Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a‑16 OR 15d‑16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF MAY 2023

COMMISSION FILE NUMBER 001-39081
BioNTech SE
(Translation of registrant’s name into English)
An der Goldgrube 12
D-55131 Mainz
Germany
+49 6131-9084-0
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20‑F or Form 40‑F: Form 20‑F Form 40‑F
Indicate by check mark if the registrant is submitting the Form 6‑K in paper as permitted by Regulation S‑T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6‑K in paper as permitted by Regulation S‑T Rule 101(b)(7):




DOCUMENTS INCLUDED AS PART OF THIS FORM 6-K

On May 8, 2023, BioNTech SE (the “Company”) provided a development update and reported its financial results for the three months ended March 31, 2023. The interim condensed consolidated financial statements as well as the operating and financial review and prospects of the Company for the three months ended March 31, 2023 are attached hereto as Exhibit 99.1 and shall be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and incorporated by reference herein.




SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BioNTech SE
By:/s/ Jens Holstein
Name: Jens Holstein
Title: Chief Financial Officer
Date: May 8, 2023




EXHIBIT INDEX
ExhibitDescription of Exhibit
99.1




Document
Exhibit 99.1


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BioNTech SE
Quarterly Report of BioNTech SE for the Three Months Ended March 31, 2023


Exhibit 99.1
Our principal executive offices are located at An der Goldgrube 12, D-55131 Mainz, Germany. Our telephone number is +49 6131-9084-0. Our website address is www.biontech.com. The information contained on, or that can be accessed through, our website is not part of this document. Our agent for service solely for the purpose of notices and communications from the Securities and Exchange Commission in the United States is c/o BioNTech US Inc., 40 Erie Street, Suite 110, Cambridge, Massachusetts 02139, +1 (617) 337-4701.


Exhibit 99.1
Unaudited Interim Condensed Consolidated Financial Statements
6 Intangible Assets
13 Events after the Reporting Period
Operating and Financial Review and Prospects
Risk Factors



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Unaudited Interim Condensed Consolidated Financial Statements
Interim Condensed Consolidated Statements of Profit or Loss
Three months ended
March 31,
20232022
(in millions €, except per share data)Note(unaudited)(unaudited)
Revenues
Commercial revenues31,276.56,362.2
Research & development revenues30.512.4
Total revenues1,277.06,374.6
Cost of sales4.1(96.0)(1,294.1)
Research and development expenses4.2(334.0)(285.8)
Sales and marketing expenses(12.2)(14.3)
General and administrative expenses 4.3(119.4)(90.8)
Other operating expenses 4.4(118.1)(71.6)
Other operating income 4.557.1134.7
Operating income654.44,752.7
Finance income4.682.3272.1
Finance expenses4.7(29.0)(6.7)
Profit before tax707.75,018.1
Income taxes5(205.5)(1,319.3)
Profit for the period502.23,698.8
Earnings per share
Basic profit for the period per share2.0715.13
Diluted profit for the period per share2.0514.24
The accompanying notes form an integral part of these interim consolidated financial statements.
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Interim Condensed Consolidated Statements of Comprehensive Income
Three months ended
March 31,
20232022
(in millions €)Note(unaudited)(unaudited)
Profit for the period502.23,698.8
Other comprehensive income
Other comprehensive income that may be reclassified to profit or loss in subsequent periods, net of tax
Exchange differences on translation of foreign operations(2.1)3.7
Net gain on cash flow hedges1.7
Net other comprehensive income / (loss) that may be reclassified to profit or loss in subsequent periods (0.4)3.7
Other comprehensive loss that will not be reclassified to profit or loss in subsequent periods, net of tax
Remeasurement loss on defined benefit plans(0.1)
Net other comprehensive income / (loss) that will not be reclassified to profit or loss in subsequent periods(0.1)
Other comprehensive income / (loss) for the period, net of tax (0.4)3.6
Comprehensive income for the period, net of tax501.83,702.4
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
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Interim Condensed Consolidated Statements of Financial Position

March 31, December 31,
(in millions €)20232022
Assets Note(unaudited)
Non-current assets
Intangible assets 6378.6219.7
Property, plant and equipment 639.2609.2
Right-of-use assets208.4211.9
Other financial assets7516.880.2
Other non-financial assets4.46.5
Deferred tax assets 5245.5229.6
Total non-current assets 1,992.91,357.1
Current assets
Inventories 8424.1439.6
Trade and other receivables 76,450.57,145.6
Contract assets  5.7
Other financial assets 7358.0189.4
Other non-financial assets171.3271.9
Income tax assets 532.60.4
Cash and cash equivalents12,143.913,875.1
Total current assets 20,086.121,922.0
Total assets22,079.023,279.1
Equity and liabilities
Equity
Share capital9248.6248.6
Capital reserve91,547.91,828.2
Treasury shares9(7.6)(5.3)
Retained earnings19,335.218,833.0
Other reserves 10(858.8)(848.9)
Total equity 20,265.320,055.6
Non-current liabilities
Lease liabilities, loans and borrowings7172.4176.2
Other financial liabilities 76.16.1
Income tax liabilities510.810.4
Provisions118.68.6
Contract liabilities45.648.4
Other non-financial liabilities14.017.0
Deferred tax liabilities5.36.2
