Quarter Earnings Call. At this time, all participants are in a listen only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that the call is being recorded. At this time, I'd like to turn the call over to Lavina Palukdar, Head, Investor Relations at Moderna, please proceed.
Thank you, Deep Tamara. Good morning, everyone. Thank you for joining us on today's call to discuss Moderna's Q1 2021 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 Bunzel, our Chief Executive Officer David Meline, our Chief Financial Officer Steven Hogue, our President Tal Zaks, our Chief Medical Officer Karim LaGouf, our Chief Commercial and Juan Andres, our Chief Technical and Operations Officer.
Before we begin, please note This conference call will include forward looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act 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. 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 3, please see the important indication and safety information for our COVID-nineteen 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 Stephane.
Thank you, Lavina. Good morning or good afternoon, everyone. Thank you for taking the time to join our Q1 2021 conference call. We'll start by a quick business review of the quarter before Corrine walks you full commercial update. David will then walk you through the key financials.
Steven will provide a clinical update, Especially new human data about 2 of our COVID-nineteen booster candidates, mRNA-twelve seventy three, The currently authorized vaccine and the mandate 1273.351, the variant specific booster to 351 first identified in South Africa. I will then come back to close. The Moderna COVID-nineteen vaccine is now available And protecting people in 37 countries around the world. And with a WHO authorization last Friday night, The number of countries where our vaccine will be available will go up significantly. In the Q1 alone, 102,000,000 doses have been shipped and many tens of millions of people have been fully vaccinated or received their first dose.
12 months ago, in Q1 2020, Moderna had never run a Phase 3 clinical study, Never gotten a product authorized by a regulator and never made 100,000,000 dose in a single quarter, not even 10,000,000, Not even 1,000,000 doses. I am very proud of what the Mona team has achieved. But most importantly, I am very thankful for their impact on the world and the incredible customer sacrifices that our team has made to help protect fellow human beings around the world. This is very humbling, and I'm fortunate to leave Moderna in this moment. I'm also thankful for Moderna scientists, Engineers, doctors and team members who have worked relentlessly over the last 10 years now to be ready for when the virus emerged In late 2019, we invented technology to produce safe, well tolerated mRNA vaccines, which made it possible for us The company achieved revenues of $1,900,000,000 in Q1 2021, Of which $1,700,000,000 were COVID-nineteen vaccine product sales.
The net income over the period was $1,200,000,000 This marks the company's 1st GAAP profitable quarter in its history after 9 years of operating losses. At the end of 2021, we had cash and cash investments of $8,200,000,000 David will give you more details in a few minutes. We increased our 2021 supply forecast once again. We now believe that we should be able to supply 800,000,000 doses 2021, we're still aiming for $1,000,000,000 for the year. The total advanced purchase agreement signed for delivery in 2021 have been increased to $19,200,000,000 We are happy to report this morning an interim update to our TIM COVE study, The initial interim analysis of our Phase twothree TIN COV study of mRNA-twelve seventy three showed vaccine efficacy against COVID-nineteen of 96% NMN-twelve seventy three was generally well tolerated with no service safety concern identified to date.
We're also on track to start this month the filing of our rolling BLA to the FDA for COVID-nineteen vaccine amounted 1273. Outside of COVID, we added another first as a company. And that is the dosing of our first patient With an mRNA therapeutics candidate against the rare genetic disease, proprionic acidemia, a genetic deficiency in the liver, we will candidate mRNA 3,927. One of the things that I'm most excited about is where we are going. The Q1 results highlighted above are the consequence of last year work and decisions we made.
So as I look to where Moderna is going, I get very excited by the level of our increased investments across the board. We think a strong balance sheet to invest to scale Moderna. Just two numbers for some color. In Q1 2021, our R and D investments were approximately 4 times higher than R and D investments in Q1 of last Not 4%, not 40%, 4 times higher. For all of you who have known us for many years, Moderna has been built as a digital enterprise since the early days.
But we now have the opportunity to do much more and And to build new functions like clinical for operations, pharmacovigilance, commercial, digitally from the get go. So looking at the next 5 to 10 years, We're investing intensely in digital, automation and AI. Our plan for 2021 is to invest 3 times more in digital than in fiscal year 2020. We announced last week that we have decided to invest to increase our 2020 supply To up to 3,000,000,000 doses. Let me share with you why we decided to recommend to our Board to invest at that scale.
First, Let's talk about the science of SARS CoV-two virus. New variants of concern continue to emerge around the world. And we believe that over the next 6 months, as the Southern Hemisphere enter its fall and winter, we could see more variants of concern We have said for a while now that we believe booster shots will be needed as we believe that the virus is not going away. We also believe from a scientific standpoint that the highest efficacy booster over time will be provided by multivalent variant specific booster. 2nd, the market has changed quite a lot versus what we knew 6 months ago.
