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Presentation

BioNTech SE misses on earnings expectations. Reported EPS is $1.9 EPS, expectations were $2.64. BNTX isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to the BioNTech’s Fourth Quarter and Full Year 2023 Earnings Call. I would like to hand the call over to Dr. Victoria Meissner, Vice President of Strategy and Investor Relations. Please go ahead.

Victoria Meissner: Thank you, good morning and good afternoon. Thank you for joining BioNTech’s fourth quarter and full Year 2023 earnings call. As a reminder, the slides, we’ll be using during this call and the corresponding press release we issued this morning, can be found in the Investor Relations section of our website. On the next slide, you will see our forward-looking statements disclaimer. Additional information about these statements and other risks are described in our filings, with the U.S. Securities and Exchange Commission. Forward-looking statements in this call are subject to significant risks and uncertainties, speak only as of the date of this conference call and we undertake no obligation to update or revise any of these statements.

On Slide 3, you can find the agenda for today’s call. Today, I’m joined by the following members of BioNTech’s management team, Ugur Sahin, our CEO and Co-Founder; Ozlem Tureci, Chief Medical Officer and Co-Founder; Jens Holstein, Chief Financial Officer; and Ryan Richardson, Chief Strategy Officer. With this, I would like to hand over to Ugur.

Ugur Sahin: Thank you, Victoria. A warm welcome to all those joining us today. Slide 5. Let me start by reiterating our vision and company goals. BioNTech was founded 15 years ago with the vision to harness the power of the immune system, to fight human diseases, particularly cancer. The emergence of the pandemic accelerated our mission, leading to the development of our COVID-19 vaccine. This achievement not only showcased the versatility of our mRNA technology, but also highlighted our unique expertise and ability to execute fast. Our vision was realized and broadened, illuminating the potential of our science across other therapeutic areas. Building on this, our three objectives moving forward are. To establish a multiproduct company powered by our pioneering technologies and science, to address medical needs worldwide.

To contribute to the development of innovative precision medicines against cancer, aiming for multiple product approvals in the coming years. And to expand and strengthen our sustainable respiratory infectious disease vaccine business, building on the success of our COMIRNATY franchise. Slide 6. On the next slide, I want to talk about our clinical achievements, in 2023, we successfully advanced our clinical pipeline and enhance our technology platforms, digital capabilities and infrastructure by executing across our key strategic initiatives. We continue to develop and empower our innovative oncology and infectious disease pipelines. Today, we have over 20 programs in oncology and seven programs in infectious disease being evaluated in more than 40 clinical trials, including multiple Phase-2 or Phase-3 clinical trials.

I’m particularly excited about our recent achievements in shaping our oncology pipeline. We started seven clinical trials and licensed six clinical assets throughout the year. Most importantly, several assets have advanced to mid and late stage development with Phase-2 and Phase-3 clinical trials ongoing. These trials feature antibody-drug conjugates mRNA vaccines and novel-IO therapies in indications such as non-small cell lung cancer, breast and endometrial cancer, adjuvant colorectal cancer and adjuvant pancreatic cancer. In infectious disease, we started three first-in-human Phase-1 clinical trials, leveraging our proprietary mRNA vaccine technology, including candidates being evaluated against Shingles, Tuberculosis and Mpox. Over the course of 2024, we aim to advance and prioritize additional product candidates to late stage development.

We expect to have 10 or more potential registrational trials running. Slide 7. The field of oncology is currently undergoing a significant shift away from traditional chemotherapy therapy towards combination therapies. This shift leverages the power of immuno-oncology and antibody-drug conjugates to potentially transform also advance cancers into manageable conditions. As we reflect on the achievements of 2023, we can proudly say that we have accelerated our IO and ADC programs, by not only starting new trials, but also successfully recruiting over 2,000 patients into our clinical trials across various indications. This is a testament to the hard work and dedication of our team and our collaboration partners, as well as the trust and willingness of patients to participate in our studies.

Looking ahead to 2024, we aim to build on the success and recruit patients into our clinical trials across indications such as lung cancer, breast cancer, colorectal cancer and other indications. Slide 8. In 2023, we successfully executed strategic investments, acquisitions, licensing agreements and public private partnerships, enabling our continued progress towards building a multi-product, AI powered patient centric company. Since our foundation, we have placed a strong emphasis on computational medicine, data science, artificial intelligence and machine learning. With the acquisition of InstaDeep, we are integrating capabilities in supercomputing AI research and generative AI into various processes. For example, to identify and optimize molecules to predict biological and clinical outcomes and to speed up our workflows.

In 2023, we expanded our technology base to include ADCs by initiating new collaborations with DualityBio and Medilink Therapeutics. We believe ADCs have the potential to supplement or replace highly toxic chemotherapy regimens as a new combination backbone of cancer treatment. Our collaborations with OncoC4 and Biotheus complement our toolkit of technologies with next generation IO antibodies that offer unique mechanisms of action and have augmented our oncology pipeline with mid-to-late stage clinical programs. We have started strongly in 2024, on the collaboration front, by announcing a strategic alliance with Autolus aimed at advancing both companies autologous CAR-T cell programs towards commercialization. With this collaboration, we will support the development and commercialization of Autolus CAR-T cell therapy candidate, Obe-cel and retain options to participate in its Auto-122 and Auto-6 NG programs.

