition to a seasonal endemic market. While cost of sales declined by $190 million compared to the prior year, lower product sales volume drove cost of sales to 79% of product sales, excluding the resizing charge this would have been 53%. R&D expenses in Q4 were $1.1 billion, reflecting a 20% year-over-year decline. The decrease was primarily driven by lower clinical development and manufacturing costs across our COVID, RSV, flu, and combination vaccine programs. This was partially offset by increased investment in our norovirus and INT programs. Additionally, last year's R&D expenses included $120 million upfront payment-related to our collaboration with Immatics, which did not recur this year. SG&A expenses for the fourth quarter were $351 million, down 25% year-over-year. The decrease was primarily driven by reductions in purchase services and external consultants as we continue to focus on cost management and operational efficiencies. We recognized an income tax benefit of $64 million in the fourth quarter. Similar to the prior year, the benefit was not material due to the global valuation allowance maintained against most of our deferred tax assets. Net loss for the quarter was $1.1 billion, compared to net income of $217 million in Q4 2023. Loss per share was $2.91, compared to earnings per share of $0.55 in the prior period. We ended the quarter with cash, cash equivalents, and investments totaling $9.5 billion, up from $9.2 billion at the end of the third quarter. The increase was primarily due to accounts receivable collections. Now, let's turn to our full year 2024 financial results on Slide 10. Total revenue for the year was $3.2 billion, a 53% decline from 2023, primarily driven by lower product sales, which I discussed on the prior page. Other revenue contributed $127 million for the year, reflecting grant revenue, collaboration, licensing, and royalty revenue. Cost of sales for the full year 2024 was $1.5 billion or 47% of net product sales. Excluding the $0.2 billion non-cash resizing charge, this would have been 39% and below our previous guidance of 40% to 45%. This represents a $3.2 billion decrease from 2023 due to lower manufacturing resizing charges, as well as lower inventory write-downs and reduced unutilized manufacturing capacity costs, all of which reflect improved efficiency. R&D expenses for the year were $4.5 billion, down 6% from 2023. The decrease was largely due to lower clinical trial and manufacturing costs, as well as fewer upfront payments for collaboration agreements. We did, however, purchase two priority review vouchers during the year, which offset some of those savings. For the full-year, SG&A expenses totaled $1.2 billion, a 24% decrease compared to 2023. The decrease reflects disciplined cost management across the organizations. We have continued to build capabilities and bring more functions in-house, allowing us to reduce reliance on external consultants, while improving operational efficiency. Additionally, these savings were supported by better leveraging digital technology and artificial intelligence to streamline operations. We recorded an income tax benefit of $46 million for the full year, compared to an income tax expense of $772 million in 2023. The shift is mainly due to the global valuation allowance we established last year on most of our deferred tax assets, which continues to impact our tax position. Net loss for the year was $3.6 billion compared to $4.7 billion in 2023 with a loss per share of $9.28 compared to $12.33 in the prior period. Moving to Slide 11, we want to highlight the significant reduction in our operating expenses in 2024. On a GAAP basis, cost declined $3.9 billion from $11.1 billion to $7.2 billion. Excluding resizing charges of $1.6 billion and $0.2 billion for 2023 and 2024 respectively, we reduced operating expenses by $2.6 billion compared to 2023, driven by manufacturing footprint resizing, pricing renegotiations, R&D prioritization, volume reductions, and a greater use of digital tools to improve efficiencies. Additionally, both 2023 and 2024 operating expenses included non-cash costs of $0.9 billion and $0.6 billion, respectively, related to stock-based compensation and depreciation and amortization. If we were to exclude the manufacturing footprint resizing charges, stock-based compensation and depreciation, our defined cash costs were $8.9 billion in 2023 and $6.3 billion in 2024, representing a year-over-year decline of $2.6 billion. To avoid double counting, please note that in 2023, there was approximately $300 million of depreciation and amortization included in the $1.6 billion of resizing charges. We are committed to drive additional cost efficiencies in 2025, and beyond, by prioritizing investments to support the 10 product launches over the next three years. Our 2025 GAAP expenses are projected at $6.4 billion in 2025, which includes $0.9 billion of non-cash charges from stock-based compensation, depreciation, and amortization. Excluding those items, we project a cash cost of $5.5 billion. This represents an approximately $1 billion year-over-year reduction from our prior 2024 projection of $6.5 billion. We are also planning for an additional $0.5 billion of expense reduction in 2026 as we continue to drive efficiencies across all areas of the business. Now, let's turn to our financial framework for 2025. We expect total revenue in 2025 to be in the range of $1.5 billion to $2.5 billion with first half sales of approximately $0.2 billion, reflecting the seasonality of our respiratory vaccine business. As discussed with investors in January, our wider guidance reflects the uncertainties in vaccination rates, the competitive market environment, the size of the RSV market, and timing of licensure of our factories and product approvals in Australia, Canada, and the UK. As a reminder, we filed three products to the FDA in 2024, and we are not including any new product revenue in our guidance range. Also we expect the revenue and R&D expense from our recently announced pandemic influenza program to be relatively immaterial in 2025 and is embedded in our guidance. Cost of sales is projected to be approximately $1.2 billion, reflecting continued improvements in manufacturing efficiency and lower expected inventory write-offs, offset by increased costs associated with the go-live of our new manufacturing sites in Australia, Canada, and the UK. R&D expenses are anticipated to be approximately $4.1 billion as we continue to invest in our late-stage pipeline, while maintaining financial discipline. SG&A expenses are expected to be approximately $1.1 billion, reflecting a continued focus on efficiency while supporting our commercial execution. We expect taxes to be negligible in 2025. Capital expenditures are projected to be approximately $0.4 billion. This increase from our prior guidance of $0.3 billion is primarily due to the timing of spend between 2024 and 2025. 2024 actual capital expenditures was approximately $150 million below our prior guidance. Some of that reduction was attributable to prioritization changes, but the majority of the impact was timing of spend between 2024 and 2025. We expect to end 2025 with approximately $6 billion in cash and investments. In summary, 2024 was a year of financial discipline, and we are well positioned as we enter 2025. We remain committed to managing costs, optimizing our operations, and investing in our future growth. With that, I will now turn the call over to Stephen.