Total non-current liabilities 262.8272.9
Current liabilities
Lease liabilities, loans and borrowings737.436.0
Trade payables729.9204.1
Other financial liabilities 7435.9785.1
Refund liabilities80.224.4
Income tax liabilities5526.3595.9
Provisions11320.4367.2
Contract liabilities22.077.1
Other non-financial liabilities98.8860.8
Total current liabilities1,550.92,950.6
Total liabilities 1,813.73,223.5
Total equity and liabilities 22,079.023,279.1
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
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Interim Condensed Consolidated Statements of Changes in Stockholders’ Equity
(in millions €)NoteShare capitalCapital reserveTreasury sharesRetained earningsOther reserves Total equity
As of January 1, 2022246.31,674.4(3.8)9,882.893.911,893.6
Profit for the period3,698.83,698.8
Other comprehensive income3.63.6
Total comprehensive income3,698.83.63,702.4
Issuance of share capital0.567.167.6
Redemption of convertible note234.9234.9
Transaction costs(0.1)(0.1)
Share-based payments 1012.212.2
As of March 31, 2022246.81,976.3(3.8)13,581.6109.715,910.6
As of January 1, 2023248.61,828.2(5.3)18,833.0(848.9)20,055.6
Profit for the period502.2502.2
Other comprehensive loss(0.4)(0.4)
Total comprehensive profit / (loss)502.2(0.4)501.8
Share repurchase program9(279.7)(2.3)(282.0)
Share-based payments10(0.6)11.510.9
Current and deferred taxes5(21.0)(21.0)
As of March 31, 2023248.61,547.9(7.6)19,335.2(858.8)20,265.3
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
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Interim Condensed Consolidated Statements of Cash Flows

Three months ended
March 31,
20232022
(in millions €)(unaudited)(unaudited)
Operating activities
Profit for the period502.23,698.8
Income taxes205.51,319.3
Profit before tax707.75,018.1
Adjustments to reconcile profit before tax to net cash flows:
Depreciation and amortization of property, plant, equipment, intangible assets and right-of-use assets31.427.6
Share-based payment expenses8.611.2
Net foreign exchange differences53.16.1
Loss on disposal of property, plant and equipment0.2
Finance income excluding foreign exchange differences(82.3)(217.3)
Finance expense excluding foreign exchange differences1.26.7
Movements in government grants(3.0)
Unrealized net (gain) / loss on derivative instruments at fair value through profit or loss76.2(1.9)
Working capital adjustments:
Decrease / (increase) in trade and other receivables, contract assets and other assets893.8(403.5)
Decrease in inventories15.543.2
(Decrease) / increase in trade payables, other financial liabilities, other liabilities, contract liabilities, refund liabilities and provisions(861.6)857.5
Interest received53.60.7
Interest paid(1.2)(6.4)
Income tax paid(844.9)(1,290.0)
Share-based payments(725.7)(1.8)
Net cash flows from / (used in) operating activities(677.4)4,050.2
Investing activities
Purchase of property, plant and equipment(45.2)(44.1)
Purchase of intangible assets and right-of-use assets(9.6)(16.7)
Investment in other financial assets(680.6)(27.0)
Proceeds from maturity of other financial assets375.2
Net cash flows from / (used in) investing activities(735.4)287.4
Financing activities
Proceeds from issuance of share capital and treasury shares, net of costs110.5
Repayment of loans and borrowings(18.8)
Payments related to lease liabilities(9.3)(11.4)
Share repurchase program(282.0)
Net cash flows from / (used in) financing activities(291.3)80.3
Net increase / (decrease) in cash and cash equivalents(1,704.1)4,417.9
Change in cash and cash equivalents resulting from exchange rate differences(27.1)53.5
Cash and cash equivalents at the beginning of the period13,875.11,692.7
Cash and cash equivalents as of March 3112,143.96,164.1
The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.
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Selected Explanatory Notes to the Unaudited Interim Condensed Consolidated Financial Statements
1Corporate Information
BioNTech SE is a limited company incorporated and domiciled in Germany. The registered office is located in Mainz, Germany (An der Goldgrube 12, 55131 Mainz). The accompanying unaudited interim condensed consolidated financial statements present the financial position and the results of operation of BioNTech SE and its subsidiaries and have been prepared on a going concern basis in accordance with the International Financial Reporting Standards, or IFRS as issued by the International Accounting Standards Board, or IASB. References to the “Company”, “BioNTech”, “Group”, “we”, “us” and “our” refer to BioNTech SE and its consolidated subsidiaries.
We are a global next-generation immunotherapy company pioneering novel medicines against cancer, infectious diseases and other serious diseases. Since our founding in 2008, we have focused on harnessing the power of the immune system to address human diseases with unmet medical need and major global health burden. Our fully integrated model combines decades of research in immunology, translational drug discovery and development, a technology agnostic innovation engine, GMP manufacturing, and commercial capabilities to rapidly discover, develop and commercialize our marketed products and other candidate vaccines and therapies. We have built a broad toolkit across multiple technology platforms, including a diverse range of potentially first-in-class therapeutic approaches. This includes mRNA vaccines and therapeutics, cell and gene therapies, targeted antibodies and small molecule immunomodulators.
