Good morning. May name is Dee Tamar, and I will be your operator today. Welcome to Moderna's First Quarter Earnings Conference Call. At this time, all participants are in listen-only-mode. Following the formal remarks, we will open the call up for your questions. Please be advised, that the call is being recorded.

At this time, I’d like to turn the call over to Lavina Talukdar, Head, Investor Relations at Moderna. Please proceed..

Thank you, Dee Tamar. Good morning, everyone. Thank you for joining us on today's call to discuss Moderna's first 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; Tal Zaks, our Chief Medical Officer, Corinne Le Goff, our Chief Commercial Officer and Juan Andres, our Chief Technical and Operations Officer.

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 two of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements.

We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments.

On slide three, 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 other countries around the world. I will now turn the call over to Stéphane..

first, to maximize supply in 2021 to protect as many people as we can; second, to build additional capacity, which we have announced last week to get up to 3 billion doses of authorized mRNA vaccines for 2022, 2023 and beyond; and third, to continue to adapt the vaccine to have the highest efficacy vaccine with variant-specific booster, for which we announced a very encouraging clinical results yesterday.

Let me now turn to Corrine to give you the commercial update.

Corinne?.

Thank you, Stephane, and good morning or good afternoon, everyone. As all of you already know, Moderna’s COVID-19 vaccine is our first authorized product, and on the back of it, we have turned into a commercial Company very quickly. So today, I’m delighted to give you an update on the commercial progress in the first quarter.

I will start with our most recently signed supply agreements, those that occurred in the first quarter and at the beginning of the second quarter this year.

I am particularly happy to announce our agreement with COVAX, which will provide access to our vaccine to millions of people in low- and middle-income countries, and is in keeping with our global access principles. In total, our COVAX agreement is for 500 million doses for delivery in the 2021 and 2022 period.

Specifically, in 2021, Moderna will begin delivery of 34 million doses in the fourth quarter of 2021. COVAX will have an option for an additional 466 million doses in 2022.

We are grateful to all the collaborative efforts of CEPI, Gavi, UNICEF, the World Health Organization, and the Moderna commercial teams in making this important supply agreement a reality. Moving now to the additional supply agreements signed for both 2021 and 2022.

We have signed additional supply agreements with Israel for 5.3 million doses in 2022, with an additional option of 17.3 million doses for 2022 and 2023 and with Switzerland for 7 million doses in 2022 and options for an additional 7 million in late 2022 and 2023.

We have also signed new deals for 2021 delivery with Botswana, Brunei, and in addition, we have also signed an agreement with Zuellig Pharma, our distribution partner in Southeast Asia, Hong Kong, Macau and Taiwan.

In total, we announced advanced purchase agreements totaling 845 million doses to be delivered in 2021 to the countries that are listed here on this slide. And we continue to have discussions with countries, both those we have already contracted with and new countries for supply in 2022 and beyond.

In our discussions, as Stephane said, we are hearing consistently from governments that in their view there is no other technology that provides the high efficacy of mRNA vaccines and the speed necessary to adapt to variants, while at the same time, allowing reliable scalability of manufacturing.

We are grateful for the trust placed in us from the various governments we have signed agreements with and we look forward to supplying the vaccine to other countries and helping end the pandemic and getting ahead of variants. Let me now turn to product sales.

Our first — our product sales for the first quarter of this year were $1.73 billion and were recorded for the delivery of 102 million doses.

Product sales in the US were approximately $1.4 billion and sales outside of the US to the EU, Canada, Switzerland, Israel and Singapore were approximately $400 million for the 14 million doses delivered in the first quarter.

In the US, we have successfully completed the delivery of the first 100 million doses to the US government within 100 days of emergency use authorization, and we expect to complete the delivery of the second 100 million doses to the United States government before the end of the second quarter.

As you know, the US production started earlier and it’s roughly one quarter ahead in production ramp, as such, in the second quarter of 2021 we expect the ex-US ramp to be similar to that of the US ramp in the first quarter.

To close, I want to reiterate that as we continue to produce and rollout vaccines into the global market, we are humbled and proud to be part of the solution. I will now turn the call over to David Meline..

Okay. Thank you, Corinne. Today, as with our last earnings call, we are presenting our results primarily on the US GAAP basis. In some cases, we also provide additional detail to provide greater clarity on underlying trends.

With this background, we are providing an analysis of actual 2021 first quarter results, along with an updated view of key drivers of financial performance going forward. Turning to Slide 18, total revenue was $1.9 billion in the first quarter of 2021, compared to $8 million in Q1 of last year.

Following our first-ever product sales of $200 million in December 2020, we recorded product sales of $1.7 billion for our COVID-19 vaccine in the first quarter of 2021. Grant and collaboration revenue increased to $204 million in Q1, primarily due to increases in grant revenue from BARDA to accelerate development of our COVID-19 vaccine.

Cost of sales were $193 million in the first quarter, benefiting substantially from previously expensed pre-commercial inventory costs, which I will discuss in more detail on a later slide. Research and development expenses were $401 million for Q1 2021, compared to $115 million for the same period in 2020.

The higher spend was driven by increased COVID-19 vaccine clinical development activities, including our announced efforts around booster, variant-specific and multi-valent vaccine candidates. Headcount increases, as well as pharmacovigilance activities related to our COVID-19 vaccine also contributed to the year-on-year expense increase.

Selling, general and administrative expenses were $77 million for Q1 2021, compared to $24 million for the same period in the prior year. The growth in spending was driven by increases in personnel outside services and costs associated with commercialization of our COVID-19 vaccine globally.

Our provision for income taxes was $39 million in Q1 2021, reflecting a benefit from utilization of our net operating loss carry-forward, as well as discrete items. I will provide further context on the following slides. We recorded net income of $1.2 billion for Q1 of this year, compared to a net loss of $124 million in the same period of last year.

Earnings per share on a diluted basis was $2.84. Please note that our share count on a diluted basis now also includes the effect of outstanding options and RSUs as we began to be profitable. Previously when we were in a net loss position, basic and reported diluted number of shares were the same.

Turning to cash and selected cash flow information on Slide 19. We ended Q1 2021 with cash and investments of $8.2 billion, compared to $5.2 billion at the end of Q4 2020. The increase is driven by our commercial sales and additional customer deposits received in the first quarter for future purchases of our COVID-19 vaccine.

Net cash provided by operating activities was $2.97 billion in Q1 of this year, compared to net cash used in operating activities of $106 million in Q1 of last year. The reversal from net operating cash outflow to cash inflow was driven by our commercial market entry for the entire quarter.

Similar to last quarter, before providing an updated financial framework for the remainder of 2021, let me summarize a few areas from our Q1 results that are important to keep in mind when modeling expected 2021 financial performance. Starting with product sales on Slide 20.