Importantly, we have the option to use Autolus commercial and cell therapy manufacturing infrastructure in a cost efficient manner. This is of relevance for our plans to extend the development of BNT-211 to additional Claudin-6 positive tumor types. And thus we realize its full potential. Slide 9, BNT-211 is our CAR-T cell therapy targeting Claudin-6. To improve CAR-T cell engravement and persistence, we co-developed a CAR-T cell amplifying RNA vaccine, or CARVac for short. BNT-211 is one example of BioNTech’s novel-novel combination. The goal is to enhance persistence and effective function of CAR-T cell by repeated administration of CARVac. Recently, we presented data suggesting a favorable effect of CARVac, on CAR-T cell persistence in our clinical trial with Claudin-6 tumor.

Based on the promising early clinical results. We believe that, BNT-211 has the potential to make a significant impact in patients with Claudin-6 positive tumors. Our near term strategy is to establish Claudin-6 as a proven target in solid tumors and to establish BNT-211 as the first CAR-T cell therapy in germ cell tumors. Claudin-6 is both — Claudin-6 is both expressed in solid cancers, including ovarian, lung, gastric, PDAC cancers, and other. Upcoming data will inform the development path for other tumor indications. Slide 10. In 2024, we will continue building a portfolio of compound classes that have synergistic mechanisms of action, including immunomodulators, targeted therapies, and mRNA vaccines. We believe that combination of these therapies, if approved, could play an important role in the efforts towards potentially curative approaches.

With that, I would like to thank you all for your confidence in our success and your continued support. I will now turn the call over to Ozlem, who will speak about our oncology pipeline.

Ozlem Tureci: Thank you, Ugur. Glad to speaking with everyone today. Starting on Slide 12, with an overview of our oncology pipeline. In 2023, we and our partners reported data across our portfolio at multiple medical meetings, including ASCO and ESMO, and we published manuscripts and peer review journals. More data readouts are expected this year. Starting at AACR on BNT-122, our individualized neoantigen based cancer vaccine in adjuvant PDAC and on BNT-116, our off-the-shelf cancer vaccine in non-small cell lung cancer. In 2023, we advanced and expanded our pipeline considerably and now have multiple mid-to-late stage trials ongoing. Our aim is to continue to progress our oncology pipeline towards pivotal data readouts and submissions for regulatory approvals in the next 18 months.

Slide 13, here on the left are the ongoing trials in mid-to-late stage development. The three on top of the list were initiated in 2023. BNT-316, an anti-CTLA-4 in IO experienced non-small cell lung cancer. BNT 323, an anti HER2 ADC in HER2-low breast cancer. And BNT-122, our individualized cancer vaccine in the adjuvant pancreatic cancer space. On the right are the product candidates based on ADC, IO, mRNA cancer vaccine modalities for which we are planning to initiate additional Phase-2 and Phase-3 trials. These programs include validated and novel targets as well as in-house and in-licensed assets with unique modes of action. We believe, we have multiple shots on goal. Our in-licensed assets are starting to contribute to value creation and towards de-risking our pipeline.

We plan to explore potential combination products candidates featuring these assets based on the scientific rationale, pre-clinical and clinical evidence, and also thinking of future treatment sequencing in different indications to provide options for patients along their disease journey. As shown in Slide 14, in 2023, we began building a pipeline of ADC candidates that now includes third generation ADCs directed against four distinct targets. These four targets collectively cover a wide range of cancer types. Our reason for adding this modality to our clinical multiplatform pipeline is that we believe ADCs will transform the oncology space and become broadly used backbones of combination treatment. Our strategy for acquiring these specific assets was based on their potentially differentiated profile, the objective of covering multiple cancer types and the broad markets they may address.

BNT-323 a HER2 targeting ADC is our most advanced ADC. It also is one-off or front run us in our clinical pipeline. It also is one of the front runners in our clinical pipeline. Now on Slide 15, BNT-323 is a third generation ADC that aims to overcome the drawbacks of first and second generation ADCs to achieve high stability in circulation, low risk of target payload delivery, a high drug antibody ratio of eight, and an expanded therapeutic window. It is comprised of a humanized anti-HER2 IgG antibody, covalently attached to a potent proprietary DNA topoisomerase-1 inhibitor via a stable maleimide tetrapeptide linker, selectively cleavable by cathepsins that are regulated in tumor cells. BNT-323 binding to HER2 on the surface of tumor cells inhibits HER2 signaling, followed by internalization of a ADC HER2 receptor complex cleavage of the linker, and release of the membrane permeable payload.

The effect is not only killing of these tumor cells but also bystander killing of neighboring tumor cells regardless of their HER2 expression levels. In preclinical studies with other third generation ADCs in animal models, BNT-323 was observed to have higher stability, lower levels of free payload and circulation, and more efficient payload release within tumor cells and stronger anti-tumor activity, including in HER2-low models. On Slide 16, now BNT-323 is currently being evaluated in a signal seeking Phase 1/2 clinical trial for HER2 expressing advanced solid tumors. The dose expansion part of the Phase 1/2 study is enrolling pretreated patients with advanced or metastatic HER2 expressing solid tumors. As of February of this year, more than 300 patients have received BNT-323 in this Phase 1/2 trial.

The first data from this study were presented at ASCO last year. We reported preliminary anti-tumor activity in heavily pre-treated patients with HER2 expressing solid tumors. Responses were observed in patients treated with different dose levels and with different HER2 expression status. Based on our findings in these dark green marked cohorts on the right, we have initiated potentially registrational trials in patients with endometrial cancer and breast cancer. On Slide 17. In the breast cancer cohorts of our Phase 1/2 trial, the 26 patients with HER2 positive cancer, which means high and intermediate levels of HER2 expression, showed an objective response rate of 50% and a disease control rate of 96.2%. The 13 patients refer to low breast cancer that have a particularly high medical need, had an objective response rate of 38.5% and a disease control rate of 84.6%.