Thank you, Jamey, and good morning or good afternoon, everyone. Slide 15 shows the prioritized programs we highlighted at our R&D Day in September. As Stephane mentioned earlier, we are focused on pursuing these 10 approvals over the next three years to drive growth. We've now filed for approval for three respiratory vaccines, our next-gen COVID vaccine, our RSV vaccine for high-risk adults ages 18 to 59, and our flu-COVID combination vaccine for people aged 50 and older. Most of the other seven prioritized programs are in pivotal studies, and the remainder are expected to begin their pivotal studies in the near future. Slide 16 highlights the most recent updates from our late-stage portfolio. As a reminder, in September, we presented positive efficacy and immunogenicity data from our next-gen COVID vaccine, mRNA-1283. We have since filed for approval in multiple jurisdictions and have a PDUFA date of May 31st in the United States. Also in September, we shared positive Phase 3 data for our RSV vaccine in high-risk adults ages 18 to 59. This vaccine has also been filed for approval in multiple countries with a PDUFA date of June 12th in the United States. For our combination flu COVID vaccine, we previously shared positive Phase 3 immunogenicity and safety data, and on the basis of that data, we filed for approval at the end of last year in the United States and other countries. We've previously demonstrated efficacy for the flu -- for the COVID component of the vaccine. Demonstration of efficacy for the flu component may ultimately be required for approval. To that end, our standalone flu vaccine, mRNA-1010 is currently in a Phase 3 efficacy study that is accruing cases rapidly. Based on the current pace of case accrual, we are optimistic that we will be able to conduct the first analysis of efficacy for our flu vaccine at the end of the current season. Now, turning to our non-respiratory portfolio. Starting with our latent and other virus vaccines. For our CMV vaccines, we announced last month that the Data and Safety Monitoring Board informed us that the early efficacy criteria was not met, and recommended that the study continue to its final analysis. We remain blinded to the study, and continue to expect the results for the final analysis later this year. Our norovirus vaccine Phase 3 study is fully enrolled in the Northern Hemisphere, and we are preparing to enroll participants for the upcoming Southern Hemisphere season. The trial is currently on FDA clinical hold in the US following a single case of Guillain-Barre syndrome, which remains under investigation. Given that enrollment had already completed for this season, we do not currently expect any impact on timelines while we complete the investigation and update trial documents with this information. In Oncology, we and our partner Merck have multiple late-stage studies underway evaluating INT or mRNA-4157 in combination with KEYTRUDA. The first of which adjuvant melanoma is part of our 10 prioritized program. The Phase 3 for this is now fully enrolled. Two additional Phase 3 studies are underway in non-small cell lung cancer, and there are two randomized Phase 2 trials ongoing in high-risk muscle-invasive bladder cancer and adjuvant renal cell carcinoma. In rare diseases, Propionic acidemia or PA is in its registrational study, and Methylmalonic acidemia or MMA, we have -- with MMA, we have agreed with FDA on our pivotal study design and expect to start that study in 2025. With that, I'll now hand back to Stephane.