We started last year to build two distinct supply chains, one in the US and one outside the US for rest of world markets. Our supply chain scale up in the US was roughly one quarter in advance of our ex-US supply chain, which is reflected in the geographic sales mix in Q1.

As we move forward in Q2, the ex-US supply chain is also ramping up toward full capability. Turning to Slide 21, cost of sales includes the cost of goods manufactured, logistics and warehousing costs, as well as third-party royalty costs.

We began capitalizing our COVID-19 vaccine inventory costs in December of 2020, following the COVID-19 vaccine emergency use authorization, based upon our expectation that these inventory costs would be recoverable through commercialization of the vaccine.

Prior to the authorization of our COVID-19 vaccine, inventory costs were recorded as research and development expenses in the period incurred. We expensed $242 million of pre-launch inventory costs in 2020 and started 2021 with the remaining balance of $187 million of zero-cost inventory.

Almost the entire balance or $184 million was sold and benefited our cost of sales in Q1 of this year and hence, will not further impact future quarters in a material way.

If inventory sold during the first quarter was valued at actual cost, our cost of sales would have been $377 million, or 22% of our product sales, somewhat favorable to what we expected, driven by favorable yields in our US production facilities. Now, turning to our cash and investment position on Slide 22.

The cash and investment balance reported as of March 31 was $8.2 billion, up from $5.2 billion as of December 31, 2020. The increase was primarily driven by the net increase in customer deposits for future product supply of COVID-19 vaccine.

The net balance of cash customer deposits increased from $2.8 billion at the end of December 2020 to $5.6 billion at the end of Q1 2021. Lastly, let me comment on tax-related items on Slide 23.

The significant investments in our research, development and startup activities to develop the mRNA platform over the last decade have resulted in net operating loss carry-forwards with a balance of $2.3 billion at the end of 2020.

As of December 31, 2020, we maintained a full valuation allowance against our deferred tax assets related to these loss carry-forwards. We perform a valuation allowance assessment during each reporting period based on the latest available financial information and outlook.

After considering the weight of available evidence, both positive and negative, we concluded that as of March 31, it is more likely than not that the Company will be able to realize the substantial majority of its net deferred tax assets. This analysis included, not only our strong first quarter results, but also our April activity.

The majority of the valuation allowance will flow through the P&L over the course of 2021 in our effective tax rate pro-rated based on the cadence of our expected pretax quarterly earnings. We also recorded two discrete benefits in our tax provision in Q1, which lowered our first quarter tax rate.

The first benefit related to the valuation allowance release for the portion of deferred tax assets, which we expect to utilize in future years. The second related to the excess tax benefits associated with stock-based compensation. Turning now to the 2021 updated financial framework on Slide 24.

Signed advance purchase agreements for expected delivery in 2021 reflect the current full-year total of $19.2 billion in anticipated product sales, including doses that have been delivered and recognized as revenue in Q1.

Based on continuous progress to ramp up available supply capacity in our network, we have raised the lower end of our global manufacturing plan for 2021 from 700 million to 800 million doses at the 100 microgram dose level. Our manufacturing team and our partners are still working to supply up to 1 billion doses for 2021.

Further, we continue to expect a range of deliveries in Q2 2021 of 200 million to 250 million doses. Our total cost of sales includes the cost of manufacturing, logistics and warehousing, and third-party royalties.

For 2021, we continue to model average total cost of sales as a percent of product sales to be approximately 20% for the full-year with some variation quarter-by-quarter, largely driven by average selling price going forward. Now, let me comment on planned R&D and SG&A expenses.

Q1 expenses of approximately $0.5 billion were stable compared to the underlying Q4 2020 expense run rate on a like-for-like basis. In Q1, our actual expenses were lower than the internal forecast, primarily driven by the timing of clinical development and commercial activities and related costs.

We now expect a notable expense trend increase starting in Q2 on a quarter-over-quarter basis for the remainder of this year.

Based on better visibility of the utilization of our accumulated net operating loss carry-forward, expected global sales mix and the mentioned discrete benefits in Q1, we now expect our all-in 2021 tax rate to be in the low-teens. This compares to our previous forecast in the mid-teen range.

This forecast is based on current US tax policy in effect and does not include any future potential discrete benefits related to stock-based compensation. We will update this view as our business evolves further. Finally, regarding capital investments.

We are raising our forecast for capital investment from our previous range of $350 million to $400 million for 2021 to $450 million to $550 million, including the planned capacity expansion investments as announced on April 29. This concludes my remarks concerning financial performance. And I now turn the call over to Stephen..

50 micrograms of mRNA-1273; 50 micrograms of mRNA-1273.351, both of which have data available today and I will discuss in just a moment; and a multi-valent booster vaccine candidate, which combines a 50-50 mix of mRNA-1273 and mRNA-1273.351 in a single vaccine. In addition, we’re also evaluating a lower 20 microgram dose of mRNA-1273.351.

Data from the multi-valent booster and the 20 microgram booster of 351 will be shared when available. Now, with that backdrop, let’s move to the data.

Starting with safety, local and systemic adverse events within seven days after a booster dose of either 1273 or 1273.351 were generally comparable to those observed after the second dose of 1273 in our previously reported Phase 2 study and our Phase 3 COVE study.

The majority of the events were mild or moderate in severity and Grade 3 events occurred with the frequency of approximately 15% in participants who received 1273 and approximately 10% in participants who received 1273.351.

The most commonly reported solicited local events were injection site pain and the most commonly reported systemic events were fatigue, headache, myalgia and arthralgia. There were no Grade 4 events reported. On the next slide, our figures from two papers.

The figure on the left-hand side were published in New England Journal of Medicine and show the difference in neutralization of SARS-CoV-2 pseudoviruses in serum samples one week after vaccination with the primary series of mRNA-1273.

Recall, that there was a six-fold decrease in neutralization titers against the B.1.351 variant, and the variant first identified in Republic of South Africa. And a three-fold drop in titers against P.1, the variant first described in Brazil.

And again, as a reminder, these neutralizing titer levels were from serum samples one week after the second dose of the primary vaccine series of mRNA-1273. So essentially, these titers are close to peak levels.

On the right-hand side of the slide is a figure from the pre-print manuscript of our initial results from our Phase 2 study posted yesterday to bioRxiv. The figure show the neutralization titer levels of the participants in our Phase 2 booster study immediately before their booster vaccinations.

A reminder that these individuals were previously vaccinated with a primary series of mRNA-1273 in either our Phase 2 or Phase 3 studies roughly six to eight months prior to enrolling in this booster study. At this time point, titers against wild-type SARS-CoV-2 remained high with almost all participants having detectable titers.

But titers against B.1.351 and P.1, the variants of concern were much lower. In fact, approximately half of participants had titers below the assays limit of quantification at this time point.

So, it is clear that waning of titers is apparent both with time and that lower titers against variants of concern lead to more rapid loss of neutralizing activity. Turning to the next slide.