Our unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2023 were authorized for issuance in accordance with a resolution of the audit committee on May 5, 2023.
2Basis of Preparation, Significant Accounting Policies and further Accounting Topics
Basis of Preparation and Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2023 have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.
The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the consolidated financial statements, and should be read in conjunction with our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 20-F as of and for the year ended December 31, 2022.
We prepare and present our unaudited interim condensed consolidated financial statements in Euros and round numbers to millions of Euros. Accordingly, numerical figures shown as totals in some tables may not be exact arithmetic aggregations of the figures that preceded them and figures presented in the explanatory notes may not add up to the rounded arithmetic aggregations.
The unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2023 include BioNTech SE and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Significant Accounting Judgments, Estimates and Assumptions
The preparation of the unaudited interim condensed consolidated financial statements requires our management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures. This includes but is not limited to the judgment described as “Pfizer Agreement Characteristics” in the notes to our audited consolidated financial statements as of and for the year ended December 31, 2022. In order to determine our share of the collaboration partner’s gross profits, we used certain information from the collaboration partner, including revenues from the sale of products, some of which is based on preliminary data shared between the partners. Our management continually evaluates judgments and estimates, including those related to the contingencies, fair value measurement of derivatives, revenues and expenses. Management bases its judgments and estimates on parameters available when the unaudited interim condensed consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market
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changes or circumstances arising that are beyond our control. Such changes are reflected in the assumptions when they occur.
Significant Accounting Policies
The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of our audited consolidated financial statements as of and for the year ended December 31, 2022, except for income taxes which are accounted for using the expected annual tax rate in our unaudited interim condensed consolidated financial statements (see Note 5). Certain policies have been described further below due to the activities related to and the transactions that occurred during the three months ended March 31, 2023.
Standards Applied for the First Time
The IFRS standards applied for the first time as of January 1, 2023, as disclosed in the notes to the audited consolidated financial statements as of and for the year ended December 31, 2022, had no impact on our unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2023.
3Revenues from Contracts with Customers
Disaggregated information on revenues
Set out below is the disaggregation of our revenues from contracts with customers:
Three months ended
March 31,
(in millions €)20232022
Commercial revenues1,276.56,362.2
COVID-19 vaccine revenues1,263.56,353.2
Sales to collaboration partners(1)
71.4603.2
Direct product sales to customers65.21,163.1
Share of collaboration partners' gross profit and sales milestones1,126.94,586.9
Other sales13.09.0
Research & development revenues from collaborations0.512.4
Total1,277.06,374.6
(1)    Represents sales to our collaboration partners of products manufactured by us and reflects manufacturing costs and variances to the extent identified.
Commercial Revenues
During the three months ended March 31, 2023 and 2022, commercial revenues were recognized from the supply and sales of our COVID-19 vaccine worldwide. During the three months ended March 31, 2023 our commercial revenues decreased due to lower demand for our COVID-19 vaccine. We are the marketing authorization holder in the United States, the European Union, the United Kingdom, Canada and other countries, and holder of emergency use authorizations or equivalents in the United States (jointly with Pfizer Inc., or Pfizer) and other countries; submissions to pursue regulatory approvals in those countries where emergency use authorizations or equivalent were initially granted are ongoing. Pfizer has marketing and distribution rights worldwide with the exception of China, Germany and Turkey. Shanghai Fosun Pharmaceutical (Group) Co., Ltd, or Fosun Pharma, has marketing and distribution rights in China, Hong Kong special administrative region, or SAR, Macau SAR and the region of Taiwan. The allocation of marketing and distribution rights defines territories in which the collaboration partners act as a principal.
Sales to Collaboration Partners
Sales to collaboration partners represent sales of products manufactured by us to collaboration partners. Whenever responsibilities in the manufacturing and supply process of the COVID-19 vaccine shift and the COVID-19 vaccine is transferred, the vaccine is sold from one partner to the other. Under the collaboration with Pfizer, from time to time, those sales are significantly influenced by amounts due to write-offs of inventories as well as costs related to production capacities derived from contracts with Contract Manufacturing Organizations (CMOs) that became redundant. Those costs represent accrued manufacturing variances and are charged to our partner once finally materialized. These manufacturing variances are reflected as transfer price adjustment once identified and assessed highly probable. Sales to collaboration partners during the three months ended March 31, 2023 and 2022, amounted to €71.4 million and
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€603.2 million, respectively. During the three months ended March 31, 2023 those sales included €47.8 million related to the aforementioned manufacturing variances (€367.6 million with respect to sales during the three months ended March 31, 2022).
Direct Product Sales to Customers
By supplying our territories during the three months ended March 31, 2023 and 2022, we recognized €65.2 million and €1,163.1 million of revenues, respectively, from direct COVID-19 vaccine sales in Germany. The share of gross profit that we owe our collaboration partner Pfizer based on our sales is recognized as cost of sales.
Share of Collaboration Partners' Gross Profit
Based on COVID-19 vaccine sales in the collaboration partners’ territories, we are eligible to receive a share of their gross profit, which represents a net figure and is recognized as collaboration revenue during the commercial phase. When determining the gross profit, manufacturing cost variances either reflected as transfer price adjustment as described above, or resulting from costs highly probable to be incurred by the partner were considered. During the three months ended March 31, 2023, €1,126.9 million in gross profit share was recognized as revenues. During the three months ended March 31, 2022, €4,586.9 million in gross profit share was recognized as revenues.