1st, mRNA vaccines have emerged as a best in class vaccines, high efficacy, good tolerability profile, I mean to scale manufacturing and speed to chase the variance in the clinic. Many companies are In the clinic, we have 1st generation vaccine, while we're in the clinic with variant specific boosters. More importantly, As we are talking to governments around the world, in the West and in the East, in the North and in the South, we're hearing loud and clear from the market. Supply us with more mRNA vaccine for primary series and supply us with more mRNA vaccine in the future For boosters for 20222023, there is a big shift versus what the market Perceived 6 or 9 or 12 months ago, when protein vaccine or adeno vaccines were thought to be the answer to a pandemic. We believe it has become an mRNA market for COVID-nineteen vaccine.
3rd is our large pipeline. We believe we will bring to market several more products in the next few years that will add to the market demand for COVID-nineteen boosters for years, flu vaccine, As we discussed at the vaccine day and our goal is to have a seasonal flu vaccine combined with a COVID variant booster in a single dose product. We'll have strong clinical data for RSV vaccine and TMB vaccine, plus we have 7 programs in clinical studies in pre therapeutics area And more programs to move from preclinical development to clinical studies in the months to come. So we decided to build capacity to deliver up to 3,000,000,000 dose of supply in 2022 to serve both the North and the South. We're doubling our drug substance supply in Europe And equating by 50% of drug substance supply in the U.
S. We are of course adding filling capacity in the U. S. And Europe at our existing partners, but also adding new ones as we speak. More to come.
Another piece of feedback we're hearing from the market is Moderna has a best in class mRNA vaccine, chip metal minus 20 Celsius and storage, not minus 70 Celsius, small cartons of 100 doses, Storage up to 6 months in standard freezer and 4 weeks in regular refrigerated temperatures. We only authorized mRNA vaccine that does not require on-site dilution. We believe this is an even more important feature today, It will be more in the future in 2021 202223 as we move to a booster market in decentralized in pharmacies and at doctor's office. We believe we have the best mRNA vaccine authorized and we'll continue to improve our product to continue to have the best in class product of the mRNA We are delighted to announce this morning the start of the dosing of our first patient in our Phase III study With propionic acidemia disease, the study is called PARAMOUNT. This is yet another milestone for Moderna.
Not only do we have, I believe, the most innovative infectious disease vaccine clinical pipeline, but we also have therapeutics candidates in clinical studies in oncology, In cardiology and now in rare disease. Let me close my remarks on this time of your slide. We now have 1500 employees. We have recently incorporated modernized Japan KK, And we'll continue to build our commercial network. We will push to Asia Pacific in 2021.
And given our strong balance sheet Of $8,200,000,000 we're going to continue to accelerate and invest to allow Moderna to scale and maximize the impact of our broad M and A platform to help as many people as we can. Let me share our perspective on the yesterday afternoon announcement By the United States' threat ambassador that the U. S. Government will support waiving intellectual property protection for COVID-nineteen vaccines. We believe this will not help supply more mRNA vaccines to the world any faster in 2021 or in 2022, Which is the most critical time of a pandemic.
There is no idle mRNA manufacturing capacity in the world. There is no industry of talented individuals We're skilled in the art of making high quality and high purity GMP grade mRNA vaccines. There are no companies who have developed manufacturing processes, Clarification processes, analytical processes that would allow them to quickly run a clinical trial. And if approved by regulators around the world, We've announced in the company's statement issued October 8, 2020 that during the pandemic, Moderna will not enforce COVID-nineteen related patents. You can find that statement on our website.
We believe that the best way to end the pandemic is what we're currently doing. 1st, to maximize supply in 2021 to protect as many people as we can. 2nd, to build additional capacity, which we have announced last week To get up to 3,000,000,000 dose of authorized mRNA vaccines for 2022, 2023 and beyond. And 3rd, to continue to adapt the To have a highest efficacy vaccine, we variant specific booster, for which we announced very encouraging clinical results yesterday. Let me now turn to Corinne to give you a commercial update.
Corinne?
Thank you, Stephane, and good morning or good afternoon, everyone. As all of you already know, Moderna's COVID-nineteen vaccine is our 1st 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 Q1. I will start with our most recently signed supply agreements, those that occurred in the Q1 and at the beginning of Q2 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 500,000,000 doses for delivery in the 2021 2022 period. Specifically, in 2021, Moderna will begin delivery of 34,000,000 doses in the Q4 of 2021. Covax will have an option For an additional 466,000,000 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 2022. We have signed additional supply agreements With Israel for 5,300,000 doses in 2022 with an additional option of 17,300,000 doses for 2022 and 2023 and with Switzerland for 7,000,000 doses in 2022 and option for an additional 7,000,000 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 Zurich Pharma, our distribution partner in Southeast Asia, Hong Kong, Macau and Taiwan. In total, we announced advanced purchase agreements totaling 840 5,000,000 doses to be delivered in 2021 to the countries that are listed here on the 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 Stefan 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 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 variance. Let me now turn to product sales. Our first our product sales The Q1 of this year were $1,730,000,000 and were recorded for the delivery of 102,000,000 doses. Product sales in the U. S.