The data shows that two weeks after booster vaccines of either mRNA-1273 or 1273.351, neutralizing titer levels increased against both the wild-type virus, as well as the B.1.351 and P.1 variants of concern.

In fact, following boost, geometric mean titers against the three variants tested increased to levels similar to or higher than previously reported peak titers against the ancestral strain following primary vaccination.

When looking specifically at the GMTs of the different strains, we achieved levels of 1,400 after booster vaccination with mRNA-1273.351 against the 351 variant. This compares against the GMT of 864 when boosting with mRNA-1273.

Vaccination with mRNA-1273.351 was more effective at narrowing the gap in neutralizing titers between wild-type and B.1.351 viruses relative to boosting with mRNA-1273.

Now, we’re encouraged by this initial data and we’re excited to see additional data over time from these arms, as well as the data from the multi-valent arm and a lower dose arm of mRNA-1273.351. On the next slide, I would like to highlight one last comparison from the manuscript.

On the left-hand is a sample of participants from the Phase 1 study and there are neutralizing titers against ancestral strain following a primary vaccination series with mRNA-1273. GMTs achieved in this assay [ph] are approximately 1,500. On the right-hand side is a reproduction of the data we just spoke through.

Looking at neutralizing titers, and I’m specifically highlighting the neutralizing titers against the B.1.351 variant of concern. A booster dose of 50 micrograms of mRNA-1273, the top bar was able to increase titers to a level of 864 in this study.

That compares with a booster dose of 50 micrograms of 1273.351, which was able to get the titers against the variant of concern as high as 1,400 in this study. We’ll continue to closely watch this data, and as I mentioned a moment ago, look forward to subsequent updates and time points.

On slide 31, is a snapshot of our vaccine development candidates that are in or entering the clinic, I’ll highlight a few. Our CMV vaccine is on track to start a pivotal Phase 3 study in 2021. Our Zika vaccine is expected to begin a Phase 2 study also in 2021. Our hMPV/PIV3 respiratory combo vaccine is currently enrolling in toddlers.

And at our Vaccines Day last month, we announced positive interim Phase 1 data from our RSV vaccine, mRNA-1345. This continues in pediatric and older adult cohorts of that Phase 1 study are still enrolling. Finally, within our flu vaccine program, we expect a Phase 1 study of mRNA-1010 to begin in 2021.

Outside of vaccines, we have seven clinical proof of concept trials ongoing across four modalities. Our VEGF program partnered with AstraZeneca is enrolling in a Phase 2. Our personalized cancer vaccine program partnered with Merck is also enrolling in the Phase 2 trial. And KRAS, our second program partnered with Merck is ongoing in a Phase 1 study.

Within intratumoral immuno-oncology, our Phase 2 dose expansion OX40 ligand, Phase 1 triplet and Phase 1 IL-2 study, which is partnered with AstraZeneca are also ongoing. Finally, as Stephane mentioned, we are pleased to have started dosing in the Paramount study in propionic academia. On slide 33, you can see our full development pipeline.

In addition to our large portfolio of infectious disease vaccines, we now have seven therapeutic programs in the clinic. I’ll now turn the call over to Stephane to take us on..

oncology, cardiology and rare disease and soon we should be in the clinic in autoimmune disease as well. We’re continuing to innovate and invest in science, like for example, for delivering mRNA in the lung with our partner Vertex. As we continue to prepare Moderna to scale and that’s 10 times more impact, we’re investing aggressively.

We are accelerating our investment in digital, automation and AI. From a spend of $27 million in 2019, we invested around $60 million in 2020 in digital. We are planning to almost triple that, $170 million in 2021.

We’re investing across the board in R&D to ensure high-quality to accelerate the pace of learning and to ensure we can transform clinical operations. We’re investing in digital to ensure high-quality, high scalability for manufacturing. We are building commercial, so that we can commercialize our pipeline in a highly efficient and effective manner.

We want to change the big pharma paradigm of large, inefficient and expensive sales force and advertising spend to promote need-to drugs. Our pipeline is first-in-class medicine that patients and doctors are waiting for. We want to enable our corporate functions, HR, legal, finance, and so on to scale without creating large corporate organization.

I’m also excited that we are launching an AI academy. Today, we have some exciting pockets of excellence in AI across the Company. But AI is not yet part of our DNA. The rhythm is simple, most companies don’t do AI. So, as we grow and hire new talent, they have great skills in their part, but few have been exposed to AI in their previous company.

We want AI to be how we run the business in science, in clinical development, in manufacturing, quality, commercial, in HR, and finance, everywhere. It is the same change management for evolution as 20 to 30 years ago when personal computers entered the workforce. We want every team at Moderna to understand and use AI in everything we do.

AI would become part of our DNA. As many of you know, we have integrated digital system, connected to each other. And as we have more systems, we get more data. As we get more data, we learn faster. And we keep building and creating our [ph] fourth cycle.

Between our strong balance sheet, our mRNA platform, our team, our culture and the digital infrastructure, I believe are willing to scale Moderna is unique in the biopharmaceutical industry. As part of scaling Moderna, that is software, but also there is another way.

Many of you are aware of the opening of a Norwood manufacturing site in July 2018 or you came to visit after reopening. Our building is around 200,000 square feet. We called it Moderna Technology Center South, or MTC South. In 2020, we added a building next to it and added around 225,000 square feet and called it MTC North.

We are pleased to announce this week that we now have access to a new building, MTC East, which will start welcoming Moderna employees later this year, after some [ph] investment and renovation to the building. That is another 240,000 square feet. So we now have in MTC access to around 650,000 square feet.

We now hold [ph] the building on this campus, and we can also add more buildings and build them now that we have the entire campus. We are deeply committed about building a Company that has a strong sense of responsibility. We want Moderna to be a positive force in the world, not only for medicines, but also by who we are as a Company.

We are very committed to belong, inclusion and diversity. We recently published our expanded workforce diversity figures for the first time. Last year, we signed the CEO Action for Diversity & Inclusion pledge. And we have also reiterated our ongoing commitment to increasing diversity in our clinical trials. We are deeply committed to the environment.

We have decided to source our Norwood and Cambridge site with renewable energy and will offset any energy that is not from renewable sources, and we will be working on our target as to when we should be a net zero carbon Company.

We’re also encouraging our employees to have a positive impact on the communities in which we live and volunteer, from cleaning the Charles River in Cambridge to feeding the homeless and stem education and much more. You can find a lot of resources online on our website.

As I close, I want to convey how thankful we are at Moderna to have a chance to do what we do. Everyday we come to work to make innovative medicine using the first information platform of the biopharmaceutical industry. My colleagues and I work and collaborate to make more medicines to help protect or treat people.

I am proud of what the team has done over the last 10 years to get us to this stage. Over the last 14 months since we started chasing SARS-CoV-2 virus, and in Q1, as we continue to execute relentlessly.