Revenues from contracts with customers were recognized as follows:
Three months ended
March 31,
(in millions €)20232022
Timing of revenue recognition
Goods and services transferred at a point in time143.01,773.4
Goods and services transferred over time7.114.3
Revenue recognition applying the sales-based or usage-based royalty recognition constraint model(1)
1,126.94,586.9
Total1,277.06,374.6
(1)    Represents sales based on the share of the collaboration partners' gross profit and sales milestones.
4Income and Expenses
4.1Cost of Sales
The cost of sales recognized during the three months ended March 31, 2023 and 2022 are shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Cost of sales related to COVID-19 vaccine revenues88.41,288.3
Cost related to other sales7.65.8
Total96.01,294.1
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4.2Research and Development Expenses
The research and development expenses recognized during the three months ended March 31, 2023 and 2022 are shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Purchased services197.2131.4
Wages, benefits and social security expense86.670.8
Depreciation and amortization14.710.8
Laboratory supplies12.757.6
Other22.815.2
Total334.0285.8
4.3General and Administrative Expenses
The general and administrative expenses recognized during the three months ended March 31, 2023 and 2022 are shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Wages, benefits and social security expense38.027.5
IT and office equipment27.511.3
Purchased services24.230.3
Insurance premiums15.46.0
Other14.315.7
Total119.490.8
4.4Other Operating Expenses
The other operating expenses recognized during the three months ended March 31, 2023 and 2022 are shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Foreign exchange differences, net116.5
Loss on derivative instruments at fair value through profit or loss69.3
Other1.62.3
Total118.171.6
The foreign exchange differences included in operating income primarily arose from valuing our U.S. dollar denominated trade receivables which mainly resulted from our COVID-19 collaboration with Pfizer, compensated by the foreign exchange rate effects of our U.S. dollar denominated trade payables as well as our U.S. dollar denominated other financial liabilities which mainly resulted from obligations incurred from our license agreements.
The loss on derivative instruments at fair value through profit or loss in the prior year comparable period related to foreign exchange forward contracts that were entered into to manage some of our transaction exposures but were not designated as hedging instruments under IFRS (see Note 6).
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4.5Other Operating Income
The other operating income recognized during the three months ended March 31, 2023 and 2022 is shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Gain on derivative instruments at fair value through profit or loss41.92.8
Foreign exchange differences, net124.0
Other15.27.9
Total57.1134.7
The gain on derivative instruments at fair value through profit or loss related to foreign exchange forward contracts that did not qualify for hedge accounting (see Note 6).
The net loss in foreign exchange differences in the prior year comparable period included in operating income primarily arose from valuing our U.S. dollar denominated trade receivables which mainly relate to our COVID-19 collaboration with Pfizer, U.S. dollar denominated trade payables as well as our U.S. dollar denominated other financial liabilities which mainly relate to obligations incurred from our license agreements.
4.6Finance Income
The finance income recognized during the three months ended March 31, 2023 and 2022 is shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Interest income60.10.5
Foreign exchange differences, net54.8
Fair value adjustments of financial instruments measured at fair value22.2216.8
Total82.3272.1
During the three months ended March 31, 2023, the interest income were mainly derived from our bank deposits and the fair value adjustments were derived from remeasuring our money market funds. During the three months ended March 31, 2022, the fair value adjustments were mainly derived from remeasuring the derivative embedded in our convertible note.
4.7Finance Expenses
The finance expenses recognized during the three months ended March 31, 2023 and 2022 are shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Foreign exchange differences, net27.8
Other1.26.7
Total29.06.7
During the three months ended March 31, 2023, the foreign exchange differences were mainly derived from our foreign exchange bank deposits and cash accounts.
5Income Tax
For the three months ended March 31, 2023 and 2022, income taxes were calculated based on the best estimate of the weighted average annual income tax rates expected for the full financial years (estimated annual effective income tax rates) on ordinary income before tax plus the tax effect of any discrete items. For the three months ended March 31,
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2023 and 2022, our effective income tax rates were approximately 29.0% and 26.3%, respectively. The current shift of the ratio between the earnings before tax for the German entities and the losses for which no deferred tax assets has been recognized, led to the present increase of the effective income tax rate.  During the three months ended March 31, 2023 and 2022, current income taxes were recognized with respect to the German tax group. Deferred tax effects were recognized with respect to identified discrete items as well as share-based payments programs during the three months ended March 31, 2023 and 2022. As of March 31, 2023, we continue to maintain a valuation allowance against deferred tax assets of our U.S. tax group as there is not sufficient probability in terms of IAS 12 that there will be future taxable profits available against which the unused tax losses and temporary differences can be utilized.
The income taxes recognized during the three months ended March 31, 2023 and 2022 are shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Current income taxes243.21,335.1
Deferred taxes(37.7)(15.8)
Income taxes205.51,319.3
6Intangible Assets
The increase of intangible assets by €158.9 million during the three months ended March 31, 2023 is mainly due to licenses acquired that meet the definition of identifiable assets in the amount of €158.0 million in connection with the License and Collaboration Agreements entered into between us and Duality Biologics (Suzhou) Co. Ltd., Shanghai, China, in March 2023.