Thank you, Stephen and Jamey. For 2025, we have three priorities. Priority one is to drive sales of approved products. Priority two is to focus on our late-stage pipeline where we believe we have up to 10 product approvals over the next three years, and which will drive sales growth and diversification. Priority three is to deliver cost efficiency across the business. Let me take you through each of these. Our first priority is to drive use of Spikevax and mRESVIA vaccines. Importantly, we enter 2025 with two approved products, which gives us a better competitive positioning than when we entered 2024. We are [indiscernible] in the US, we expect to better compete in the respiratory vaccine market. In addition, upcoming mRESVIA approvals outside the US should also add to sales in 2025. Priority two, we are focused on delivering up to 10 product approvals over the next two years, which we believe will drive sales growth. Together, these 10 anticipated products target a total addressable market of over $30 billion. Priority three, deliver cost efficiencies across the business. We've demonstrated our commitment to cost savings by the $2.6 billion cost reduction we made in 2024. We will continue to focus on improving efficiency by reducing costs across the entire company, across manufacturing, across [indiscernible], and across SG&A in 2025, but also in 2026. For our efficiency program, we're reducing cash cost to an estimated $5.5 billion in 2025 and $5 billion in 2026. This brings our total cash cost-reduction to over well over $1 billion over these two years from the $6.2 billion in 2024. We will continue to adjust our cost structure to ensure we breakeven on a cash-cost basis no later than 2028. [indiscernible] be very clear, if needed, we will reduce our cost structure further than the $5 million cash cost level if our sales objectives are all met. For Methylmalonic acidemia test products, we expect important milestones. We filed three [indiscernible]. For CMV, we look forward to having the final results of our Phase 3 study in 2025. Flu and norovirus vaccine are in Phase 3 studies, and the timing of data with that will be subject to case accrual. For INT adjuvant melanoma, we will also be subject to [indiscernible] accrual. For PA, we are already joining data from our registrational study and we expect to start registrational study for MMA this year. We will continue to focus on delivering the greatest possible impact to people through mRNA medicines. Our portfolio of products and pipeline are progressing well. Two approved products, three [indiscernible] and six Phase 3 of pivotal studies ongoing. So our mRNA platform is working. With demonstrated progress in our cost reduction program, we assume that we have a financial discipline to achieve our goals and fulfill our mission. With this, operator, we'd be happy to take questions.

Thank you. [Operator Instructions] Our first question comes from Ellie Merle with UBS. Your line is open.

Hey, guys. Thank you for taking the question. Can you help us understand the breakdown of the R&D spend across your program? So, if you needed to or wanted to reduce R&D spend further, how much flexibility is there on the expense structure there, for say, further cuts in the 2026 timeframe? And then just a second question on the clinical hold on Norovirus. Can you give any more detail around, sort of, this why one case of GBS prompted the clinical hold? And yeah, any more color surrounding the situation there would be helpful. Thanks.

Yes. Thanks Ellie, for the questions. Maybe I'll address the first one on R&D. So, we still think there's a lot of room to be reduced and a lot of flexibility. So as a reminder, we're guiding $4.1 billion for 2025. And in R&D Day, we said we would take it down by $1.1 billion from the $4.8 billion level by 2027. So, that suggests a number of about $3.6 billion, $3.7 billion. To answer your question on what we're spending on, that's still back primarily over 50% of our trial spend, and therefore overhead is related to respiratory trials, which as you know, we expect to roll-off over this year and the following year. And then, the only other Phase 3 trials that we've started are in latent disease and oncology for Norovirus and CMV and INT, and we expect those to be reduced over the coming years as well. So, we expect that there will be some flexibility beyond the $3.6 billion that we've already indicated. But right now, we're still monitoring the sales line, but that is an area that we could continue to reduce if need be.

[indiscernible] and thank you for the second question, I'll take it. So, just a little bit of context, as you alluded to, GBS does happen, obviously in the background population. It's usually seen in older adults about one to two per 100,000 participants per year or people per year. And given we've enrolled well over 250,000 participants in studies over the last couple of years, it wouldn't be surprising to see cases in our clinical trials as you suggested. And although that hasn't been associated as a risk factor with our approved vaccines, this is something that does happen. As it relates to this case, when we identified it, we proactively decided to pause our activities and update our study documents because we prioritize patient safety and obviously transparency, first and foremost, and we want to make sure that all that information was shared as soon as the case emerged. We submitted those for review with regulators globally and the FDA has placed us on a clinical hold while they review that information in those documents. Perhaps most importantly for study conduct, because we had enrolled and dosed everybody prior to the emergence of this case in the current season study, we really don't expect there to be any impact on the conduct of the study or its timelines for readout on efficacy, which will ultimately be case-driven. So, from our side, this is just about being prudent and transparent and making sure that we're prioritizing patient safety.

Understood. Thank you.