Were approximately $1,400,000,000 and sales outside of the U. S. To the EU, Canada, Switzerland, Israel and Singapore were approximately $400,000,000 for the 14,000,000 doses delivered in the Q1. In the U. S, we have successfully completed the delivery of the first 100,000,000 doses to the U.
S. Government within 100 days of emergency use authorization, and we expect to complete the delivery of the second 100,000,000 doses to the United States government before the end of Q2. As you know, the U. S. Production started earlier and is roughly 1 quarter ahead in production ramp.
As As such, in the Q2 of 2021, we expect the ex U. S. Ramp to be similar to that of the U. S. Ramp in the Q1.
To close, I want To reiterate that as we continue to produce and roll out 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 Maligne.
Okay. Thank you, Corinne. Today, as with our last earnings call, we are presenting our results Primarily on the U. S. GAAP basis.
In some cases, we also provide additional detail to provide With this background, we are providing an analysis of actual 2021 1st quarter results along with an updated view of key drivers of financial performance going forward. Turning to Slide 18. Total revenue was $1,900,000,000 in the Q1 of 2021 Compared to $8,000,000 in Q1 of last year. Following our first ever product sales of $200,000,000 in December 2020, We recorded product sales of $1,700,000,000 for our COVID-nineteen vaccine in the Q1 of 2021. Grant and collaboration revenue increased to $204,000,000 in Q1, primarily due to increases Grant revenue from BARDA to accelerate development of our COVID-nineteen vaccine.
Cost of sales We're $193,000,000 in the Q1, 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 $401,000,000 For Q1 2021 compared to $115,000,000 for the same period in 2020. The higher spend was driven by increased COVID-nineteen vaccine clinical development activities, including our announced efforts around booster, variant specific and multivalent vaccine candidates. Headcount increases as well as pharmacovigilance activities related to our COVID-nineteen vaccine also contributed To the year on year expense increase, selling, general and administrative expenses were $77,000,000 for Q1 2020 Compared to $24,000,000 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-nineteen vaccine globally.
Our provision for income taxes was $39,000,000 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 $1,200,000,000 for Q1 of this year, Compared to a net loss of $124,000,000 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 standing options in our shoes 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 8,200,000,000 Compared to $5,200,000,000 at the end of Q4 2020. The increase is driven by our commercial sales And additional customer deposits received in the Q1 for future purchases of our COVID-nineteen vaccine. Net cash provided by operating activities was $2,970,000,000 in Q1 of this year compared to net cash Used in operating activities of $106,000,000 in Q1 of last year. The reversal from net operating cash outflow The cash inflow was driven by our commercial market entry for the entire quarter. Similar to last Before providing an updated financial framework for the remainder of 2021, let me summarize a few areas 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 2 distinct supply chains, 1 in the U. S. And 1 outside the U. S.
For rest of world markets. Our supply chain scale up in the U. S. Was roughly 1 quarter In advance of our ex U. S.
Supply chain, which is reflected in the geographic sales mix in Q1. As we move forward in Q2, the ex U. S. 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 3rd party royalty costs.
We began capitalizing our COVID-nineteen vaccine inventory costs in December of 2020, following the COVID-nineteen 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-nineteen vaccine inventory costs were recorded as research and development expenses in the period incurred. We expense $242,000,000 of pre launch inventory costs in 2020 and started 2021 with the remaining balance So the $187,000,000 of 0 cost inventory, almost the entire balance or $184,000,000 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 Q1 was valued At actual cost, our cost of sales would have been $377,000,000 or 22% of our product sales, Somewhat favorable to what we expected, driven by favorable yields in our U.
S. Production facilities. Now turning to our cash and investment position on Slide 22. The cash and investment balance reported as of March 31 was $8,200,000,000 up from $5,200,000,000 as of December 31, 2020. The increase is primarily driven by the net increase in customer deposits for future product supply of COVID-nineteen The net balance of cash customer deposits increased from $2,800,000,000 at the end of December 2020 To $5,600,000,000 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 the balance of $2,300,000,000 at the end of 2020. As of December 31, 20 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 and L over the course of 2021 in our effective tax rate prorated Based on the cadence of our expected pretax quarterly earnings. We also recorded 2 discrete benefits in our tax provision in Q1, which lowered our Q1 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 a current full year total of $19,200,000,000 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 700,000,000 to 800,000,000 doses at the 100 microgram dose level. Our manufacturing team and our partners are still working to supply up to 1,000,000,000 doses for 2021. Further, we continue to expect a range of deliveries in Q2, 2021 of 200,000,000 to 250,000,000 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 and D and SG and A expenses. Q1 Expenses of approximately $500,000,000 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 Cumulated 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 U. S. 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 $350,000,000 to $400,000,000 for 2021 to $450,000,000 to $550,000,000 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.