7Financial Assets and Financial Liabilities
Financial Assets
Set out below is an overview of financial assets, other than cash and cash equivalents, held as of March 31, 2023 and December 31, 2022.
(in millions €)March 31,
2023
December 31,
2022
Derivatives not designated as hedging instruments
Foreign exchange forward contracts109.6183.7
Derivatives designated as hedging instruments
Foreign exchange forward contracts2.6
Equity instruments designated at fair value through OCI
Non-listed equity investments57.157.1
Listed equity investments20.020.0
Financial assets at amortized cost
Trade and other receivables 6,450.57,145.6
Security investments671.9
Other financial assets13.68.8
Total7,325.37,415.2
Total current6,808.57,335.0
Total non-current516.880.2
Derivatives Not Designated as Hedging Instruments
Derivatives not designated as hedging instruments relate to foreign exchange forward contracts that were entered into during the three months ended March 31, 2023 and 2022, to manage some of our foreign currency exposures. The
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foreign exchange forward contracts are measured at fair value through profit or loss and are intended to reduce the exposure to foreign currency risk resulting from trade receivables denominated in U.S. dollar.
Derivatives Designated as Hedging Instruments
Derivatives designated as hedging instruments relate to foreign exchange forward contracts that were entered into during the three months ended March 31, 2023, to hedge the cash flow risk associated with the purchase price in British pound (GBP) of the intended acquisition (forecasted transaction) of InstaDeep Ltd.
Equity Instruments Designated at Fair Value through Other Comprehensive Income
Equity investments generally are made in conjunction with our existing commercial partnerships. In accordance with IFRS 9 we elected to present gains and losses on our equity investments in other comprehensive income to avoid fluctuations in our unaudited interim condensed consolidated statements of profit or loss. During the three months ended March 31, 2023, no gains and losses on our equity investments occurred.
Financial Assets at Amortized Cost
Trade and other receivables predominantly comprise trade receivables from our COVID-19 collaboration with Pfizer. The contractual settlement of the gross profit share has a temporal offset of more than one calendar quarter. As Pfizer’s fiscal quarter for subsidiaries outside the United States differs from ours, there is an additional time lag between the recognition of revenues and the payment receipt. Consequently, as of March 31, 2023, our trade receivables included, in addition to the profit share for the first quarter of 2023, trade receivables which related to the gross profit share for the fourth quarter of 2022.
Our investments in different securities with a remaining term of more or less than twelve months are presented as current or non-current security investments, respectively, and measured at amortized cost. Within our interim condensed consolidated financial statements as of and for the three months ended March 31, 2023, €426.4 million are presented as non-current and €245.5 million as current security investments as part of the financial assets.

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Financial Liabilities
Set forth below is an overview of financial liabilities, other financial liabilities and trade payables held as of March 31, 2023 and December 31, 2022.
Loans and borrowings
(in millions €)March 31,
2023
December 31,
2022
Lease liabilities207.7210.1
Loans and borrowings2.12.1
Total209.8212.2
Total current37.436.0
Total non-current172.4176.2
Other financial liabilities
(in millions €)March 31,
2023
December 31,
2022
Derivatives not designated as hedging instruments
Foreign exchange forward contracts3.0
Financial liabilities at fair value through profit or loss
Contingent consideration6.16.1
Total financial liabilities at fair value9.16.1
Trade payables and other financial liabilities at amortized cost, other than loans and borrowings
Trade payables29.9204.1
Other financial liabilities432.9785.1
Total trade payables and other financial liabilities at amortized cost, other than loans and borrowings462.8989.2
Total other financial liabilities471.9995.3
Total current465.8989.2
Total non-current6.16.1
Total financial liabilities
(in millions €)March 31,
2023
December 31,
2022
Lease liabilities, loans and borrowings209.8212.2
Other financial liabilities471.9995.3
Total681.71,207.5
Total current503.21,025.2
Total non-current178.5182.3
Other Financial Liabilities at Amortized Cost
Other financial liabilities at amortized cost mainly include obligations derived from license agreements which are being incurred with respect to our COVID-19 vaccine sales in our and our collaboration partners’ territories where we and our partners are using third party intellectual property. In addition, other financial liabilities at amortized cost comprise obligations from services received but not yet invoiced.
Risk Management Activities
No changes have occurred regarding our risk management activities as disclosed in the notes to our audited consolidated financial statements included in our Annual Report on Form 20-F as of and for the year ended December 31, 2022.
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Fair Values
Fair values of cash and cash equivalents, trade receivables, trade payables, security investments and other financial assets and liabilities approximated their carrying amounts as of March 31, 2023 and December 31, 2022, largely due to the short-term maturities of these instruments.
The financial instruments at fair value are measured at fair value on a quarterly basis. The money market funds, or MMFs, which are recognized as cash and cash equivalents in the amount of €3,792.7 million as of March 31, 2023, are valued using quoted prices on the valuation date in active markets (Level 1). The foreign exchange forward contracts are valued using valuation techniques, which employ the use of foreign exchange spot and forward rates (Level 2). The fair values of listed equity investments are measured based on the stock prices of the listed companies (Level 1). The fair values of non-listed equity investments are measured based on observable inputs, e.g., based on multiple analyses (Level 2). The initial fair value of contingent considerations determined at acquisition was based on cash flow projections (unobservable Level 3 input factors) and remained valid since no material changes of the underlying performance criteria have occurred.