Our next question comes from Gena Wang with Barclays. Your line is open.

Thank you. Maybe I'll just follow-up on the Norovirus. What would it take for the FDA to remove the clinical hold? What kind of an outcome that would deem to be okay? And then another question regarding the CMV, now we should see more events accrue? Will it still happen in the first half, 2025? Should we see the final readout?

So Gena, it broke for just a second. Could you repeat the CMV portion of the question?

Sure. CMV, you know, since now we've seen additional months of events accruing, should we still be able to see the final readout in the first half 2025?

Oh, thank you. So I think so I'm going to deal with that first. So yes, we continue to accrue cases in the CMV trial. As I said, we remain blinded to the interim analysis. We still do expect that result in 2025. I don't know that we've guided to the specific timing, but we still do expect the result in 2025. As it relates to the Norovirus, the clinical hold, obviously, I think the FDA needs the time to review the materials we submitted, they may come back with some questions. If they do, we'll answer those. But as has been suggested even in the question, a case of GBS is not necessarily unexpected, and because we've updated the documents, we really do expect there to be minimal impact on trial conduct at this point. But I -- it will be ultimately up to the agency what they need to see before we move forward with further enrollment in that study.

Thank you.

Our next question comes from Michael Yee with Jefferies. Your line is open.

Hi, thanks. Good morning. We had two timing questions for you guys. First on the INT cancer vaccine, which of course is a really exciting product. I think previously, if you've done some math on the Phase 2, it's certainly possible on the event rates that were seen in Phase 2 that the data could come by end of year or first half of 2026 and the company has not totally dissuaded us or others from that type of timing. Do you generally agree with that timing? And can you shed some light on how to think about the powering for the INT cancer vaccine a primary endpoint? And then similarly, with the Norovirus, I think you mentioned that you're enrolling the Southern Hemisphere, but completed the Northern. Do you need both to hit the primary or to hit the event rate? And just help us understand the timing of that despite the fact that it's on-hold the Northern was already completed enrollment. Thank you.

Thanks for the question. So, first on INT, be -- there are some differences between the study population between the Phase 2 and the Phase 3. And so, we will want to be guided by the actual event accrual, case accrual rate, the relapse rate in the Phase 3 study before we feel confident that we could offer a timing on that. And so, as we have started to recruit cases, the study, as you know is fully enrolled. So there are going to be events that start to happen. We'll have a better sense of that. Certainly, 2026 seems possible, plausible, but whether or not it could be on the early side of that or the late side of that, we just don't know at this point, it is event-driven. And so more as we have information in the future. On the question of Norovirus, so we have -- we fully enrolled and fully dosed the Northern Hemisphere study, which is the majority of the study. But given epidemiology, we also wanted to enroll some participants in Southern Hemisphere geographies. At the end of the day, we will also be case driven. So you ultimately need cases of norovirus towards that efficacy endpoint, because the majority is -- the sizable majority of the studies is completely enrolled now, but this Northern Hemisphere is completely enrolled, which is the majority of the participants we intended. It's possible that we won't need Southern Hemisphere participants, but we do intend to enroll Southern Hemisphere because we want a broader epidemiology towards that final endpoint. So again, we don't know when that will happen. We do currently hope that we're sufficiently powered in this season to see efficacy. But if more participants are needed, then of course, we will enroll them to accrue more cases towards that efficacy endpoint.

Got it. Thank you, guys.

Our next question comes from Salveen Richter with Goldman Sachs. Your line is open.

Good morning. Thanks for taking my questions. Could you help us understand what the clinical bar is for the Norovirus program? And then on the INT portfolio, will we get any data or just enrollment updates for the programs beyond melanoma? Thank you.

So the -- on the clinical bar for Norovirus, obviously, there are other vaccines out there for gastrointestinal infections, Rotavirus and others where we will want to show a meaningful decrease in the rate of moderate-to-severe gastrointestinal symptoms, those are really where the burden of disease happens, particularly in higher-risk populations like older adults or the immune-compromised. We'll look at a pretty broad range of endpoints as secondary exploratory endpoints as well, things like hospitalization, utilization of healthcare services. And we have not disclosed our target product profile for that yet or the -- or the powering assumptions we have in those interim analysis. And so, I won't do that here, but we will perhaps in the future provide an update on that. But we will -- we will be looking for a meaningful reduction in the rate of moderate to severe acute gastroenteritis. As for INT, obviously, we're all looking forward to the melanoma -- adjuvant melanoma Phase 3 readout. As you know, and as I mentioned, there are additional Phase 3s as well as two randomized Phase 2s, including bladder cancer, renal cell carcinoma, which, depending on the rate of approval of events could have readouts that we would be updating on as well in the coming years.