BNT-323 was observed to be well tolerated and all adverse events were manageable. Interstitial lung disease of grade-1 occurred in two out of these 85 patients. Based on this data, we initiated a Phase-3 study of BNT-323 in chemotherapy naive patients, with hormone receptor positive HER2-low breast cancer whose disease has progressed on prior endocrine therapy with or without CDK4/6 inhibition in the metastatic setting versus investigators choice of chemotherapy. As shown in Slide 18, in the U.S., the U.K., the EU4 and Japan, approximately 700,000 patients per year are diagnosed with breast cancer. A majority of those achieve remission through surgery or the initial therapy. Those that do not get cured are being treated with hormonal and targeted therapies and chemotherapy.

First generations of HER2 targeting antibodies only benefited those 30% of patients with high or intermediate expression levels of HER2 designated as HER2 positive. More recently, patients with HER2-low expression that comprise two-thirds of the remaining 70% breast cancer patients have been shown to benefit substantially from new generation HER2 targeted ADC therapy. HER2 directed ADCs are currently only approved for chemotherapy experienced patients, meaning from first-line onwards. In our ongoing Phase-3 study, we are targeting chemo-naive patients from second-line onwards as marked here in dark green. Slide 19. Coming back to our Phase 1/2 trial and the findings in endometrial cancer patients with advanced recurrent or metastatic HER2 positive and HER2-low tumors.

For endometrial cancer, we received Fast Track designation and breakthrough designation from the FDA in 2023. In September 2023, clinical data from 17 patients with endometrial cancer were presented at the ASCO annual meeting. All patients had received one or more treatments lines including immunotherapy, anti-HER2 antibody or endocrine therapy. BNT-323 shows promising anti-tumor activity across different HER2 expression levels including IHC 1+ expression which is low expression, with an objective response rate of 58.8% of which 35.5% pending confirmation. The disease control rate, was 94.1%. While the sample size is still small and data cutoff is too early to draw conclusions on less frequent treatment, emergent adverse events and TEAEs with protracted manifestation, the safety profile was manageable and no new safety signals were observed.

Slide 20, patients with advanced, unresectable or recurrent endometrial cancer receive treatment based on their molecular profile. The latest clinical data support adding immuno-therapy to chemotherapy as a frontline treatment for patients with stage-4 endometrial cancer and dMMR status. Patients who overexpress HER2 can be treated with HER2 targeting therapies such as trastuzumab in combination with chemotherapy as a frontline treatment. Despite the recent advancements in frontline treatment, most patients relapse. At present there is no targeted therapy approved for patients who progressed on first line treatment and whose tumors expressed — express HER2. This is the patient population we are currently focusing on with BNT-323. Slide 21, I would like to reemphasize that our aim for 2024 is to further advance our key programs into late stage development with the aim of contributing to the next generation of oncology medicines, that could include candidates featured on this slide.

We believe our investments and efforts will pave the way for an initial wave of oncology product launches from 2026 onwards. I now pass the presentation to our CFO, Jens Holstein.

Jens Holstein: Thank you. Ozlem. And a warm welcome to everyone, who has dialed-in today’s call. 2023 was another successful year for BioNTech on its journey to develop novel therapies for cancer and infectious diseases. Let me highlight three main points here. We kept our global COVID-19 vaccine market leadership. We grew and advanced our late stage pipeline and we again delivered a strong financial performance highlighted by €3.8 billion of total recognized revenues, €1.2 billion of profit before tax, resulting in earnings per share on a fully diluted basis of €3.83. With this, we ended the 2023 financial year with approximately €17.7 billion of cash, cash equivalents and security investments. Turning to the next slide.

While our financial performance in 2023 was strong, and we were able to maintain profitability, there were also some financial challenges that we had to navigate through. In our third quarter earnings call last year, we updated our full year 2023 COVID-19 vaccine revenue guidance to around €4 billion, reflecting write downs in the amount of approximately €600 million by our collaboration partner Pfizer. In Q4. Pfizer recognized additional write-downs of approximately €300 million that negatively impacted our top line figure compared to our initial expectations for Q4. The negative impact on our revenue for 2023 accumulated to a total of approximately €900 million. Write-downs related to EG inventory would typically have a negative impact on the gross profit in a P&L.

Following our gross profit share agreement for Pfizer, write-downs by our partner have a negative effect on BioNTech’s revenue figure. That made our revenue guidance for 2023, challenging. Having said that, the agreement has an important advantage. BioNTech only require very little commercial infrastructure in the COVID-19 vaccine franchise and with this has low expenses related to sales and marketing in comparison to other players in the field. This is, we believe, favorable as COMIRNATY is a leading brand in the global COVID-19 vaccine market. Despite the decrease in our revenues in 2023, and despite the negative impact of these write-downs, we were able to both remain profitable in 2023 and grew our year-end financial position in respect of cash, cash equivalents and security investments to €17.7 billion compared to €13.9 billion at the end of 2022.

Please note that the contractual settlement of the gross profit share has a temporal offset of more than one calendar quarter. In addition, Pfizer financial quarter for the subsidiaries outside the United States differs from ours. I’ll be moving now to the summary of our financial results for the fourth quarter of 2023 and full year of 2023, as shown on the next slide. For the three months ended December 31st, 2023, we recognized €1.5 billion in COVID-19 vaccine revenues compared to €4.3 billion for the comparative period in 2022. For the financial year 2023, our total reported revenues reached €3.8 billion, compared to €17.3 billion in 2022. This was primarily driven by lower COVID-19 vaccine market demand. And as stated before, write-downs reported by our collaboration partner Pfizer, which negatively influenced our revenues.