8Inventories
Below is an overview of inventories held as of March 31, 2023 and December 31, 2022.
(in millions €)March 31,
2023
December 31,
2022
Raw materials and supplies402.9409.7
Unfinished goods13.321.0
Finished goods7.98.9
Total424.1439.6
During the three months ended March 31, 2023 and 2022 expenses from inventory write-downs to net realizable value and inventory write-offs due to inventories expected to be unsaleable, not fulfilling the specification defined by our quality standards, shelf-life expiry or disposals resulted in €73.7 million and €156.0 million, respectively, included in cost of sales.
9Issued Capital and Reserves
As of March 31, 2023, the number of shares outstanding was 240,990,499. This amount excludes 7,561,701 shares held in treasury. As of December 31, 2022, the number of shares outstanding was 243,215,169, excluding 5,337,031 shares held in treasury.
Second Tranche Share Repurchase Program
In November 2022, our Management Board and Supervisory Board authorized the second tranche of our share repurchase program of ADSs, with a value of up to $0.5 billion, commencing on December 7, 2022. Between January 1, 2023 and March 17, 2023, the date on which the trading plan for the second tranche of our share repurchase program expired, the following repurchases under the program occurred:
Second Tranche ($0.5 billion)
PeriodNumber of ADSs purchasedAverage price paid per ADSNet amount spent (in millions)
January 2023618,355
$142.26 (€131.12)
$88.0 (€81.1)
February 2023857,620
$138.05 (€129.06)
$118.4 (€110.7)
March 2023(1)
745,196
$128.49 (€121.08)
$95.7 (€90.2)
Total2,221,171
$302.1(€282.0)
(1)    Ending March 17, 2023.
2023 Share Repurchase Program
On March 27, 2023, our Management Board and Supervisory Board authorized a new share repurchase program under which we may purchase ADSs, each representing one ordinary share, with a value of up to $0.5 billion until the end of 2023. No repurchases were made under the new program during the three months ended March 31, 2023.
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10Share-Based Payments
Expenses Arising from Share-Based Payment Arrangements
During the three months ended March 31, 2023 and 2022, the following share-based payment arrangements led to the expenses recognized for services received during the respective periods as shown in the following table:
Three months ended
March 31,
(in millions €)20232022
Expense arising from equity-settled share-based payment arrangements10.712.2
Employee Stock Ownership Plan0.14.7
Chief Executive Officer Grant0.40.9
Management Board Grant1.11.0
BioNTech 2020 Employee Equity Plan for Employees Based Outside North America9.15.6
Expense / (Income) arising from cash-settled share-based payment arrangements(2.5)(2.0)
Employee Stock Ownership Plan(2.4)(0.2)
Management Board Grant(1.3)(0.8)
BioNTech Restricted Stock Unit Plan for North America Employees1.2(1.0)
Total8.210.2
Cost of sales1.50.8
Research and development expenses6.57.3
Sales and marketing expenses0.10.1
General and administrative expenses 0.12.0
Total8.210.2
During the three months ended March 31, 2023 and 2022, our share-based payment arrangements led to a cash outflow of €725.7 million and €1.8 million, respectively. During the three months ended March 31, 2023, the cash outflows included wage tax payments (including solidarity surcharge thereon and church tax, if applicable) and social security contributions of €724.0 million related to the exercise of rights under the Employee Stock Ownership Plan in 2022 (please see Note 16.5 to our audited consolidated financial statements included in our Annual Report on Form 20-F as of and for the year ended December 31, 2022 for further details of the exercise).
Changes in Share-Based Payment Arrangements
During the three months ended March 31, 2023, no new share-based payment arrangement plans were issued and no material changes to existing arrangements occurred. A detailed description of our share-based payment arrangements is included in Note 16 to our audited consolidated financial statements included in our Annual Report on Form 20-F as of and for the year ended December 31, 2022.
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11Provisions and Contingencies
Provisions
As of March 31, 2023, our provisions amounted to €329.0 million (€375.8 as of December 31, 2022). The change was mainly related to the release of obligations for production capacities derived from contracts with Contract Manufacturing Organizations, or CMOs, (please see Note 17 to our audited consolidated financial statements included in our Annual Report on Form 20-F as of and for the year ended December 31, 2022 for further details).