Thank you. Our next question comes from Terence Flynn with Morgan Stanley. Your line is open.

Hi, thanks for taking the question. Maybe a two-part from me. Just wondering if you can confirm if you still have not seen any cases of GBS with your RSV vaccine. And then, I know you filed for approval for the COVID-flu combo vaccine. And it sounds like now you're waiting for some vaccine efficacy data. Can you tell us anything more there about what the bar is? Is it only on the flu side? Or do you need vaccine efficacy for both COVID as well? And kind of what level of protection you're -- you need to see? Thank you.

Thanks for both questions. So first, I can confirm that GBS has not yet or has not been identified as a risk factor for our RSV vaccine or our COVID vaccine Spikevax to date. And so, obviously, we'll continue to track that closely, but that's encouraging. On the combo study, so we have demonstrated efficacy for the COVID component. As you may remember, mRNA-1283 had a successful efficacy study in -- that we announced last year, and that is the COVID component of the combination vaccine. And so, it does satisfy that requirement. As for the flu vaccine, we have had multiple Phase 3 readouts in our flu vaccines as well as for the combo vaccine demonstrating a non-inferior or superior immunogenicity and good safety profile for those vaccines, but we have not yet demonstrated efficacy for the flu component of that vaccine. That trial, as I mentioned is actually ongoing right now. And given that it is a robust flu season in the Northern Hemisphere, as many folks know, and given the case accrual rate we see there, we do expect that we'll -- we're actually quite optimistic we'll be able to conduct the first interim analysis of efficacy at the end of this current-season. And so that would then be the demonstration of efficacy for the flu component of the combo vaccine.

Thank you. Our next question comes from Tyler Van Buren with TD Cowen. Your line is open.

Hey guys, thanks for the update and for taking the question. Regarding CMV, just to confirm, even though the criterion for early efficacy was not met at the interim, is it still possible that a higher vaccine efficacy threshold from the first interim could still be reached with the final analysis due to a wide confidence interval with fewer patients at the time of DSMB review or do you think that's less likely?

Thanks Tyler for the question. So, what we -- if you look at the power that we had at that first interim analysis, it actually was intended as an early look, but not sufficiently powered that you would have high confidence if it was in-between efficacy. And for that reason, it is still very much possible that at the final analysis with many more cases, the confidence intervals narrow, and what we see is a point estimate for efficacy that is favorable from our perspective meets or exceeds our expectations for the target profile. The most important thing to say though is that we remain completely blind of this. All we know is that the confidence interval did not exclude the lower bound target, and given the powering of the study that -- for that interim analysis, that's not necessarily surprising, stopping for early efficacy, early criteria and would have been an upside scenario in our view. So, we remain blinded. We will accrue the full number of cases and we continue doing those in that study and then we'll look to that final analysis, which is actually the fully powered analysis for assessing against our target product profile.

Thank you. Our next question comes from Luca Issi with RBC Capital. Your line is open.

Oh, great. Thanks so much for taking my question. Maybe, Stephane, big picture, we all know that you have worked very closely with the Trump administration during the pandemic. But have you talked to either the President, RFK, or any of their representatives this time around? If so, what has been the message that you have been hearing from them? I think any color there would be much appreciated. And then maybe second, Stephen, on Norovirus, can you just talk about the timing of the GBS case? Is that something that occurs soon after the individual receive the vaccine or maybe many months after that? I'm just trying to understand the correlation versus causation here. So again, any color much appreciated. Thanks so much.

Thank you for the question. So, as you know, we work productively with the Trump administration in President Trump's first mandate, and we look forward to working with the new team as they get confirmed by the Senate, and the different members. Vaccine are a very important piece of keeping people healthy and we look forward to having those discussions as people get confirmed. Stephen?

Yes. And as on the Norovirus case, as you probably will know, we've enrolled about 20,000 participants in that study in just the last couple of months. It's all been relatively rapid enrollment for the current Norovirus season. For that reason, you can imagine the -- that it's relatively proximal, which is why we're being cautious and communicating around it first and foremost with participants, investigators and regulators, just so they have that information. Now to the point of correlation versus causation, it's important to note that in this case, there's -- there are these extremely rare events that do happen, it's very hard often to finally determine a cause or relationship. And so other than reporting it that it happened around this time and investigating it thoroughly and communicating around it, we may never have an answer beyond that. But yeah, the respect for the confidentiality for that participant and more generally, I don't think I would offer any more information about it other than we continue to investigate it and see if what the potential causes would be.

Got it. Thanks so much.

Our next question comes from Cory Kasimov with Evercore ISI. Your line is open.

Hi, this is [Adi] (ph) on for Cory. I wanted to ask on what possible changes have you seen in the past month that has caused the bump to expense guidance already?