Moving to cost of sales. Cost of sales amounted to €179 million in the fourth quarter of 2023, in line with the €183.5 million for the comparative prior year period. For the 2023 financial year, the cost of sales amounted to close to €600 million compared to approximately €3 billion in 2022. The drop was mainly caused by the decrease in COVID-19 vaccine sales. Research & development expenses reached €578 million for the fourth quarter of 2023 compared to €510 million for the comparative period in 2022. For the 2023 financial year, research & development expenses amounted to approximately €1.8 billion compared to €1.5 billion in 2022. The increase was mainly influenced by progressing clinical studies for pipeline candidates, as well as by our newly acquired product candidates and the development of variant adapted COVID-19 vaccine.

In-line with a higher headcount compared to the previous year to — for example, support our existing clinical trials and future growth initiatives. We also saw respective higher costs and wages, benefits and social security expenses in the financial year 2023. General administrative expenses amounted to approximately €0.1 million for both the fourth quarter of 2023 as well as for the comparative period in 2022. For the 2023 financial year, general and administrative expenses remained at €0.5 billion. Around the same level as in the previous year. Slight increase in G&A was mainly influenced by increased expenses for IT services, as well as by wages benefits and social security expenses resulting from an increase in headcount. Income taxes were accrued with an amount of €205.3 million for the fourth quarter of 2023 compared to €893.9 million for the comparative period in 2022.

For the 2023 financial year, income taxes were accrued with an amount of €255.8 million compared to €3.5 billion in 2022. The derived effective income tax rate for the 2023 financial year was 21.6%, roughly in line with our expectations of around 21%, improved versus last year’s tax rate of 27%. For the fourth quarter of 2023, net profit reached €457.9 million compared to €2.3 billion in the comparative period in 2022. For the year ended December 31st, 2023, net profit reached €0.9 billion, compared to €9.4 billion in 2022. Our diluted earnings per share for the fourth quarter of 2023 amounted to €1.90 compared to €9.26 for the comparative period in 2022. For the 2023 financial year, our diluted earnings per share amounted to €3.83 compared to €37.77 in 2022.

Let’s continue with the next slide. This shows the 2023 financial guidance provided to you during our Q3 earnings call in November 2023 in comparison with the actuals for the 2023 financial year. Starting from the top, we recognized €3.8 billion of COVID-19 vaccine revenues compared to our guidance of around €4 billion. Approximately €300 million additional write-downs by our collaboration partner had to be unexpectedly recognized in Q4. Moving to R&D expenses. During the 2023 financial year, our R&D expenses were nearly €1.8 billion, slightly below our amended guidance from November of 2023 of €1.82 billion. Lower spending in, for example, all our collaborations have been a main contributor as well as strong cost control measures.

Our core R&A activities in 2023 focused on broadening and accelerating our existing pipeline of product candidates in oncology and infectious diseases, in line with our expectations. Moving to SG&A expenses, during the 2023 financial year, we recognized €558 million in SG&A expenses slightly below the lower end of our amended guidance of €600 million to €650 million. Again, we were closely monitoring our spending to reflect the uncertainty on the revenues without jeopardizing the future needs in this area. Moving to CapEx our 2023 financial year capital expenditures for operating activities amounted to €276 million, whereof the majority was related to investments in building our laboratory and office facilities in Mines Germany. The spending is in line with our expectations ranging from €200 million to €300 million.

Lastly, tax. As already mentioned, during the 2023 financial year we reached an annual effective income tax rate of 21.6%, which is roughly in line with our amended guidance of around 21%. Turning to the next slide, showing the 2024 financial year guidance. Let me highlight now some key aspects of the company’s outlook for the 2024 financial year. Starting with total revenues for the BioNTech group, we expect total revenues in the range of €2.5 billion to €3.1 billion for 2024. In providing a range estimate today, we take to some extent potential up and down cuts into account. For example, we assume largely the same vaccination rate for the U.S. market, but have seen some price pressure in the U.S. in Q4, some smaller inventory write down risks by our collaboration partner Pfizer.

As we have faced again additional write-downs above the previous announced ones that hit our revenue figure in Q4 2023. We also assume that we generate revenues from a pandemic preparedness contract with the German government in 2024. For the 2024 financial guidance, we expect our R&D expenses to be in the range of €2.4 billion to €2.6 billion, while our SG&A expenses are expected to be in the range of €700 million to €800 million. Please note that anticipated expenses related to the external legal advice in connection with legal litigations is not reflected in SG&A but in other operating expenses. Additionally, the guidance does not include, but may be impacted by potential payments resulting from any collaboration agreements or in-licensing deals, M&A transactions or outcomes of ongoing or future legal disputes or related activities such as judgment for settlements.

Lastly, capital expenditures for the 2024 financial year are expected to be in the range of €400 million to €500 million. In 2024, we will be increasing our operating expenses in R&D and SG&A to accelerate BioNTech’s transition into a multi-product oncology and infectious disease company with a commercial footprint, for that, we want to increase our investments to lift the potential value that we see in our portfolio of product candidates. In 2023, we in-licensed multiple assets to bolster our late stage pipeline. This year, we will invest in progressing our candidates into later stage trials to fuel BioNTech’s next stage of growth. As previously mentioned, we aim to have 10 or more potentially registrational clinical trials ongoing by the end of 2024.