Thank you, David. I'll begin with an overview of our COVID-nineteen strategy against variants of concern and the initial data from our Phase 2 booster vaccine study before ending with a summary of the rest of our pipeline. And before I go into the data, a reminder that our booster strategy is evaluating single dose booster With 3 different mRNA vaccines, 50 micrograms of mRNA-twelve seventy three, 50 micrograms of mRNA 1273.351, both of which have data available today and what I will discuss in just a moment and a multivalent booster vaccine candidate, which combines a fifty-fifty mix of mRNA-twelve seventy three and mRNA-twelve seventy three.351 in a single vaccine. In addition, we're also evaluating a lower 20 microgram dose of mRNA-twelve seventy three.351. Data from the multivalent booster and the 20 microgram booster of 351 will be shared when available.
And with that backdrop, let's move to the data. Starting with safety, local and systemic adverse events within 7 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 a frequency of approximately 15% in Participants who've 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 are figures from 2 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-two pseudoviruses In serum samples, 1 week after vaccination with the primary series of mRNA-twelve seventy three. Recall that there was a 6 fold decrease in neutralization titers against the B1351 variant, the variant first identified in the Republic of South Africa, And a 3 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 1 week after the second dose of the primary vaccine series of mRNA-twelve seventy three.
So essentially these titers are close to peak levels. On the right hand side of the slide is a figure from the preprint manuscript of our initial results From our Phase 2 study posted yesterday to bioRxiv. The figures 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-twelve seventy three in either our Phase 2 or Phase 3 studies, roughly 6 to 8 months Prior to enrolling in this booster study. At this time point, titers against wild type SARS CoV-two remained high With almost all participants having detectable titers.
The titers against B1351 and P1, the variance Concern were much lower. In fact, approximately half of participants had titers below the assays limit of quantitation 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 2 weeks after booster vaccines of Either mRNA-twelve seventy three or 1273.351 neutralizing titer levels increased against both the wild type virus As well as the B1351 and P1 variants of concern.
In fact, following BOOST, geometric mean titers Against the 3 variants tested increased to levels similar to or higher than previously reported peak titers against the ancestral strain following primary When looking specifically at the GMTs of the different strains, we achieved levels of 1400 after booster vaccination with mRNA-twelve seventy three.351 against the 351 variant. This compares Again, so GMT of 864 when boosting with mRNA-twelve seventy three. Vaccination with mRNA-twelve seventy three.351 was more effective at narrowing the gap in neutralizing titers between wild type and B1351 viruses relative to boosting with mRNA-twelve seventy three. 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 multivalent arm and a lower dose arm of mRNA-twelve seventy three.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 they're neutralizing titers against ancestral strain following a primary vaccination series with mRNA-twelve seventy three. GMT achieved in this asset are approximately 1500. 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 B1351 variant of concern. A booster dose of 50 micrograms of mRNA-twelve seventy three, 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 to titers against the variant of concern As high as 1400 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-thirteen forty five. 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 10,10 to begin in 2021.
Outside of vaccines, we have 7 clinical proof of concept trials ongoing across 4 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 a Phase 2 trial. And KRAS, our 2nd program partnered with Merck Is ongoing in a Phase 1 study. Within intratumoral immuno oncology, our Phase 2 dose expansion NOX40 Ligand, Phase 1 triplet And Phase 1 IL-two study, which is partnered with AstraZeneca are all still ongoing.
Finally, as Stephan mentioned, we are pleased to have Started dosing in the PARAMOUNT study in propionic acidemia. On Slide 33, you can see our full development In addition to our large portfolio of infectious disease vaccines, we now have 7 therapeutic programs in the clinic. I'll now turn the call over to Stephane to take your time.
Thank you, Stephen, Cohen and David. For 2021, advanced purchase agreements signed have now been increased to $19,200,000,000 As we look into 2022, We're investing to build 3,000,000,000 dose supply capacity because we believe the market need could be greater in 2022 than in 2021. First, we already have countries signing APAs for 2022 for additional prime series for children, but also for variant specific boosters, Israel last week and Switzerland this morning. If you recall, there were some of the first countries to sign APAs in 2020. And again, This conference is ahead of the game for 2022 and 2023.
2nd, with the COVAX partnership announced Monday, On Monday, we anticipate to supply up to 466,000,000 doses in 2022. 3rd, we're having active discussions with all the governments that have signed 2021 APAs with Moderna. For new APS for 2022 deliveries, again, prime series, but also boosters. 4th, We are having numerous discussions with government that do not have 2021 APAs with Moderna because we cannot supply them in 2021, But many of these governments are already asking us to enter into 20 22 APA because they want high efficacy mRNA vaccines that are easy to store. This is why we decided to invest for more supply in 2022.
We believe from our current deals and Current discussions that the market wants more supply from us in 2022 than we can supply in 2021. As we look at the next 5 to 10 years, we have the most innovative vaccine pipeline in the industry. And we're investing more in research to increase our impact by bringing to the clinic More innovative vaccines against viruses that help humans. We are now in a clinic in 3 thoracic areas, oncology, cardiology and rare disease, And soon, we should be in a clinic in autoimmune disease as well. We are 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 have 10 times more impact, We're investing aggressively. We're accelerating our investment in digital, automation and AI. From a spend of $27,000,000 in 2019, we invested around $60,000,000 in 20.20 in digital. We are planning to almost triple that $170,000,000 in 2021. We're investing across the board in R and 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 me too drugs. Our pipeline is 1st 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 reason is simple. Most companies don't do AI. So as we grow and hire new talent, they have great skills in their art, But few have been exposed to AI in the previous company.