To expense guidance, Adi?

The increase in, you know, R&D and SG&A spend.

I think -- so I don't know if it's a bit confusing. So we've been basically talking about two different sets of numbers. Neither have changed. One is our GAAP costs, Adi, and one which includes stock-based compensation and depreciation and amortization. So maybe that's what you're referring to versus what we define as cash costs, which excludes those two numbers, which have not changed. And as a reminder, those numbers were close to $9 billion in 2023. They had -- we had $6.3 billion in 2024. We're guiding to $5.5 billion in 2025 and $5 billion in 2026. So, perhaps you're looking at the GAAP inclusion, but we have not changed any estimates from our cost…

Got it. And I had just one more follow-up. If you can provide any more color on the language of the PA program, the PR at JPM and today's PR suggests a potential decrease in MDE sequencing. Wanted just some additional color on it.

Yes. Thank you for that. So, on the -- as we had previously disclosed from our ongoing clinical trial there, we have seen a significant -- a substantial decrease in the rate of metabolic decompensation events in that Propionic acidemia PA study. And we believe and ultimately have agreed with regulators that, that is the endpoint that we will assess for the pivotal part of that study. And we've moved forward into that pivotal phase. So what we'll be looking at is the rates of metabolic decompensations or MDEs for participants prior to being on drug versus once they start treatment with that medicine. That rate and the reduction in it will ultimately be, we believe the pivotal endpoint that would support registration for the drug for PA. And so as we move forward with new participants as well as some older -- other participants who are already on the study, we'll be looking at that comparison on reduction in the rates of MDEs.

Thank you. Our next question comes from Courtney Breen with Bernstein. Your line is open.

Fantastic. Thank you so much for taking the call today -- taking the question today. I wanted to kind of pivot a little bit to some of the costs as well and specifically the inventory write-downs. I think they continue to be an issue for kind of seasonal vaccines we have to produce in advance, and then see the season play-out. I would love to understand a little bit more about what the future looks like in this space. You're going to continue to be in a seasonal market kind of both with COVID, now with flu and with RSV. And so as we think about kind of projecting and manufacturing appropriately to minimize those write-downs, but maximize the opportunity? What does good look like, number one, kind of what is the goal in terms of limited inventory write-downs? And number two, kind of what are the things that you're changing to kind of continue to improve your ability to make to the right amount?

Yes, thanks for the question, Courtney. It's a great one. So, as you know, maybe just to step back, 2023, I forget what the numbers are, but we've reduced this dramatically already. But nonetheless, we did have $500 million of inventory write-downs in 2024 and about $100 million of unutilized manufacturing capacity. And so, at $600 million on $3 billion of sales, that is obviously not what good looks like yet. What I will say is much of this is related to our raw materials where we take an inventory reserve-based upon future demand. And if you look at our inventory levels now, Courtney, we are under $300 million, I think $270 million. So, the go-forward should look much better as we project moving forward on the raw material side. On the excess capacity side, you're right, we still have a fair amount of either write-offs of good product that we produce because we produced last year, for example, we assumed $4 billion in sales and we came in at $3 billion. So we obviously overproduced. And we are still going to produce to the higher-end of our guidance range of $1.5 billion to $2.5 billion, which is why you see a cost of sales in the neighbourhood of 50%. But as we get better, what we're working on is matching what does that future demand look like and what is the supply that we should account for. And as an example, as we've continued to adjust for that, that's the example of the termination of a contract manufacturing agreement that we had in the fourth quarter. So we continue to be proactive about what is that future demand, what is the capacity we require, and you should see that come down and certainly, $600 million on $3 billion is not what we expect. We want that to be less than 10%, let's say, over time, but I'm not saying that will happen in the year 2025, but it will get better also because our inventory balance is down dramatically.

Thank you.

Our next question comes from Edward Tenthoff with Piper Sandler. Your line is open.

Great. Thank you very much. Most of my questions have been answered, but I think I saw some news maybe on the Vertex CF program. And I was wondering if you could just kind of give us an update on what's going on there with that rare disease program. Thanks.

Yes. So, thank you for the question, Ted. So we continue with our partner Vertex, who is conducting that clinical trial. So, they're the sponsor for the study and have the most information on it. But we continue to have a path of -- we completed the single-ascending dose portion of that trial and are now in the multiple-ascending dose portion of that trial. That is patients receiving treatment regularly to ultimately measure whether or not we're having an effect on respiratory measures and hopefully overall addressing the burden of CF in those patients that can't take the small-molecule correctors. We do expect a readout from that multiple-ascending dose trial. I think Vertex previously guided that we expect that this year and we will look for them to provide further updates on that timing if they happen.

Great. Thanks, Stephen.