With this, we pave the way for multiple potential product approvals estimated to begin with first launch in 2026. As previously indicated, 2024 will be a transition year for our company during which we will continue to invest in our long term growth strategy while maintaining strict cost discipline. Overall, during this transition year, our revenues will be driven largely by the uptake of our COVID-19 vaccines in the second half of 2024. As a consequence of the expected revenue range and taking into account cost of sales, R&D and all other expenses, we do not expect to be profitable in 2024. Turning to the next slide today, BioNTech has a leading and profitable COVID-19 vaccine business. As you can see on this slide our COVID-19 vaccine business benefited from its lean fixed-cost structure in 2023 and generates very attractive positive results.

In the coming years, we aim to invest alongside our partner in bringing variant adapted and potentially combination vaccines to market with a goal to further contributing to our future value generation. In addition to our value contributing COVID-19 vaccine franchise, we are investing into long term value creation with our multiple product oncology pipeline. Let me highlight three value drivers. We plan to have 10 or more potentially registrational trials ongoing by the end of 2024. We aim to have a first potential oncology launch in 2026, adding to our top line. And thirdly, we believe to have a diversified clinical pipeline that offers multiple product growth opportunities for the years to come. Summarizing, we believe that our COVID-19 vaccine franchise and our innovative pipeline of product candidates will drive long-term value creation for the company.

Our Chief Strategy Officer, Ryan Richardson, will now talk you through some of the strategic drivers for this transformation. Thank you.

Ryan Richardson: Thank you, Jens. To wrap up our prepared remarks, I’ll provide a high level overview of our 2030 strategy and the path to value creation from our mid-and-late stage oncology pipeline programs before concluding with a few important dates to mark on your calendars. On the next slide, we highlight the broad value creation opportunities underpinning our 2030 strategy. Our balance sheet has been further strengthened in 2023 and will continue to serve as a strategic asset to fuel long-term growth. We will continue to invest behind our market leading COVID-19 vaccine franchise, leveraging our partnership with Pfizer across R&D manufacturing and commercial functions. On a product contribution basis. We expect this franchise to continue to be highly cash generated.

We are working with Pfizer to develop a COVID-19 and influenza combination vaccine, which is successful in late-stage trials, could reach the market as early as fall 2025. We are ramping up our investments into our expanding and diverse latest stage oncology pipeline. Our goal is to have at least 10 trials initiated with registrational potential by the end of this year. We believe this broad pipeline can deliver multiple new commercial product launches in the years ahead. Finally, we will continue to invest to industrialize our mRNA vaccine platform to address infectious diseases with high unmet global need. Today, we have five infectious disease vaccines beyond COVID-19 in Phase-1 clinical trials, by 2030, we aim to bring our first vaccines from this pipeline to market, complemented by an expanding late stage infectious disease vaccine pipeline.

Our 2030 strategy aims to transform BioNTech into a diversified cash flow generating, multi-product company that can deliver sustained long term growth. Turning to the next slide, I would like to spend a little more time today on the growth potential of our expanding late stage pipeline. This pipeline includes seven mid and late stage programs that are currently in Phase-2 and 3 trials. We have mentioned our goal to have 10 plus trials with registrational potential initiated by the end of 2024. Also, expect a busy calendar of program updates this year. These include updates on several cancer vaccine programs at AACR, which were announced last week. And further anticipated updates for specific IO and ADC programs at other major medical conferences throughout the year.

2024 will therefore be an important year of execution as we transition toward our goal of commercializing our oncology portfolio. We are looking forward to sharing further details on these programs throughout the course of the year. Ultimately, we believe our oncology pipeline can deliver one or more indication launches per year from 2026 onwards. We see significant potential for our mid and late stage programs to address unmet medical need across a broad range of cancer types and across the cancer treatment continuum. We are truly excited by the potential our oncology pipeline holds to expand and improve on cancer treatment options for people around the world. In closing, I would like to highlight on the next slide a few important investor events we will be holding this year.

Our annual general meeting will take place on May 17th. And the next innovation series event on November 14th. This year we will also introduce a new and exciting event focused on our expanding work in the field of artificial intelligence and machine learning, which will take place on October 1st. We look forward to sharing further details on both events in the near future. With that I would like to thank our shareholders for their continued support and open the floor for questions.

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Operator: [Operator Instructions] And your first question comes from the line of Daina Graybosch from Leerink Partners. Please go ahead.

Daina Graybosch: Yes, thank you, guys, thanks for the update. And the question. As you look-forward to these 10 potential registrational trials. I wonder if you can talk about, maybe even a range of revenue expectations. That you could be looking at by 2030 from the oncology portfolio? And then I have a follow-up.

Ryan Richardson: Yes, thanks, thanks Daina. I think the pipeline is quite broad, and one of the criteria that is common among most of those assets in that list is actually that they can target multiple solid tumors. And so that means that actually the peak sales estimate for that collection of assets is actually well over €10 billion in our range long term — in our estimates long term. And — but I think we’re focused now on executing in those first launches, so I think we’re not prepared yet to give you a 2030 number. But we do think that we’re talking here about double-digit indications that we can address across the solid tumor landscape.

Daina Graybosch: Great. Thank you. And then my follow-up is more specific on the Autolus collaboration. I wonder if you could talk about potential scenarios for how you see your CAR-T business with Autolus, maturing and advancing in the next five year?