We want AI to be how we run the business in science, in It is the same change management revolution As 20 to 30 years ago, when personal computers enter the workforce, we want every team at Moderna to understand And use AI in everything we do. AI will become part of our DNA. As many of you know, we have this integrated And as we have more systems, we get more data. As we get more data, we learn faster. And we keep building and creating an upward cycle.
Between our strong balance sheet, our M and A platform, our team, our culture In the digital infrastructure, I believe our ability to scale Moderna is unique in the biopharmaceutical industry. As part of scaling Moderna, very software, But also very hard way. Many of you were at the opening of a Norwood manufacturing site in July 2018 or you came to visit after the opening. Our building is around 200,000 square feet. We call it Moderna Technology Center South or MTC South.
In 2020, we added the building next to it and added around 245,000 square feet and call it empty C North. We are pleased to announce this week that we now have access to a new building, MPC East, which will start welcoming more than employees later this year, After some of the investments 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 have all the building on this 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 our medicines, But also by who we are as a company. We are very committed to belong inclusion and diversity. We recently published or expanded the workforce diversity figures for the first time. Last year, we sent the CEO action for diversity and 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 Norwood and Cambridge type 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 child 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, we have a chance to do what we do. Every day we come to work to make innovative medicine using the first information platform of a biopharmaceutical My colleagues and I work and collaborate to make more medicines to protect our 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-two 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 5, 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 work to connect this event as Stephen and his team have some very cool new things to share with you. And later at the end of the summer September 9, our annual R and D Day for holistic clinical update. Operator, we'll be happy to take any question now.
Thank Your first response is from the line of Salveen Richter with Goldman Sachs. Please go ahead. Good
I have a couple here. So firstly, with regard to if the U. S. Supports the WTO waiver of COVID-nineteen 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 And then 2022 as you look to address variance and kind of we see the 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 Thank you.
Savin, good morning, Stephane. Let me start with your first questions and then I'll turn the PIK question to Stephen. So on the IP, Ritenour, what does it mean? I believe it doesn't change anything for Moderna. As I said, we had said last October That will not enforce our COVID-nineteen related patents during the pandemic.
And as I said in my remarks, There is no mRNA in the 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 No, buy the machine, invent the manufacturing process, invent verification processes, analytical processes and then they will have to go run a clinical trial, Get the data, get the product approved and scale manufacturing.
This doesn't happen in 6 or 12 or 18 months. We have been Looking at this for years. And as you know, there are some small mRNA companies that are still in the clinic trying to get the products to the finish line. And so we saw the news last night, and I didn't lose a meat or chip of the news during the night. On 2022 contract, the dynamic is as I first described it, which is the market has 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 move first on protein contracts, on ADEMOS contracts and then the kind of mRNA contracts came later, Just in case, and then the clinical data came along and the speed to get to And so and then you have the fact that the protein are still not authorized anywhere in the West. And then you have The lower efficacy of the ADENOS and over safety questions around the ADENOS, manufacturing scale of issues that ADENOS companies have had. And the big question that scientists advising government have, which is can you actually really boost adenose with more adenose products because by definition, you give again the same virus 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, again, Given many governments, I think last year, I believe the pandemic will be gone quickly. Trust me, every governments we're talking to believe this is going to stay for a long time.
They have got massively educated by the scientists and the clinician, and they believe this virus is not going away. They believe boosting is going to be critical. They believe Viret specific boosting is going to be the right way to do the science. And as you saw from Steven's presentation, This is what the clinical data are showing as well. And so the dynamic is that current Governments that have already contracted with us are calling for more and we're in active discussion with all of them to supply more for 2022 and 2023, Both Prime Series and specific Glion Booster.
The beauty about the technology is we can agree right now in the contract To give them next year, we have 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 new 1273.something, you guys have new variants. And we can share that on a very short notice because it's the same equipment, in the same room, with the same people, with the same raw materials. And then you hold those governments, which is Almost more exciting to me that never called before or that we called before, but we couldn't supply them because we We are in the unfortunate position, Sebastien. Look, we're very sorry.
We have no more supply for you in 2021, which 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 $3,000,000,000 next year, we now can have those discussions with those governments and Corinne and Optimum are having a lot of discussions So that's kind of give you a sense for the dynamic. Steven, on PN?