Our next question comes from Jessica Fye with J.P. Morgan. Your line is open.

Hey guys. Good morning. Thanks for taking my questions. I had a few follow-ups for Stephen just from prior questions. I was hoping to clarify the response on. On Norovirus, how confident are you that the trial will not go on some equivalent of clinical hold in the Southern Hemisphere? Have other global regulators confirmed they do not need a pause to review the information or is there a chance of stoppage there? For CMV, just following-up on Gena's question, I think in the past, you had said the final CMV analysis could come mere months after the interim, which we heard about in January. So, should we still think of that as the first half of 2025 or can you clarify the prior answer? And then on the 1083 COVID-flu filing, I think the press release states that approval may require vaccine efficacy data from the Phase 3 flu trial. Why is that a point of uncertainty that the FDA may require it. Has it not been clear with you in your pre-submission meeting? And then lastly for Jamey, can you recap what variables in the COVID vaccine and RSV markets would land you at the low-end or the high-end of your 2025 guidance of like price vaccination rates, market-share, stuff like that? Thank you.

So, lots there for me. So I'll go first and then kick it to Jamey. So, first on the Northern Hemis -- on this Norovirus study. As we said, we will look to enroll a second season in the Southern Hemisphere. At present, we do not expect any delays in doing that. Given that we have enrolled over 20,000 participants in that study already in Northern Hemisphere, if there were any delays, we're not sure that it would have an impact to study timeline. But at this point, we're as confident as we can be. The -- that there won't be any delays in the South Hemisphere. As it relates to CMV on case accrual, the second half -- we have previously said that case accrual was moving relatively quickly. It continues to accrue steadily in the study. Ultimately, it's an event-driven analysis, so we can't necessarily predict the timeline, but we previously indicated that we expected it perhaps mid-2025. We're not changing that here. We continue to believe that that's possible. And ultimately, again, it will depend upon the rate of case accruals, which we don't control. As it relates to 1083, and so for the flu-COVID product, when we submitted the package as part of our initial exchange with regulators, we are identifying review questions that they have or issues. And as we said in our press release, in some cases, the proximity of the flu efficacy readout really does loom large on the overall review for the combination product and we will be -- we do expect that may be necessary in some cases now that, that flu efficacy readout is expected shortly. As it relates to individual conversations with individual regulators, I'll say we're working through their review questions in that submission, and I won't otherwise comment on those specific back-and-forths. And with that, I guess I'll turn it over to you, Jamey.

Okay. Thanks. So thanks, Jess. Yes, as a reminder, on the high-end, the $2.5 billion, if you exclude the unusuals we saw in 2024, we call that essentially flat. So in my prepared remarks, the US came in at $1.7 billion. It had a $200 million return reversal adjustment from the prior year, which would take that to about a $1.5 billion number. And then outside the United States, we were at $1.4 billion, and we said that there was about $400 million of advanced purchase agreements at the demand level we don't not anticipate repeating. So the high-end is essentially flat, Jess. So, you can anticipate both inside the US and outside US similar market share vaccination rates. We do have a little bit of uptick in RSV in the high-end, but it's all together rather minimal in general. On the low-end, it basically assumes no increase in RSV. On -- in the US, you would have to expect it to go down substantially. So, you'd have to expect it to go down, 5% to 10% from a market share perspective, vaccination rates would have to go down again 7% to 10%. Both of those things would have to happen to go down, let's say, $0.5 billion. And then really the biggest factor outside the United States are the licensure timing of our plants in the UK, Canada, and Australia. So, should those be licensed and registered on time, we will be on the upper end, but if they are delayed, we've factored that into the lower end of our guidance.

Very helpful. Thanks.

Our next question comes from Simon Baker with Redburn Atlantic. Your line is open.

Thank you for taking my question. And there's also a clarification, Jamey, you mentioned the spend on respiratory trials being 50%. Was that 50% of your total trial spend or 50% of your R&D spend? And then just another question on the flu-COVID combo following off from Jessica's question. I'm just interested to know what the mechanism is, and the timing at which point the regulators could ask for that extra data. Is this something that could come at any time? If it happens sooner rather than later, do you think it would have an impact on the approval timeline? And is there any risks in the US that the initial filing gets a complete response and then you have to refile with that COVID data? Any color on the machinations of that would be very handy. Thank you.

Yes. Thanks, Simon. On the first one, I was referencing 50% of the trial expense, which is what we break down in our 10-K. There are other line items that hit R&D in terms of the overhead that supports it, people, the sites, et cetera., our manufacturing facilities as well as research, but the 50% that I was referencing is really trial related, but you could imagine many of those other costs are also related therefore, to the respiratory trials as well.