But as I look at the future of Moderna, I believe we have a chance over the next five, 10, 20 years to transform medicines potentially like no other company has ever changed medicine. This is just the beginning.

Before taking your questions, I would like to remind you that we will be hosting our Annual Science Day in a few weeks on May 27, you are going to want to connect with this event as Stephen and his team has some very cool new things to share with you.

And later, at the end of the summer, on September 9, our Annual R&D Day for holistic clinical update. Operator, we’ll be happy to take any question now..

Thank you. [Operator Instructions] Your first response is from the line of Salveen Richter with Goldman Sachs. Please go ahead..

Good morning. Thanks for taking my questions. I have a couple here.

So, firstly, with regard to — if the US supports WTO waiver of COVID-19 vaccine IP, what does that mean for Moderna? I mean, if you could just walk us through that? Secondly, if you could just discuss contract dynamics for the vaccine in 2022 as you look to address variants and kind of you see them move towards an endemic market? And third, it’s nice to see the PA program move forward, it’d be great to kind of understand whether we’ll see data from that program this year? And what else we might see from the ex-COVID pipeline? Thank you..

Salveen, good morning. It’s Stephane. Let me start with your first question and then I’ll turn the PA question to Stephen. So, on the IP, what does it mean? I believe it doesn’t change anything for Moderna. As I said, we had said last October that we will not enforce our COVID-19-related patents during the pandemic.

And as I’ve said in my remarks, there is no mRNA manufacturing capacity in the world. This is a new technology. You cannot go hire people who know how to make mRNA. Those people don’t exist.

And then even if all those things were available, whoever wants to do mRNA vaccines will have to buy the machine, invent the manufacturing process, invest purification processes, analytical processes and then they will have to go run the clinical trial, get the data, get the product approved and scale manufacturing.

These doesn’t happen in six or 12 or 18 months. We have been working at this for years. And as you know, there are some smaller mRNA companies that are still in the clinic trying to get the products to a finish line. And so, we saw the news last night and I didn’t lose my [ph] sleep over the news during the night.

On 2022 contract, the dynamic is, as I just described it, which is the market that’s tremendously changed, since the pandemic started last year before clinical data many countries, as you know, didn’t want to move, especially because of mRNA being a new technology they moved first on protein contracts, on adenos contract.

And then the kind of mRNA contracts came later, more just in case, and then the clinical data came along, and the speed to get through approval. And so — and then you have the — in fact, the proteins are still not authorized anywhere in the West.

And then you had the low efficacy of the adenos, the safety questions around the adenos, manufacturing scale-up issues that adenos companies have had.

And the big question that scientists advising governments have, which is scale actually really boost adenos — with more adenos products because, by definition, you give again the same virus vector to somebody that we believe over time will get less and less response from it.

So as you look at the marketplace, which what governments are doing, and given many governments, I think last year believed the pandemic will be gone quickly. Trust me, every governments we’re talking to believed this is going to stay for a long time. They have got massively educated by their scientists and their clinician.

And they believe this virus is not going away. They believe boosting is going to be critical. They believe variant-specific boosting is to going to be the right way to do the science, and as you saw from Stephen’s presentation, this is what the clinical data are showing as well.

And so, the dynamic is that current governments that have already contracts with us are calling for more, and we’re in active discussion with all of them to supply most of 2022 and 2023, both prime series and specific variant booster.

The beauty about the technology is, we can agree right now in the contract to give them next year but we having to choose what they want based on the clinical data and that’s an incredible competitive advantage and this we can do because, as you know, the manufacturing process is the same for 1273 or 1273.351 or 1273.211 or our new 1273-dot-something [ph] new variant.

And we can change up on a very short notice because it’s the same equipment in the same room, with the same people, with same raw materials.

And then all those governments, which is almost more exciting to me that never called before or that will be called before, but we couldn’t supply them because we are in a unfortunate position to say, look, we’re very sorry, we have no more supply for you in 2021.

This is, of course, a very difficult discussion to have given the suffering happening around the world. But the great news with the investments we’ve announced to get up to 3 billion next year, we now can have those discussions with those governments and Corinne and her team are having a lot of discussions with them.

So that’s kind of give you a sense for the dynamics.

Stephen, on PA?.

Sure. Salveen, thanks for the question. So, as you know, the program, the Paramount study for propionic acidemia is going to be looking at biomarkers as a part of its dose optimization. And so, it’s possible that we’ll be seeing very early indicators of impact there.

But we are going to — if there is no guarantee that the first dose level and the first cohort that we’re looking at will be the correct one. And we’re going to make sure that we develop a cogent and consistent data set before we bring that forward. It is a dose optimization study and we will perhaps be looking at multiple dose levels.

So, while I think it’s possible that we would see data this year, it’s dependent up on many things that are well beyond our control. Now, you asked a more general question also about our broader portfolio, and if you look at the programs more generally, VEGF, as we mentioned, is a Phase 2 program that’s been enrolling for a while.

It’s possible we could see data from that. Our PCV and KRAS programs, again, is open label programs, we’ll continue to track those closely as they enroll. And then similarly, intratumoral programs that we highlighted, many of them are ongoing and producing data and, of course, when we have a complete and cogent data set, we will bring it forward..

Thank you..

Thank you, Salveen..

Thank you. Your next response is from Matthew Harrison with Morgan Stanley. Please go ahead..

Great. Good morning. Thanks for taking the questions. I guess, two from me. One, on the sort of next-generation COVID vaccine, where you think it might be a refrigerator stable.

Can you just talk about the regulatory path for that vaccine given that it’s not the full spike? Do you think you might have to run an actual efficacy study or do you think a neutralization titer study with safety might be enough for that? And then the second question, Stephen, if I can just follow-up on PPA [ph] I know in the past, right, one of the struggles has been enrollment.

Obviously, it’s great to see that you’ve gotten a patient into the study.

Can you just talk about now that you’ve gotten a patient in, what your sort of view is around enrollment? And if you think you’ve gotten through some of those hurdles?.

Sure. Thank you, Matthew, for both questions. So, first, on, I believe, you’re referencing our second-generation vaccine candidate, which is mRNA-1283. It is a shorter construct that we think could have a much longer refrigerant stability profile.

As we announced previously, we’ve started enrolling in the Phase 1 in that study, and it’s probably a little bit premature to comment on what we think the regulatory path will look like for that until we get some of that initial data and have conversations, obviously, with regulators.

But I would highlight that it’s possible that 1283 may not go into a full primary series vaccination study. It could impact in the future function as a booster. But, again, that’s — it’s probably too early to say we will have to wait until we see that data and ultimately, it will be dependent upon conversations with regulators in the future.

As it relates to PA enrollment, yes, as you mentioned, we’ve been working very hard on that over the coming — over the past years and we’re quite pleased to have enrolled the first participant, the first patient in that study. And the team is working hard to enroll additional patients as quickly as possible.