Sure, Salveen. Thanks for the question. So as you know, the program The paramount study for propionic academia is going to be looking at biomarkers as a part of its dose optimization. And so it's possible that we'll be Very early indicators of impact there. But we are going to there's no guarantee that the first dose level and the first cohort that we're looking at It 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 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 as open label programs will continue to track those closely as they enroll. And then similarly, the intratumoral programs that we highlighted, many of them are ongoing and producing data. And of course, when we have a complete and cogent dataset, we will bring
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 2 from me. 1 on the sort of next generation COVID vaccine where you think It might be 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 And then second question, Stephen, if I
can just
follow-up on PPA. I know in the past, right, one of the struggles has been enrollment. Obviously, it's great 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 2nd generation vaccine candidate, which is mRNA-twelve eighty three. 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 probably too early to say we would have to wait until we see that data and ultimately would be dependent upon conversations with regulators in As it relates to PA enrollment, yes, as you mentioned, we've been working very hard on that over the past years. We're quite Pleased to have enrolled the 1st participant, the 1st 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 near term that will demonstrate that we've made that progress.
Thank you. Your next response is from Ted Tenthross Ms. Piper Sandler, please go ahead.
Great. Thank you very much and thank you for all of the detailed updates, including running through the financial Now this is so detailed, David. Congrats on all the success. Steven, I wanted to pick up on the Booster data that you've shown and maybe you can kind of take us a step forward. What is the booster strategy going to look like?
Do we actually need to maybe do redose or revaccinate sooner than 8 to 6 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 will 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 reinfections 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 6 to 12 month time horizon, And 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 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 9 to 12 months 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 multivalent vaccine. Right now, we're still waiting to see our multivalent vaccine data, which is a combination as you know of Ancestral and 3 51 or 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 pandemic through 2022 at least globally. And therefore, we're committed as a company to make as many updates to the Aim to add as many variants as we think are necessary to ensure that when people receive a booster, it provides the broadest immune protection
Incredibly helpful. Thank you guys for all the work you're doing.
Thank you, Tim.
Thank you. Your next response is from Michael Yee with Jefferies. Please go ahead.
Hi, thank you. Good morning. I appreciate the questions. I had 2 important follow ups. One was going back to the question about the WTO.
Can you just offer some color around the view of raw material supply capacity, etcetera? In other words, Setting 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 don't think it's not 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. Stefan, let me start on the raw material and the IP. Going back to what I said, is that If somebody was to start from scratch because again, there is no M1 player that's with idle capacity out there. 1, we'll not start by focusing on large scale raw material supplier. I mean, 1, we'll have to figure out how to make the money, And you cannot find that in our patents, which as you all know are on the Internet on the U.
S. Patent office website. And so one we have to figure out what machine do You need how do you make mRNA? What verification method you need? What analytical method you need?
And Once you have figured out all those things, which, trust me, is going to take your time, it is not easy. And the rest and our companies that are in the market where mRNA vaccine have been working on it for decades. And even companies that have been working on it for 10 months, 1 year, are still in the clinic trying to figure out how to get to a finish line. And so I really believe that this is not the issue. I really believe the IP topic It's mostly particularly driven.
This is not the issue. It might impact over technology like adenyls and proteins and this I could not comment on. But for Amalia, I really think this is the wrong question. Steven, you want to take the baron?
Yes. So thank you again Michael for the question. So on our multi valent strategy, we have at this point we're still waiting for the clinical data to confirm that. And as we expect to have that shortly as we've mentioned, we previously dosed people with the mRNA-twelve seventy three-two eleven variant. The preclinical data that we have published does or presented it does suggest that that is going to be the winning approach.
And as I highlighted Or as is highlighted by the monovalent clinical data we already have, there is a benefit to adding additional antigens and potentially therefore benefit with a multi I think it's important to recognize that we view this as 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-twelve seventy three-two eleven, the current bivalent vaccine, but because we think we're going to Go down the path of multivalent 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 multivalent vaccine. And we do think that's going to be required because we think the virus is not going to stand still and stop evolving.
And We suspect there's 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 It's efficient 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 the clinic.
Yes. Just a point to add to Steven on the multivalent traffic, a lot of people don't appreciate It is not easy to do multivalence mRNA GMP products from an analytical QC standpoint, Because those M and A have the same size. They look mostly similar because you just change a few I mean, a few nucleic acid. And that takes time now. And it's where the platform comes to drive 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 virus. So if you think about what the multivalent vaccine for COVID is going to look like, it's It's not going to be easy. And so for people that have not done mutivalence in GMP setting before, trust me the regulators because we've had this discussion with regulators around CME over the years. They're going to 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 Model.
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 2, 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 boosted data, This is more for Steve.
Actually to me it was a little bit surprised the differences between 12.70 3 versus 1273.35 was less or narrower than initially I would expect. Seems like 1273 should be also sufficient to protect from a varying strain. So what could be the And then you did just lay out the plan, you still will be going after the multi variant approach. But regarding the and explanation there. Like do you think that just single shot that was still should be sufficient for the protection?
Thanks, Gina. I'll maybe I'll take 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's A little bit less than twofold difference between them. But you are seeing substantially higher titers in the order of 1400 When you give the very specific booster that's mRNA-twelve seventy three-three fifty one.
Now I would note that this is happening already at day This is an early time point that we're looking at, at this point. We will also be looking at day 29. And in this case, we are effectively it is a prime with the 1273.351, right. It is the first dose of the strain First identified in South Africa. And so it's actually there's 2 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 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, To levels that are approximately similar in amount. Now that's not to say that mRNA-twelve seventy three as a booster couldn't wouldn't provide a benefit. And I think you're highlighting that, Gina.