Contingencies
Our contingencies include, but are not limited to, intellectual property disputes and product liability and other product-related litigation. From time to time, in the normal course and conduct of our business, we may be involved in discussions with third parties about considering, for example, the use and/or remuneration for use of such third party’s intellectual property. As of March 31, 2023, none of such intellectual property-related considerations that we have been notified of, and for which potential claims could be brought against us or our subsidiaries in the future, fulfill the criteria for recording a provision. We are subject to an increasing number of product liability claims. Such claims often involve highly complex issues related to medical causation, correctness and completeness of product information (Summary of Product Characteristics/package leaflet) as well as label warnings and reliance thereon, scientific evidence and findings, actual and provable injury, and other matters. These complexities vary from matter to matter. As of March 31, 2023, none of these claims fulfill the criteria for recording a provision. Substantially all of our contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, we are unable to estimate the range of reasonably possible loss. Our assessments, which result from a complex series of judgments about future events and uncertainties, are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. We currently do not believe that any of these matters will have a material adverse effect on our financial position, and will continue to monitor the status of these and other claims that may arise. However, we could incur judgments, enter into settlements or revise our expectations regarding the outcome of matters, which could have a material adverse effect on our results of operations and/or our cash flows in the period in which the amounts are accrued or paid. We will continue to evaluate whether, if circumstances were to change in the future, the recording of a provision may be needed and whether potential indemnification entitlements exist against any such claim.
Certain pending matters to which we are a party are discussed below.
Alnylam Proceedings
In March 2022, Alnylam Pharmaceuticals, Inc., or Alnylam, filed a lawsuit against Pfizer and Pharmacia & Upjohn    Co. LLC in the U.S. District Court for the District of Delaware alleging that an existing patent owned by Alnylam, U.S. Patent No. 11,246,933, or the ‘933 Patent, is infringed by the cationic lipid used in Comirnaty, and seeking monetary relief, which is not specified in their filings. We filed a counterclaim to become party to the Alnylam proceeding, and in June 2022, Alnylam added to its claims allegations that we induced infringement of the ‘933 Patent. Additionally, in July 2022, Alnylam filed a lawsuit against us, our wholly owned subsidiary, BioNTech Manufacturing GmbH, Pfizer and Pharmacia & Upjohn Co. LLC in the U.S. District Court for the District of Delaware alleging that we also induced infringement of a newly issued patent, U.S. Patent No. 11,382,979, or the ‘979 Patent, which is a continuation of the ‘933 Patent. The two lawsuits were consolidated on July 28, 2022 and are currently pending.
We believe we have strong defenses against the allegations claimed relative to each of the patents and intend to vigorously defend ourselves in the proceedings mentioned above. However, our analysis of Alnylam’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
CureVac Proceedings
In July 2022, CureVac AG, or CureVac, filed a lawsuit against us and our wholly owned subsidiaries, BioNTech Manufacturing GmbH and BioNTech Manufacturing Marburg GmbH, in the Düsseldorf Regional Court, alleging Comirnaty’s infringement of one European patent, EP1857122B1, or the EP’122 Patent, and three Utility Models DE202015009961U1, DE202015009974U1, and DE202021003575U1. Later in July 2022, we and Pfizer filed a complaint for a declaratory judgment in the U.S. District Court for the District of Massachusetts, seeking a judgment of non-infringement by Comirnaty of U.S. Patent Nos. 11,135,312, 11,149,278 and 11,241,493. In August 2022, CureVac
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added European Patent EP3708668B1, or the EP’668 Patent, to its German lawsuit. In September 2022, we and Pfizer filed a declaration of non-infringement and revocation action against the EP’122 Patent and the EP’668 Patent in the Business and Property Courts of England and Wales. In addition, we filed a nullity action in the Federal Patent Court of Germany seeking a declaration that the EP’122 Patent is invalid. Lastly, on November 11, 2022, we filed cancellation actions seeking the cancellation of the three German Utility Models in the German Patent and Trademark Office. All of the proceedings are currently pending.
We believe we have strong defenses against the allegations claimed relative to each of the patents and utility models and intend to vigorously defend ourselves in the proceedings mentioned above. However, our analysis of CureVac’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
Moderna Proceedings
In August 2022, ModernaTX, Inc., or Moderna, filed three patent infringement lawsuits against us and Pfizer related to Comirnaty. Moderna filed a lawsuit against us and Pfizer and our wholly owned subsidiaries, BioNTech Manufacturing GmbH, BioNTech Europe GmbH and BioNTech Manufacturing Marburg GmbH, Pfizer Manufacturing Belgium NV, Pfizer Ireland Pharmaceuticals and Pfizer Inc. in the Düsseldorf Regional Court alleging Comirnaty’s infringement of two European Patents, 3590949B1, or the EP’949 Patent and 3718565B1, or the EP’565 Patent. Moderna filed a second lawsuit asserting infringement of the EP’949 Patent and EP’565 Patent against us and our wholly owned subsidiaries, BioNTech Manufacturing GmbH, BioNTech Europe GmbH and BioNTech Manufacturing Marburg GmbH, Pfizer Limited, Pfizer Manufacturing Belgium NV and Pfizer Inc. in the Business and Property Courts of England and Wales. Additionally, Moderna filed a lawsuit in the United States District Court for the District of Massachusetts against us and our wholly owned subsidiaries BioNTech Manufacturing GmbH and BioNTech US Inc. and Pfizer Inc. alleging infringement of U.S. Patent Nos. 10,898,574, 10,702,600 and 10,933,127 and seeking monetary relief, which was not specified in the filings. In September 2022, we and Pfizer filed a revocation action in the Business and Property Courts of England and Wales requesting revocation of the EP’949 Patent and EP’565 Patent. Later in September 2022, Moderna filed a lawsuit against us and our wholly owned subsidiary BioNTech Manufacturing GmbH and Pfizer B.V., Pfizer Export B.V., C.P. Pharmaceuticals International C.V. and Pfizer Inc. in the District Court of The Hague alleging Comirnaty’s infringement of the EP ‘949 Patent and EP’565 Patent. All of the proceedings are currently pending.