I think time will tell whether we’ve actually broken through here and addressed any of the issues that we previously had in terms of enrollment. And so, hopefully, we’ll be able to provide subsequent updates on expanding enrollment in the near term that will demonstrate that we’ve made that progress..

Thank you. Your next response is from Ted Tenthoff with Piper Sandler. Please go ahead..

Great. Thank you very much, and thank you for all of the detailed updates, including running through the financial balances, so detailed David. Congrats on all the success.

Stephen, I wanted to pick up on the booster data that you’ve shown, and maybe can kind of take us a step forward, what is the booster strategy going to look like? Do we actually need to maybe re-dose or re-vaccinate sooner than eight to six months because of where the levels were? And maybe you can just tell us what you see as sort of the potential timing? Thank you.

For when we’ll be getting boosters?.

Thank you for the question, Ted. Look, I think we have to start by saying, we don’t know. We do not have data on when to expect waning immunity leading to breakthrough infections.

But we do know that there is a raging pandemic that re-infections will happen at some point and the best way to ensure that we do not have renewed outbreaks in well vaccinated countries is to boost and maintain the highest possible levels of neutralizing immunity.

We, as Moderna, also believe that that means we want to maintain the broadest neutralizing immunity against the largest number of then circulating variants of concern.

If you look at the data that we have posted today, as well as some of our published data and others reports, it does feel like immunity to a primary vaccination series or a previous infection seems to weigh in over the six- to 12-month time horizon, at least as measured by neutralizing titers.

Again, we don’t know whether that’s a clinical correlate or not, but it certainly is an indication of that waning immunity. And if you look at the data that we — that I presented earlier, approximately half of the participants in our booster studies, no longer have detectable neutralizing immunity against the variants of concern.

They have neutralizing immunity against the ancestral strain that they were vaccinated against.

So the logical thing we think to do is to boost their immunity against those variants of concern, if you will vaccinate them against those to both increase those titers right now, but also give them a longer duration of protection, perhaps long enough that we can see our way through the pandemic.

That probably looks like boosting on a nine to 12-month after primary series as an annual booster for now, at least while we’re continuing to see the evolution of the virus.

Now, the last point was about our strategy, more generally here, and we do believe that the virus is not going to follow one path of evolution that we are going to see many variants of concern that there may be divergent paths.

And therefore, the best way to ensure that we can protect against the broadest number of variants of concern will be a multi-valent vaccine. Right now, we’re still waiting to see our multi-valent vaccine data, which is a combination, as you know, of ancestral and 351 and the strain first identified in South Africa.

But we think this is just the beginning, and we think we’re going to be unfortunately continuing to fight this pandemic through 2022, at least globally.

And therefore, we are committed, as a Company, to make as many updates to the vaccine, to add as many variants as we think are necessary to ensure that when people receive a booster, it provides the broadest immune protection against the widest range of variants..

Incredibly helpful. Thank you, guys, for all the work you’re doing..

Thank you, Ted..

Thank you. Your next response is from Michael Yee with Jefferies. Please go ahead..

Hi. Thank you. Good morning. Appreciate the questions. I had two important follow-ups. One was going back to the question about the WTO.

Can you just offer some color around the view of loss of raw material supply capacity, etc? In other words, shedding some light on any ability to actually increase global capacity even if there were some form of open patents? So maybe just talk about that because I don’t think that you can just make it. I like it to have easy.

Can you maybe just offer some color there? And the second question is also a follow-up on the variant strategy, it sounds like the bivalent strategy might be the best, Stephen. So, at what point would you just pull the trigger on beginning to manufacture that and ramp that all up for 2022? Thank you..

Thanks, Michael. It’s Stephane. Let me start on the raw material and the IP. Going back to what I said, if somebody was to start from scratch, because again there is no mRNA player that’s with idle capacity out there. One will not start by focusing on large-scale raw material supply. I mean, one will have to first figure how to make mRNA.

And you cannot find that patent, which, as you all know, on the Internet, on the US Patent office website. And so, one will have to figure out what machine do you need? How do you make mRNA? What purification methods you need? What analytical methods you need? And once you have figured out all those things, which, trust me, is going to take you time.

It is not easy, and there are companies that are on the market with mRNA vaccine that they are carrying [ph] for decades. And even companies that have been working on it for 10 or 20 years are still in the clinic trying to figure out how to get to the finish line. And so, I really believe that this is not the issue.

I already believe the IP topic is mostly critically driven. This is not the issue. It might impact other technologies that had adenos [ph] and protein, at least I could have comment on, but for mRNA I really think this is the wrong question.

Stephen, do you want to take the variant?.

Yeah. So thank you, again, Michael, for the question. So, on our multi-valent strategy, we have — at this point, we are still waiting for the clinical data to confirm that. And then we expect to have that shortly, as we’ve mentioned, we previously dosed people with the mRNA-1273.211 variant.

The preclinical data that we have published does — are presented and does suggest that that is going to be the winning approach. And as I highlighted or as is highlighted by the mono-valent clinical data we already have, there is a benefit to adding additional antigens and potentially therefore benefit with a multi-valent approach.

I think it’s important to recognize that we view this is an ongoing battle.

And so, your question about when do we pull the trigger and move forward bivalent manufacturing? We’re already on the path of doing that manufacturing, not because we think that we’re done with mRNA-1273.211, the current bivalent vaccine, but because we think we’re going to go down the path of multi-valent vaccines and continue needing to add things.

And so, that platform capability, we are already in the process of building and establishing to support multiple updates to a multi-valent vaccine. And we do think that’s going to be required, because we think the virus is not going to standstill and stop evolving, and we suspect there is going to be trivalent, maybe quadrivalent.

It will keep happening in the time ahead. We have completed GMP manufacturing of all of those batches and we’re at sufficient scale we think to be able to quickly move into commercial scale distribution if needed. But at this point, we are still waiting for data to come shortly to confirm that performance in clinic..

Yes. Just a point to add to Stephen on the multi-valent strategy, a lot of people don’t have pushed it is, it is not easy to do a multi-valent mRNA GMP product from an analytical QC standpoint, because those mRNAs are the same size. They look mostly similar because you just change a few — I mean, a few nucleic acid and that takes time.

And it’s where the platform comes to have so much value. As you all know, we have a CMV vaccine on its way to Phase 3, where we developed and as we find over the years, a very complex product, 6 mRNA in the same variant. And so, if you think about what the multi-valent vaccine for COVID is going to look like. It’s not going to be easier.

So for people who have not done multi-valent in GMP setting before, trust me, the regulators, because we’ve had these discussion with regulators around CMV over years. They don’t want to see a lot of analytical method characterization, so that you can prove to them that you know what is in the pipe.

And that is yet again another big differentiation with Moderna. Thank you, Mike..

Got it. Thank you, guys..

Thank you. Your next response is from Gena Wang of Barclays. Please go ahead..