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-twelve seventy three, our authorized vaccine at 50 micrograms. And that is encouraging. That is good Because I think it suggests that is also a useful strategy. But if you had to choose between the 2 and you are 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 evidence even at day 15, even after a priming dose That there's going to be an advantage to some strain matching of the antigen.
And that's what has us continue to be excited about a multivalent strategy.
Stephane? Sure. Thanks, Stephen. So Gina, on the contract manufacturers, we kind of look at kind of raw material, drug substance and drug products. In all of these, we have new tier contracts.
As soon as we got board authorization to go to 3,000,000,000 supply for 2022, We right away sent 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's a monologize where we actually have the biggest capacity of drug substance even in the 3,000,000,000
Thank you. Your next response is from Geoff Meacham with Bank of America. Please go ahead.
Good morning, guys. Thanks so much for the question. Just had 2 on COVID. The first one is, what does your data tell you with real world In this of 1273 today, as of now, with respect to some of the main variants, I'm just trying to reconcile 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-nineteen, 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 I see against disease against COVID-nineteen. I think it's important to note though that this is all happening very acutely.
We're 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. So what does this look like in 9 months? What does this look like in 18 months? And I think the really difficult situation everybody is in 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 and bad flu season in the winters, tens of thousands, maybe hundreds of thousands of deaths, 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 break through 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 level, we think for the very near term, the correct and sort of conservative decisions to continue to try and maintain the highest level of broadest immunity in the 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 3, 4, 5 years from now, hopefully we're well past the current pandemic. We still believe there's going to be SARS CoV-two reinfections. 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, We're 100 of years later and you still see reinfections mortality substantial healthcare costs associated with those viruses. We don't know whether SARS CoV-two 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 reinfect and when they do, they can really have a devastating effect in high risk populations, particularly older or 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 yet. But it's certainly a situation we're preparing for.
And Stephane, just on the second question on the different modalities Or Stephen Yes.
I apologize. And this is your second question, on different modalities and different parts of So I think what is pretty clear from all the 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 spike protein immunogenicity. That is the antigen that's being expressed. Is it theoretically possible that non spike antigens could have provided the same protection? I think it's definitely possible, still forward looking possible.
But I think you would be remiss to look past the multiple large Phase 3 trials that I pretty conclusive evidence of the value of going up for SPIKEDRA in trying to prevent COVID-nineteen. So I think you would probably if you went down that route, how to have to re demonstrate that efficacy. That may be increasing 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 Yes, 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 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 How much confidence do you have that there's going to be demand to fill up to 3,000,000,000 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 wanted to see if we should be assuming stable pricing for modeling purposes for 2022. Thank you.
Yes. So let me take a stab at the question, Corin. 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 M and A market looking And so there are not so many players in the market. And if you look at what the future needs across the globe, you're going to see up to vaccinate adults.
All adults are not going to get vaccinated this year on And then you have adolescents and then you have children across the world and then you have boosting. So when you add all those pieces, the reason we are building up to 3,000,000,000 of supply As a mix between the crop 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 setup than what it was a year ago. A year ago, you hear people saying, oh, I'm going to get a cheaper adenovirus vaccine because it brings no supplier Of course, this is not a discussion anymore. The discussion is, I want some mRNA vaccine for all my people.
I want variant booster specific. I want multivariant. 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. I'm sorry.
Yes. No, and on the pricing question for modeling purposes.
I think 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 of $3 This discussion is gone.
Okay. All right, perfect. Thank you, Stephane.
Thank you.
Okay. Your next response is from Hartaj Singh with Oppenheimer and 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 and 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 $1283,000,000 also.
And then just on OpEx, just any kind of color when we think about 2022 and 2023 For 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 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 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. 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, It's been shared. We're evaluating 50 micrograms as a potential primary series even in pediatric populations. As you can imagine, You don't need perhaps as high a 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 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 We'll continue to carefully evaluate whether or not we can adopt that as a target dose across all of our applications, but it will depend upon data.
Great. And then just a question on the
Go ahead.
Thanks, Steve.
No, go ahead, Dave.
Yes. 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 U. S. And we've seen, as I said, yields have been better than we'd, 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 I mentioned we while our overall operating expenses were quite stable at $500,000,000 in the Q1, we do see that Trending up and 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 Springer with Needham and Company. Please go ahead.
Hi, good morning. Thanks for taking our questions. Just another one on manufacturing capacity here. As you Potential 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 a potential manufacturing ramp would look like for some of these 2nd gen vaccines in terms of manufacturing capacity And the ramp relative to what we had seen with 1273. Thank you.
Yes, it's Stephane, so the total sensitivity ramp has been constrained by manufacturing capacity.