Ryan Richardson: Sure. So I’ll start with that too. So the primary rationale for Autolus was that, as we ended 2023, we actually had higher conviction on moving forward more aggressively with BNT-211, which is our lead cell therapy CAR-T program, as you know, targeting Claudin-6 with an mRNA vaccine amplifier. And so we’ve talked about testicular cancer being a potential lead indication and fast — a potential fast-to-market path given the high unmet need in the refractory setting. But we’re also seeing strong and encouraging data in other indications, such as refractory ovarian cancer and even seeing responses in lung cancer and other Claudin-6 positive tumors. And so the Autolus collaboration gives us a sort of runway to more aggressively explore multiple pivotal trials in parallel leveraging the manufacturing infrastructure that we have in the United States through the Kite acquisition of assets that we had two and a half years ago, but also combined with the Autolus state of the art manufacturing infrastructure in the United Kingdom.

So that’s the first rationale. And then in addition to that, the deal incorporates some options where we could come in at the pivotal trial stage into a couple of Autolus’ programs. We find their Phase-1 data for our CD19/22 very encouraging, it’s early, but it’s encouraging and also the GD2 CAR we think is an interesting approach that could be complementary. So the collaboration contract gives us the optionality to actually scale into a multiproduct franchise in cell therapy, while keeping our fixed cost lean and allowing us to accelerate BNT211 forward.

Operator: Thank you. We will now go to the next question. And your next question comes from the line of Chris Shibutani from Goldman Sachs. Please go ahead.

Unidentified Analyst: Hi, this is Steven, on for Chris. Thank you for taking our questions. I had one on the financial side. Can you just give a little bit of color about what’s driving the increase in SG&A guidance. I think at the midpoint it’s about over a 30% increase from the prior year. So just wondering if that’s related to COVID or if that’s more related to building out the oncology franchise? And then specifically on your HER2 ADC, can you just talk about what type of clinical profile would be attractive in that HER2-low breast cancer indication? Thank you.

Jens Holstein: Yes, thanks for the question. I’ll take the first one on the SG&A expense increase that we anticipate for 2024. You have heard some from us that we plan to launch potentially, our first product in 2026, of course, we got to build-up the infrastructure to be able to commercialize those compounds. That are coming down in ’26 onwards. And therefore, we intend to invest in infrastructure. Specifically also in the commercial setup in the U.S. going forward.

Ozlem Tureci: The second question was, what makes for our HER2 ADC, the indication of hormone receptor positive HER2-low breast cancer, interesting. Did I get that right?

Unidentified Analyst: More kind of expectations for what type of clinical profile would be attractive in that space.

Ozlem Tureci: [The TPP]. So our HER2 ADC. We think has a differentiated safety efficacy profile. And this is what we want to see in our Phase-3 trial, which is ongoing.

Ugur Sahin: Yes. And just to add on that, what Ozlem shared is we have a profile allowing us to provide higher doses and we believe that this is particularly important in the HER2 1+ population, which is around half of the HER2-low population. Particularly this is interesting in breast cancer as well in endometrial cancer and other HWE2 positive tumors. And we believe that we can position here the product with higher objective response rates plus higher durability of response.

Unidentified Analyst: Okay, thank you very much, team.

Operator: Thank you. Your next question comes from the line of Bill Maughan from Canaccord. Please go ahead.

Bill Maughan: Good morning and thanks. So I have kind of a two part question about your ability to maintain market share on the COVID vaccine going forward. Just wondering how you’re thinking about your ability to, I guess, defend and or grow that. Just given, for example, I know Arcturus in Japan with a self-amplifying RNA for COVID. And Moderna has previously made a lot of noise about their pre-filled syringe. I know that Pfizer is rolling out a pre-filled syringe, but I guess I’m just wondering how widespread that is? And if you’ve seen any competitive advantage where that has become available? Thank you.

Ryan Richardson: Yes, thank you for the question. So we believe that we still performed very strong in 2023, and having globally above a 50% market share for the COVID franchise, we did see some market share pressure in a couple of markets like the United States. As you point out, we’ve also had market share gains in a number of other geographies. We maintained a very high market share above 85% in Europe, and also grew our market share in countries like Japan, which have actually been pretty sizable from a volume perspective over the last 12 months. Going into 2024, we do feel confident that we can continue to maintain a leadership position above the 50% mark globally. To your question on competition, yes, we do expect there to be some new entrants, mostly niche players in some of the peripheral markets.

I think that you pointed out also the role of pre-filled syringes, which is an important point. I think last year it is fair to say that part of the reduction in market share in the United States that we experienced was due to a lack or limited supply of pre-filled syringes. Last year, we did have some supply in the United States, but we also had single dose vials as well. And clearly, the market preference was for pre-filled syringes. As we go into 2024, we have taken steps with Pfizer to dramatically increase our supply of pre-filled syringes. In the United States, but also elsewhere.

Bill Maughan: Thank you.

Operator: Thank you. Your next question comes from the line of Akash Tewari from Jefferies. Please go ahead.

Ivy Wang: Good morning. This is Ivy on for Akash. Thanks for taking our questions. We have two. The first one is on COVID. So for COVID vaccines gross margin given that Pfizer reported $5.4 billion for revenue versus your €1.5 billion, and that your exploiting growth, perfect, 50-50 with Pfizer. It seems to imply a gross margin of 60% which is lower than previous levels of around 80%. So, is this just because of the additional write-offs Pfizer had in Q4? Additionally, I think, what’s your view on gross margin in ’24 and beyond for your COVID business, especially when the competitors seems to talk about a higher GTN discount. And my second question is quickly for pipeline. I guess how encouraged are you with the early signals of BNT122 in other consumers outside of pancreatic? And is there any read-across from the pancreatic data that will be presented at AACR soon? Thanks.