Yes, thank you. And so for the clarifying question, again, I -- we have filed in multiple geographies, and I won't comment on individual regulatory exchanges, but generally speaking, we -- as a part of the initial round of questions and feedback that we're receiving, there are instances where we think we will be dependent upon that efficacy data from the 1010 study, which we do expect in the coming months, the current season to be available. The timing of that readout and the impact on the review process for regulators is not something I can predict at this point, but we're in active discussion with regulators about it. Certainly, it is possible that if that is substantially delayed or if it is not a favorable efficacy readout that it could for sure delay or impact the timeline to approval for the combination product. If we are able to complete that submission, get that data to regulators and they're able to conduct that review, it's possible that we continue with that review without substantial delays. Ultimately, we don't know at this point because it will depend upon those submissions and discussions with regulators that we're having right now. But we did want to flag that we do think based on some of the initial conversations that we may be dependent upon that data ultimately for approval with some -- in some geographies.

Right. That's very helpful. Thank you.

Our next question comes from Myles Minter with William Blair. Your line is open.

Hi. Thanks for taking the question. Just one on potential ACIP recommendation review for RSV vaccines. Do you expect that hearing to be in February or the June meeting? And is there anything built into the top-end of that $2.5 billion revenue guidance for mRESVIA that would require a widening of that recommendation that it currently stands. Thanks very much.

So I'll take the first question on timing. We are obviously working closely with public health officials on the widening. We've filed for approval for the 18 to 59 high-risk population. At this point, we are not yet approved. And so, from a broader sort of engagement with ACIP perspective, we'll wait for approval before we do that too broadly. We do expect that the benefit-risk is favorable for RSV vaccines, including mRESVIA and so do look forward to expansion of the recommendation to cover high-risk populations on both the 50 to 59, which have previously been discussed, but ultimately hopefully 18-plus high-risk populations. And Jamey, I don't know if you want to take that...

Yes, sure. Yeah. So Myles, as I mentioned in Jess' question, we have a little bit of growth in RSV, but I also mentioned that we have nothing related to new product approvals in our guidance for 2025. So that doesn't include the next-gen COVID vaccine or what Stephen just talked about the expanded indication related to RSV or anything from a combination approval should it happen.

Right. Thanks.

Our next question comes from Tim Anderson with Bank of America. Your line is open.

Thank you. So, if I could just go back to that very last point on your 2022 revenue guidance, you're not including any new products. It makes sense for RSV because that would be tiny. Makes sense for the combo product because of the reasons that you outlined. But why wouldn't the next-gen COVID product be included in guidance at this point, given that the PDUFA date is not very far away, end of May, it's a well-characterized paradigm having COVID vaccines out there. I'm just wondering if that -- that lack of inclusion guidance anticipates some uncertainty about approval given the new administration coming in and this common thread of kind of an anti-COVID stance across lots of people from the Trump administration? And then second question on norovirus. If you're fully enrolled, what does FDA gain by putting the program on clinical hold? Is that just a forced disclosure of that adverse event to the clinical and patient community? Or is there some other reason why they would do this?

Yes, Tim, thanks for the question. Maybe I'll take the first one. So, I don't think there's much to read into here. I think we've learned our lesson coming into 2024 in terms of guiding with a product that has yet to be approved. So, moving forward, we have eliminated any products. Of course, there could be upside, but I think we approach our guidance understanding that there is variability, and therefore, we will not put the -- any revenue-related to the next-gen COVID or any of the other two products as well. And again, I don't think there's anything else to read into as a result of that.

Yes. So -- and on the question of Noravirus, so importantly, we have already proactively communicated around this to all the investigators and IRBs and regulators around the world. So that communication has happened. And actually, we've updated all the documents that would be necessary to, sort of, broadly identify this. So the purpose for the clinical hold, ultimately, you have to agree -- I anticipate or ask the FDA that question. I mean at this point, they are appropriately, and we think prudently and conservatively reviewing the documents and making sure that all of their questions are answered around this. It does not impact from our perspective right now in the Northern Hemisphere of study conduct. And so we'll look forward to engaging with them answering those questions, hopefully completing that review. Removing that hold, but as we said, we will not then reinitiate any enrollment because we now have 20,000 participants in the Northern Hemisphere, which is more than we feel like we need. And so, we'll just answer those questions and move forward. But I really couldn't offer any other insight around it, but it certainly isn't around transparency communication because that will happen proactively. We did that before -- as we submitted all the information to them and others.

Thank you. Ladies and gentlemen, this does conclude the Q&A portion of today's conference. I'd like to turn the call back to Stephane for any closing remarks.

Thank you very much, everybody for joining us and for your good questions. Have a great day and we look forward to speaking to some of you in the next hours and in next days. Bye.