So if
you look at this year, The only we only supply $100,000,000 to those in Q1, which is an extraordinary number, is Because we're building the capacity. And so the way to think about it is as Ron 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 violent booster launches, as you think about RSV, flu, CMB Lounge, we will not be on the back foot. As you know, as part of our 2020 budget that we did at the end of 2019, we did not plan for a pandemic. We're 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 Therefore, I would anticipate all of the year supply constraint. Corinne and her team would love to product Because trust me, their phone is turning red hot by calls from around the planet and we would not be able to help protect more people, but we just can't because We're not planning on a pandemic in 2020. So I anticipate that for variance and for new product launch, we will make sure that we are not capacity Which is why the 3,000,000 supply volume that some people might think is maybe too aggressive. As I said in my remarks, The pipeline of the company is also going to play with this and fluid is just behind the multivariate vaccine. If you look at the couple of years out and we're not being manufacturing for 6 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 Corin and our team can Make sure that the market was.
Great. Thanks for taking my question.
Thank you.
Thank you. Your next response is from Mani Arouhar of SVB Leerink. Please go ahead.
Hey guys, thanks for taking the question. One quick one starting on financials. You gave us a little clarity on CapEx investments around expanding capacity production. Should we think of that level setting CapEx going forward, with a modest Going forward, I wish we think about as primarily a one time go down. And then secondarily, you've given a little bit of clarity, there's a lot of clarity, around COGS for this quarter versus rest of the year.
Going forward, should we think about the absolute COGS per unit, again, pretty linearly related to dose. Are there other attributes, royalties, etcetera, Differences in products used between different vaccines, that suggested that's not the right way to think about it.
Yes. 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 developments that have 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 don't give that precision as of yet because we're it's not that clear yet. 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. As a quick follow-up on I know it's been asked in various forms. You talk about the OUS manufacturing being about Quarter ish behind U. S. Manufacturing.
Right now based on your disclosures on volume, those who delivered This is what we have from the other mRNA competitor and with Duopoly right now. Market share for you guys is somewhere between 5% 10% A lot of these countries in terms of delivery 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 U.
S. Suggest you are better positioned for U. S. Contracting volume? Or do you think 2021, the results for 2021 contracting have nothing to do with 2022 And every year is a whole new game between you 2.
Yes, it's a good question. So as we said, the plan was always the plan we're
executing on. And so when we spoke
to country and set up those And so when we spoke to country and set up those 21 APAs, quarter Delivery to the countries as we knew capacity would come online. We had not anticipated early part of the year that we were we'll be able to export from the U. S. And we should not forget is, as you know, it's reported in the media daily. The U.
S. Is going to be having way too many vaccines very, very soon, if not already. And so the capacity that we are building in the U. S. And we are adding is also going to supply the world.
So I think one should anticipate a very big acceleration of shipments to countries outside the U. S. As we go into Q2 and even more in Q3 and Q4 As we met our obligation to the U. S. Government.
Great. That's really helpful. And do you guys comment on Where are you all what you're seeing in the real world in terms of vaccine hesitancyend market demand? There's been a couple of media reports But that's starting to be more of a limiting factor as opposed to supply, at least in the U. S.
Currently, certainly not globally.
Correct, in the U. S. And you see it on The daily numbers probably by the CDC for, I think, since mid April roughly, the number of vaccination per day in the country is going down. 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's 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're lucky, as I said, that very high rate of vaccination is going up every day. There are over parts of the country, as you know, where they have Way too many vaccines.
You have heard that the federal government, I think yesterday or the day before, they announced that they were going to start to shift products from one state to the other Based on actual demand and this is really linked to vaccine hesitancy. The U. S. Doesn't have a supplier vaccine issue anymore. That was true in January, not for anyone.
Great. Thanks. I'll hop back in queue in case there's 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. Stefan, as you said, The talk of IP waivers rather misses the point about limited global manufacturing capacity. So to sort of support that, given that you announced You would unilaterally waive IP enforcement back in October. To your knowledge, has any company in the following 7 months Sort 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 6 to 8 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 and A in Q1, there were some costs related to effectively start up of supply. I just wondered if you Give us any color on the non recurring one off elements of SG and A in Q1 as we think about evolution across the Thanks so much.
Thank you so much. So I'll take 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, When we are first to figure out how to make mRNA GMP before asking the regulators to start a clinical study, and that doesn't 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, 21, impossible, but given 22.
Stephen, I'll take that.
So the data we have from today is the initial analysis on the boosters. We are As we previously announced, we've been looking at a study ourselves and with the NIH. They're running a primary series vaccination And also looking at other elements. And so we will perhaps get T cell data in the midterm. But at this point, we do not have any T cell data yet on the boosters.
We do have ongoing studies with NIH 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 6, 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 than T cells. And David?
Yes. So in terms of the expenses we incurred in the first Including in commercial, yes, 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, We'll continue and therefore that's why I gave you some guidance that if you start at that $500,000,000 spend level In the Q1 and the 4th 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 we'll 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.
Great. 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 Banco.
Thank you so much for participating in today's call and for the great questions. We look forward to seeing you at Times Day on May 27. Stay safe, everybody. Have Have a nice day. Bye.
Ladies
and gentlemen, this concludes today's conference. Thank you for your participation.