Jens Holstein: Yes. So, let me take the first question. Thanks for the question. To just clarify, Pfizer is, as you know, responsible for the commercialization of COMIRNATY in most markets with the exception of Germany and Turkey. And we have a gross profit share. And that methodology works in a way that, of course, you know whatever Pfizer is writing-off on in the — in write-off on inventories or something that is — will grow in the gross profit share and will reduce our revenue figure, that is what we are trying to highlight for the — for the last quarters, because we have been hit by round about €900 million due to that procedure. This means for us, this is basically a 100% profit for us before COGS that come across, due to the manufacturing activities that we are responsible for, and they are limited.

And if you compare the margin development that we’ll have in ’23 versus ’22, you will see that we are above 80% margin. So, you can’t really read-through from what Pfizer’s reporting really to our numbers that we report.

Victoria Meissner: With regard to your question to our BNT122 and its performance in PDAC, we are very encouraged, not surprised, but really encouraged, and this is also the reason why following the Data Disclosure of our Phase 1 PDAC trial, we have initiated a Phase 2 PDAC trial in the adjuvant setting with BNT122 which is enrolling of patients. The results we saw in this cancer type, which is considered as immune suppressive and cold and low in tumor mutational load is encouraging us also to go into other cancer indications with this type of immunological profile. And in fact in our Phase 1 trials in other such indications, we have collected data which supports the PDAC findings and which we currently are compiling to be published as manuscripts.

Ivy Wang: Thanks.

Operator: Thank you. Your next question comes from the line of Yaron Werber from TD Cowen. Please go ahead.

Yaron Werber: Right. Good morning, and thanks for taking that. I have a couple of questions as well. So maybe the first one is on 323, the ongoing Phase 3 study, the DYNASTY-Breast02. Can you talk a little bit about the powering and the PFS, and it sounds like, if I remember correctly, Chemo, the ORR, the — historically is 11% to 36%, PFS is about 3% to 8%, you show they are 39% ORRs [indiscernible]. It depends how chemo is going to do, which is kind of will determine kind of how the study works. So maybe if you can talk about the powering of the study and maybe a little bit, if you can share any Phase 1/2 data on PFS, so we can kind of just get a sense of what you’re expecting. And then secondly, just curious, you have such a huge pipeline already. And you’ve executed and you obviously continue to execute and you need to grow the company a lot to continue to execute. What’s the purpose to doing potentially more BD, given that you have so much already? Thank you.

Ryan Richardson: Thanks Yaron. So, I’ll start with the second question, and then we’ll come into the first. So I think, we were obviously very active last year on the BD front, bringing in-house six clinical stage or near clinical-stage assets. We are going to continue to be active. But Yaron, I think we would agree that we feel that we already have actually now a very broad toolkit that allows us to do a lot. And so, we are focused increasingly on execution. So, I do think that, we’re going to continue to be active in BD, but probably not as active in terms of the number of clinical-stage assets that we’re looking to bring on-board. We’re looking — the focus this year is going to be more on executing and getting the pivotal trials initiated and enrolled.

Ugur Sahin: Yes. To your second question. I think the second question can be — can be better answered with the powering for hazard ratio, which we usually do at around 0.7, 0.65. And with that, we have a power of 90%. And this gives rise to a study of around 530 patients that we will onboard.

Operator: Thank you. I will now go to the next question. And your next question comes from the line of Etzer Darout from BMO Capital. Please go ahead.

Etzer Darout: Great. Thanks for taking the question. Just one question from me. On BNT327 VEGF PD-L1, you highlighted the program sort of prominently, a couple of slides. And looking at sort of Phase 3 2024 and beyond. Just wondered if you would be providing any clinical updates for this program in 2024, what we could expect to see there. And any more specifics as well on sort of the potential path to Phase 3 and what programs or what indications specifically, you made, be able to sort of pursue with this molecule. Thank you.

Ugur Sahin: Yes. Thank you for the question. Indeed, we will see a number of clinical trial updates on this molecule in multiple indications. Just to remind everyone, this is a bispecific molecule, which has a PD-L1 for PD-1 blocking and anti-VEGF arm. What we have seen so far consistently, and in a number of cohorts is then the objective response rate which are very encouraging in various indications, and what we have also reported already first two — first combination size and small-cell lung cancer and in triple-negative breast cancer, cancer patients, and what is really exciting in this indications is, it’s not only the high response rate in the range of 60% to 75% in triple-negative breast cancer patients, but also the response rate in the patient population who are – are negative for immune infiltrate which is unusual, yes, for checkpoint blockade.

So, we believe that this molecule — that we can replicate this molecule, not only in these two indications, small cell lung cancer and triple-negative breast cancer, but also in a wider range of indications. This results allowing us to position the molecule as a combination partner for classical chemotherapy and even more importantly for our ADC portfolio.

Etzer Darout: Thank you.

Operator: Thank you. Your next question comes from the line of Jessica Fye from JPMorgan. Please go ahead.

Jessica Fye: Hi guys, good morning. Thanks for taking my questions. First on the topline guidance. I think you’ve previously talked about roughly a €3 billion topline, just a couple months ago, and, I appreciate you highlighting the variables that factor into the guidance, but can you just expand on which of those assumptions drove the change? And then second, on the pipeline related to the HER2 space. What are you guys going to be watching for in the DESTINY Breast-06 readout, as it relates to your HER2 ADC? Thank you.