Thank you for taking my questions. I also have two, one also related to the IP question. So, wanted to ask differently. Just wondering, Stephane, how many contracted global manufacturing sites you have? And how long in general is the contract? And the second question also regarding the new booster data. This is more for Steve.

Actually, to me it was a little surprised that differences between 1273 versus 1273.35 was less on narrow than initially I would expect. It seems like 1273 should be also sufficient to protect from variant strain. So, what could be the explanation? And then you did just lay out the plan, you still will be going after the multi-variant approach.

But regarding the explanation there, like do you think that just single shot that would still should be sufficient for the protection?.

Thanks, Gena. I’ll — maybe I’ll take the — that question first and then hand it back to Stephane on your IP question. So, a couple of things I would note. The first is the level of titers as you suggested there is little bit less than two-fold difference between them.

And you are — but you are seeing substantially higher titers on the order of 1,400 when you give the variant-specific booster, that’s mRNA-1273.351. Now, I would note that this is happening already at day 15. All right. This is an early time point that we’re looking at this point. We will also be looking at day 29.

And in this case, we are effectively, it is a prime with 1273.351. It is the first dose of the strain first identified in South Africa. And so, it’s actually, there’s two ways you could look at it, one is, obviously, that it is both look good.

I think the other and the way that I’m still looking at this is, it looks like we can very rapidly direct the immune response to an increased level of neutralizing titers against the variant of concern that was first identified in South Africa, 351 in this case.

And if you compare the titers that we’ve achieved even by day 15 between these two variants or between the ancestral strain and the 351 strain, it’s really only the 351 strain that’s getting to the same level that we saw against the ancestral strains in that last comparison, so to levels that are approximately similar amount.

Now, that’s not to say that mRNA-1273 as a booster couldn’t — wouldn’t provide a benefit, and I think you’re highlighting that, Gena.

There is evidence in this data as well that we can substantially increase neutralizing titers generally across the response with a booster dose of mRNA-1273, our authorized vaccine at 50 micrograms, and that is encouraging. That is good news, because I think it suggest that is also a useful strategy.

But if you had to choose between the two, and you were primarily concerned about increasing immunity to a higher level so that it can last longer, particularly in patient populations at high-risk of either waning immunity or incomplete immunity, we think this starts to provide very early event [ph] even at day 15, even after a priming dose that there is going to be an advantage to some strain matching of the antigen.

And that’s what has us continue to be excited about the multi-valent strategy.

Stephane?.

Sure. Thanks, Stephen. So, Gena, on the contract manufacturers, I would kind of look at kind of raw material, drug substance and drug products. In all of these, we have multi-year contracts. As soon as we get Board authorization to go to a 3 billion supply for 2022, we right away send a lot of orders and a lot of additional supplies to our suppliers.

And not to forget, the drug substance, actually, now this is the place, it is a Moderna site where we actually have the biggest capacity of drug substance even in the 3 billion doses 2022 scenario..

Thank you..

Thank you. Your next response is from Geoff Meacham with Bank of America. Please go ahead..

Hi. Good morning, guys. Thanks so much for the question. I just had two on COVID. The first one is, what does your data tell you with real world effectiveness of 1273 today, as of now, with respect to some of the main variants? I’m just trying to reconcile that the need for annual boosters versus minimal breakthroughs thus far and high efficacy.

And then the second question is, when the next-gen vaccines for COVID-19 when you have some permutations, what’s the potential to leverage the technology to use different parts of the virus versus just modifying the spike protein or do you think this could add regulatory steps that make it difficult, even if it’s theoretically possible? Thank you..

Thank you, Jeff. Those are both good questions. So, maybe I’ll take the first one.

First, which is our real world evidence the largest amount of it that we’ve seen has been published by groups like the CDC and continues to reinforce that the efficacy we saw in the clinical trial seems to be translating well into real world use with very high efficacy against disease — against COVID-19.

I think it’s important to note, though, that this is all happening very acutely, right? We are still only months away into our — months into these vaccination campaigns.

And the primary concern that we and others have from a public health perspective is, really not what’s going to happen right after vaccination, but what does this look like in nine months? What does this look like in 18 months? And I think the really difficult situation everybody is in, is you could say, well, let’s wait until it’s a year from now, and we see in a reemergence of spikes of cases we see maybe it’s not as bad, but we see a very big in bad flu season in the winters, tens of thousands, maybe hundreds of thousands of death, that kind of scale.

That’s not a situation that most are willing to take a risk on because it obviously could be substantially worse than that. And so, we’re probably not going to have a chance to wait for data for cases to really breakthrough a year from after vaccination in the real world setting and let that start to guide re-vaccination decisions.

At that point, it’s almost too late. And so, I think at this at this level, we think for the very near term the correct and sort of conservative decision is to continue to try and maintain the highest level of broadest immunity in the populations that are well vaccinated already.

Now, if you look beyond this sort of epidemic phase and pandemic phase that we’re in with this variant evolution into the years beyond that, so three, four, five years from now, hopefully, we’re well past the current pandemic.

We still believe there’s going to be SARS-Cov-2 re-infections and, as we shared at the Vaccines Day just a couple of weeks ago, we take that lesson from the previous endemic coronavirus epidemics that have happened, where hundreds of years later, and you still see re-infections mortality, substantial healthcare cost associated with those viruses and we don’t know whether SARS-CoV-2 is worse than them or the same, but we believe that that burden of disease that’s created by the fact that respiratory viruses continually re-infect and when they do, they can really have a devastating effect in high-risk populations, particularly older immunocompromised.

We think that’s a real probability in the future, in fact, it would almost be unprecedented for that not to be the case in the coronavirus context.

And so, for that reason, we believe there is going to be a need for continual boosters, whether it’s annual or not, and whether the multi-valency continues to add more and more valencies, I don’t think anybody can say it. But it’s certainly a situation we’re preparing for..

And, Stephane, just on the second question on the different modalities or Stephen….

Yeah, Geoff. I’m sorry. Yeah. I apologize.

And this is your second question, on different modalities and different parts of the entry [ph] So, I think what is pretty clear from all of vaccines, if you look across them, but certainly if you focus on the messenger RNA vaccines is that, the high degree of efficacy we’re seeing in vaccines right now is based on the spike protein immunogenicity.

That is the antigens being expressed. Is it theoretically possible that non-spike antigens could have provided the same protection? I think it’s definitely possible, so forward looking possible.

But I think you would be remiss to look past the multiple large Phase 3 trials that provide pretty conclusive evidence of the value of going after spike protein trying to prevent COVID-19.

So, I think you would probably, if you went down that route, you have to re-demonstrate that efficacy, that may be increasingly difficult in a world where we have so many good choices in terms of vaccines. And so, I’m not exactly sure how we go down that path, yeah, even theoretically..

Okay. Great. Thank you so much..

Thank you. Your next response is from Cory Kasimov with JPMorgan. Please go ahead..