Jens Holstein: So yes, let me take the first question. So we broadened the range. We felt that the top line guidance should reflect the assumptions that we’ve made with respect to the vaccination rates and the price levels that we currently have seen, where COMIRNATY of course is significantly relevant. We also have made assumptions related to the inventory write offs that hit us back in ’23. And there will be some write offs that we got to anticipate going forward. So we’ve done some included here some assumptions. And of course, there are also some additional anticipated revenues related to our service business and the German pandemic preparedness contract that we have in-hand, or we are finalizing currently with the government. So therefore, we feel we have — that was driving basically, the broadening of that range.

Jessica Fye: So each of those really factored into the broadening.

Jens Holstein: This is — there are some upsides, there are some downside that I mentioned and we’ll try to work it in with of course current assumptions. That could vary over-time, but that’s what we’ve done, yes.

Jessica Fye: Got it.

Ozlem Tureci: Yes, with regards to our HER2 ADC, the concept of her HER2 ADCs and the molecules which are around, that’s a great concept, that’s very obvious. And we are very excited about our HER2 two ADC, the molecule BNT-323 which we have partnered with Duality. And as Ugur pointed out earlier, in HRE2-low breast cancer are looking for making a difference in this high medical need population. You also have heard about our target hazard ratio which we are targeting.

Ugur Sahin: And we can’t of course comment on the clinical price of third parties.

Jessica Fye: Thank you.

Operator: Thank you. Your next question comes from the line of Simon Baker from Redburn. Please go ahead.

Simon Baker: Thank you for taking my question. Two quick ones if I may. The 2024 R&D guidance of €2.4 billion to €2.6 billion is a step-up on ’23 and against the plethora of studies you’re running. That makes perfect sense, but I was wondering is this the new normal? I was wondering what you could say about the anticipated levels of R&D expense beyond 2024? And finally, there’s been an awful lot of deal activity in the radiopharmaceutical space of late, I’d be interested to get your thoughts on the attractiveness of that modality? Thanks very much.

Jens Holstein: Yes, happy to take the first question. So, as you pointed out correctly, of course, we have broadened our portfolio. We have more and more late stage clinical trials running and those drive the costs up to a great extent. And going forward, we haven’t given any guidance here yet for ’25 following years. So you got to bear with us a little bit. But of course, late stage clinical trials will cost some money. We will carefully look where we invest our money. We have shown that in ’23 already, where we had the same sort of range at the beginning and then we reduced costs also reflecting the pressure that we have faced on the top line regarding the COVID revenues figures that we had to adjust during 2023. So there is some level of insecurity.

I think it’s part of our job to manage our costs here. And of course we will do that in ’24, and in the ongoing years, but we will invest in the areas where we feel will create value for the company. And value for the shareholders. That remains on top of our list going forward.

Ugur Sahin: Yes. And the second part of your question about attractiveness of radioligand, I would like to say, and I am repeating myself, is that oncology is being in a transformation. And we will see this transformation ongoing in the next 10 to 15 years. And the transformation happens because there are new concepts, and one of the new concepts is targeting tumor cells but having bystander effect. And this is what we are seeing in radioligand. So, we have this targeting of tumor cells plus additional bystander effect. And this is even more pronounced in the ADC field. So we will see really tremendous transformation in the oncology, providing us the opportunity to open up indications where we believed in the past, patients.

We can’t offer patients anything. And this is offering now the opportunity to treat patients with advanced diseases, and not only with the ADCs, but bring in combinations and thereby ensure that even in patients with advanced disease, we really get a considerable clinical benefit.

Simon Baker: Great, thanks so much.

Operator: Thank you. Your next question comes from the line of Ellie Merle from UBS. Please go ahead.

Sara Vernizzi: Hi, this is Sara on for Ellie. Thanks so much for taking our question. Could you remind us the latest thinking about when we could see data from iNeST Phase-2 randomized trial and what you’re hoping to see there that would continue to give you guys confidence in the program and moving forward?

Ugur Sahin: Okay. Shortly, we will report iNeST data on our melanoma trial this year, latest in the second half of this year, and we expect the next update for our colorectal cancer study at end of 2025.

Sara Vernizzi: Great. Thanks.

Operator: Thank you. We will now go to our final question for today. And your final question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead.

Emmanuel Papadakis: Hello. Thank you. So quick question from us, Emmanuel Papadakis, Deutsche Bank. So just wanted to know what are the first Phase-3 readouts, we will see for the rest of the portfolio in 2025 or beyond? And I’m assuming nothing major in 2024. Please correct me if I’m wrong. Thank you.

Ryan Richardson: Yes, thank you, Emmanuel. So we talked about a couple of different trials that we think could produce data in 2025 ahead of product approvals, if successful. And that includes the Phase-2 randomized trial for iNeST and CRC, which Ugur just mentioned. There’s the potential for an interim update in the second half of 2025 or early 2026. And we’ve also talked about the BNT-323 program in refractory second, third line endometrial cancer. So then those initial readouts are likely to be Phase-2, but we think they could have registrational potential if the data is strong. Obviously, the goal by the end of this year is to start many Phase 3. Some of those have already started. So we could have further data updates as well from the pipeline. But those are the two that I would — that. I would point you to.

Emmanuel Papadakis: Thank you.

Operator: Thank you. This concludes today’s conference call. Thank you for participating, you may now disconnect.