Hey. Good morning, guys. Thanks for taking the questions. I want to go back to the topic of the future contracts. I know this has kind of been asked in a couple of different ways.

But based on discussions and negotiations that are currently taking place, how much confidence do you have that there is going to be demand to fill up to 3 billion doses in anticipated supply that you think you could have next year, especially if people are getting a single annual booster in the future? And then the second question is from really a modeling perspective, are the price points currently being negotiated on future contracts comparable to what you have on the existing ones for 2021 just basically want to see if we should be assuming stable pricing for modeling purposes for 2022? Thank you..

Yeah. So, let me take a stab at the question, Cory. And if I miss anything, Corinne, just please add some color. So, as I said in my remarks, from what we’re hearing from the customer, this is becoming an mRNA markets looking forward. And so, there are not so many players in the mRNA market.

And if you look at what the future needs across the globe, even the fear to vaccinate adults, all adults are not going to get vaccinated this year on the planet. The math doesn’t work. And then you have adolescence, and then you have children across the world. And then you are boosting.

So, when you add all those pieces — the reason we are building up to 3 billion of supply as a mix between the prime series and boosters is because we believe that this is what the world is looking for based on the daily engagements we have with governments around the world. It’s a very different set up than what it was a year ago.

A year ago, you get people saying, oh, I’m going to get a cheap adenovirus vaccine because being suppliers at cost. This is not a discussion anymore today.

The discussion is, I want some mRNA vaccine for multiple, I want variant booster-specific, I want multi-variant, I want the best thing because I don’t want a second and the third and the fourth year with this thing. I need my country to be back on its feet.

Understand, Cory?.

Yeah. No.

And on the pricing question for modeling purpose?.

Yeah. On the pricing, I will give you any color, but again, there is no more discussion at all, but your price is this and there is a small company. The company will price at cost at $3. This discussion is gone..

Okay. All right, perfect. Thank you, Stephane..

Thank you..

Okay. Your next response is from Hartaj Singh with Oppenheimer & Company. Please go ahead..

Great. Thank you. Thanks for the question, and all the color. A question I would have is just on the 50 microgram going forward, the booster against variants.

Would you see that potentially becoming your initial kind of prime boost vaccine possibly in the future or you think you’ll stick with the 100 microgram route whether it’s with 1283 [ph] also? And then just on OpEx, just any kind of color, when we think about 2022 and 2023, o David, what cost of goods sold could look like once these quarterly variations kind of flush out? And then what your adjusted operating margins could start looking like also? Thank you for the question..

Thanks, Hartaj. I’ll take a stab at the first one and then hand it to David for the other. So, on 50 micrograms, obviously, the data we shared today is a small number of subjects.

But we previously shared and published our Phase 2 data on a slightly larger number of subjects looking at a 50 microgram primary series, that looked quite good and at least as measured by immunogenicity seem to achieve levels that were consistent with the 100 microgram dose.

So, it’s certainly something we’re going to look at as to whether or not we could pursue a 50 microgram primary series. But how we get there, will depend upon data that we don’t yet have.

Right? So, we will have to look at whether there are clear correlates of protection that we can use to bridge between those doses and/or we’ll have to look at different populations in which we started those doses.

As an example, this has been shared, we are evaluating 50 micrograms as a potential primary series even in pediatric populations, as you can imagine, you don’t need perhaps a higher dose in younger people than you do in older ones.

So, there’s a lot of things ahead of us in terms of looking at whether or not a primary series for 50 micrograms is possible. Certainly, for a booster series that is the top dose at which we’re looking. And as we look forward, we will continue to carefully evaluate whether or not we can adapt that as a target dose across all of our applications.

But it will depend upon data..

Great. And then question on the - thanks, David. No. Go ahead, David..

Yeah. So, cost of goods and operating expense trends as in 2022 and beyond, I guess, what I’d say is, it’s a little early to start giving that kind of guidance for 2022.

What I would say is that, if you look at our cost of goods and the cost of goods manufacturing thus far, we’ve been quite pleased with what we’re seeing as we’ve ramped up production initially here in the US. We’ve seen, as I said, yields have been better than we had foreseen as we did the initial planning. So that’s obviously very helpful.

And we reiterated today we think right now the right planning assumption continues to be 20% cost of goods.

As you move beyond 2021, you get into a question of vaccines versus therapeutics, we think cost of goods manufactured will be very competitive for this product, and therefore, margins — and the gross margins will depend very much on price levels, which I think it’s early to comment on.

And then in terms of operating expenses, we are building out the Company. We continue to do that. And as I mentioned, we — while our overall operating expenses were quite stable at $0.5 billion in the first quarter, we do see that trending up as we now move through the year.

And we’ll continue to invest appropriately to drive the portfolio investment and to build out globally. So, I would say, we’ll continue to do that, and we’ll give you better and more precise guidance here as we move closer to 2022 and beyond..

Great. Thank you..

Thank you. Your next response is from Joseph Stringer with Needham & Company. Please go ahead..

Hi. Good morning. Thanks for taking our questions. Just another one on manufacturing capacity here. As you potentially move to next-generation COVID vaccines, I was wondering if you could give us a sense maybe even qualitatively in terms of the — given the modularity of the technology.

What are potential manufacturing ramp would look like for some of these second-gen vaccine in terms of manufacturing capacity in the ramp relative to what we have seen with 1273? Thank you..

Yes. It’s Stephane. So, with 1273 [ph] ramp has been constrained by manufacturing capacity. So, if you look at this year, the only reason we quote-unquote only supply 100 million to those in Q1, which is an extraordinary number is because we are building the capacity.

And so, the way to think about it is, as Juan and his team are working hard to add new lines and to increase the capacity, the ramps of a follow-on products will be much faster because today manufacturing is slowing down the ramp.

So, I anticipate that, as you think about the multi-variant booster launches, as we think about RSV through CMV launch, we will not be on the backfoot. As you know, as part of our 2020 budget that we did at the end of 2019, we didn’t plan for pandemic. We were supposed to be commercial several years down the road.

And so, the team has done a remarkable job to get to this point, but we are — and we’re going to stay for, I would anticipate all of the year supply constraint. Corinne and her team would love to be able to sell more products because, trust me, their phone is turning red hot by calls from around the planet.

And we would lover to be able to help protect more people, but we just can’t because we were not planning on the pandemic in 2020. So I anticipate that for variants and for new product launch, we will make sure that we’re not capacity constrained, which is why the 3 billion supply volume that some people might think it maybe too aggressive.

As I said in my remarks, the pipeline of the companies are still going to pay with these. And so, this is just behind the multi-valent vaccine. So if you look at a couple of years out, and we’re not building manufacturing for six months.

We’re going to be really happy to have that capacity so that as we launch products, we can supply the market every single dose that Corinne and her team can make sure that the market wants..

Great. Thanks for taking the question..

Thank you..

Thank you. Your next response is from Mani Foroohar of SVB Leerink. Please go ahead..

Hey, guys. Thanks for taking the question. One quick one, I’m starting on financials. You gave a little clarity on CapEx investments around expanding capacity for reduction.

Should we think of that as level setting CapEx going forward — modest increase going forward? Or should we think of that as primarily a one-time build-out? And then secondarily, you’ve given a little bit of clarity, there’s a lot of clarity around COGS for this quarter versus the rest of the year.

Going forward, so we think about the absolute COGS per unit, again pretty linearly related to dose.

Or are other attributes, royalties, etc., differences in product use between different vaccines, would that suggest that that’s not the right way to think about it?.

Yeah. So CapEx, if I understand the question is guidance for 2022 and beyond on CapEx, and again, unfortunately it’s a bit early to be able to comment. We — if you look now, we’ve increased our guidance for this year based on the development side that occurred over the last couple of months.

Is that a steady state going forward into the future? I think for a company of what will be our size and scope and level of vertical integration, I think it’s reasonable to expect that we’ll continue to invest in our own capacity and therefore, you can expect we’ll have ongoing CapEx.

Is it precisely in this range or somewhat above or below? I really wouldn’t want to give you that precision as of yet because we’re — it’s not clear yet. But I think an ongoing CapEx trend will be appropriate for the Company.

In terms of COGS, I think that’s the right way to think about the cost of manufacturing this product, it will be impacted at some level by the amount of materials in the product. But when you’re talking about micrograms of materials, it’s really not that significant.

So, I think you can as the simplest assumption assume, it’s a pretty steady cost of manufacture as we’re seeing right now..

Great. And a quick follow-up on some of the contracting. I know it’s been asked in various forms. You talked about the OUS manufacturing being about a quarter-ish behind US manufacturing.

Right now, based on your disclosures on volume, doses actually delivered, versus what we have from the other mRNA competitor and duopoly right now, market share for you guys is somewhere between 5% and 10% in a lot of these countries and to be delivered doses.

How do you think about catch up on manufacturing and deliveries? And how that influences the ongoing contracting for next year, i.e., does your stronger incumbent position in the US suggest you are better positioned for US contracting volume? Or do you see 2021, the results for 2021 contracting have nothing to do with 2022 and every year is a whole new game between you two?.

Yes, it’s a good question. So, as we said, the plan was always the plan we are executing on. And so, when we spoke to countries and set up those 21 APAs, we manage the quarter — delivery to the countries as we knew capacity will come online. We had not anticipated early part of the year that we will be able to export from the US.

And the piece we should not forget is, as you know, it’s reported in the MediaDaily, the US is going to be, I mean, way too many vaccine very, very soon, if not, already. And so, the capacity that we are building in the US and we are adding is also going to supply the world.

So, I think once we’d anticipate a very big acceleration of shipments, two countries outside the US as we go into Q2 and even more in Q3 and Q4 as we met our obligation to the US government..

Great. That’s really helpful. And could you guys comment on where you are — what you’re seeing in the real world in terms of vaccine hesitant/end market demand? There has been a couple of media reports that that’s starting to be more of a limiting factor as opposed to supply, at least in the US currently, certainly, not globally..

Correct. In the US and you see it on the daily numbers published by the CDC for, I think, since mid-April roughly the number of vaccination per day in the country is going down, and it is not because of supply, if you look at the shipments coming from the companies, they keep increasing exactly as we have been saying.

And so, now there is an oversupply of vaccine. It’s really a demand-driven problem now. So you see some states across the country that are still very active in vaccination. And we are looking, as we said, that we have very high rate of vaccination is going up every day with elder parts of the country, as you know, where they have way too many vaccine.

As you have heard that the federal government I think yesterday or before has announced that they were going to stop to shift products from one place to the other based on actual demand and this were leading to vaccine as you going to see. The US doesn’t have a supply of vaccine issue anymore. That was true in January, it is not true anymore..

Great. Thanks. I’ll get back in the queue and let [ph] others..

Thank you..

Thank you. Your next response is from Simon Baker with Redburn. Please go ahead..

Thank you for taking my questions. Firstly, just going back to the debate around IP waivers. Stephane, as you said that the talk of IP waivers rather than misses the point about limited global manufacturing capacity. So, just to support that, given that you announced, you would unilaterally waive IP enforcement back in October.

To your knowledge, has any company in the following seven months sought to exercise that freedom to operate? And also sticking with the vaccine, going back to Slide 28, do you have data on T-cell response over that six- to eight-month period post primary vaccination for 1273? And then just a quick question on the financials.

David, I think you mentioned that in the SG&A in Q1 there were some costs related to effectively start-up of supply. I just wondered if you could give us any color on the non-recurring one-off elements of SG&A in Q1 as we think about the evolution across the year. Thanks so much..

Thank you so much. So I think the first one on IP and Stephen will take the T-cell and David the financials. So, I’m not aware of any company of size that is going after mRNA. Again, going back to what I described, one would have first to figure out how to make mRNA GMP before asking the regulators to start the clinical study.

And that doesn’t happen quickly. We are monitoring the field very closely as we always have, but at this stage, I think that this is really not the point that will impact, of course, 2021 impossible but even 2022.

Stephen on T-cells?.

So the data we have from today is an initial analysis on the boosters. We are — as we previously announced, we’ve been looking at the study ourselves and with the NIH, they are running a primary series vaccination study and also looking at other elements. And so, we will perhaps get T-cell data in the mid-term.

But at this point, we do not have any T-cell data yet on the boosters. We do have ongoing studies with NIH on — in general on our Phase 1 and our own Phase 2 and if it becomes important in the future, we can obviously look at T-cell responses with waning immunity out six, 12 months in those studies as well.

We don’t have a specific plan to do that at this point. But we are pretty encouraged by the historical correlation between our previously reported T-cell data and public T-cell data and the neutralizing titers that are obviously much easier to measure over time across a wider range of subjects in T-cells.

And David?.

Yeah. So, in terms of the expenses we incurred in the first quarter, including in commercial, yeah, we had some one-time expenses to set-up businesses around the world, but the preponderance of the total operating expenses, including in commercial, I would say, will continue.

And therefore, that’s why I gave you some guidance that if you start at that $0.5 billion spend level in the first quarter in the fourth of last year, we’re expecting now to see that trend up notably as we move forward through the year, which we thought it would start sooner, but we now expect will start in the second quarter.

So, running a business of this size on a global basis, we think that that spend level is quite reasonable, to be honest..

All right. Thank you very much..

I’m showing no further questions at this time. I would now like to turn the conference back over to Stephane Bancel..

Thank you so much for participating in today’s call and for the great questions. We look forward to seeing you at Science Day on May 27. Stay safe, everybody. Have a nice day. Bye..

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You have a wonderful day. And you may all disconnect..