We believe we have strong defenses against the allegations claimed relative to each of the patents and intend to vigorously defend ourselves in the proceedings mentioned above. However, our analysis of Moderna’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
12Related Party Disclosures
ATHOS KG, Holzkirchen, Germany is the sole shareholder of AT Impf GmbH, Munich, Germany and beneficial owner of our ordinary shares. Entities controlled by ATHOS KG mainly provide rental and property management activities and sell property, plant and equipment to us. The total amount of transactions with ATHOS KG or entities controlled by them had no significant impact on our unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2023 compared to the details disclosed in Note 20 to our audited consolidated financial statements included in our Annual Report on Form 20-F as of and for the year ended December 31, 2022.
13Events after the Reporting Period
Arbutus and Genevant Proceedings
On April 4, 2023, Arbutus Biopharma Corp., or Arbutus, and Genevant Sciences GmbH, or Genevant, filed a lawsuit against Pfizer and us in the U.S. District Court for the District of New Jersey alleging that Pfizer and we have infringed the following patents owned by Arbutus: U.S. Patent Nos. 9,504,651; 8,492,359; 11,141,378; 11,298,320; and 11,318,098, through the use of Genevant’s lipid nanoparticle technology and methods for producing such lipids in Comirnaty, and seeking monetary relief.
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We believe we have strong defenses against the allegations claimed relative to each of the patents and intend to vigorously defend ourself in the lawsuit mentioned above. However, our analysis of Arbutus and Genevant’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
Appointment of Chief Legal Officer and Managing Director
On May 3, 2023, our Supervisory Board appointed James Ryan, Ph.D. to the Management Board as Chief Legal Officer (CLO) and Managing Director, effective as of September 1, 2023. As CLO, James Ryan will lead our legal efforts with regard to the Company’s global operations and transactions, as well as corporate governance, securities, intellectual property, insurance and data privacy. Prior to his appointment to the Management Board, James Ryan served as our General Counsel and Senior Vice President Legal & IP. He joined us in July 2018.
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Operating and Financial Review and Prospects
In this report, unless stated or the context otherwise requires, references to the “Company”, “BioNTech”, “Group”, “we”, “us” and “our” refer to BioNTech SE and its consolidated subsidiaries. The following “Operating and Financial Review and Prospects” should be read together with the unaudited interim condensed consolidated financial statements and related notes as presented above. The following discussion is based on our financial information prepared in accordance with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, which may differ in material respects from generally accepted accounting principles in other jurisdictions, including U.S. GAAP. The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described in the “Risk Factors” section further below. Please also see “Forward-Looking Statements” included elsewhere in this quarterly report for the three months ended March 31, 2023.
Operating Results
Overview
BioNTech was founded in 2008 with the goal to develop treatments for patients that address diseases with high unmet medical need. As a next generation immunotherapy company, it is our vision to harness the power of the immune system to develop novel therapies against cancer and infectious diseases. To realize this vision, we combine decades of groundbreaking research in immunology, a wide array of computational discovery and therapeutic drug platforms for the rapid development of novel biopharmaceuticals. To date we have expanded our team to more than 5,100 employees worldwide.
We have built a broad toolkit across multiple technology platforms, including a diverse range of potentially first-in-class therapeutic approaches. This includes mRNA vaccines, cell and gene therapies, targeted antibodies, small molecule immunomodulators, Ribologicals, and next generation immunomodulators. Our approach has created a robust and diversified product pipeline across infectious diseases and oncology, comprised of our first commercial product, BNT162b2 (Comirnaty), the first ever approved mRNA therapy, and that includes three commercial stage products (original vaccine, original/BA.1- and BA.4-5-adapted bivalent vaccines). The clinical pipeline includes over 25 clinical stage product candidates and more than 30 research programs.
We believe our successful development of a first-in-class COVID-19 mRNA vaccine in less than one year validates our execution capabilities and the power of our technologies to change lives. We leverage powerful new therapeutic mechanisms and exploit a diverse array of biological targets to harness the power of each patient’s immune system to address the unique molecular signature of each patient’s underlying disease.
Core to our business practices is ensuring that people all around the globe benefit from our efforts. As part of this effort, we intend to maintain our focus on high medical needs and democratizing access to novel medicines. We believe we are well positioned to develop and commercialize the next generation of immunotherapies with the potential to transform treatment paradigms for many severe diseases and substantially improve clinical outcomes for patients. We support the United Nations Sustainable Development Goals, or SDGs. Our research and product development efforts make a relevant contribution to supporting the third United Nations Sustainable Development Goal (SDG 3): ensuring healthy lives and promoting well-being for all people of all ages. This aligns with our commitment to global social responsibility.
On the research and development front, we are focused on developing next-generation COVID-19 vaccines to enable rapid response, maintain leadership and strengthen pandemic preparedness as well as broaden the label of and access to the vaccine.
Additionally, we are accelerating clinical development, bolstering mid- and late-stage oncology presence and broadening our pipeline through the start of new programs in oncology and infectious diseases. We are also diversifying our therapeutic area footprint which will enable us to fully leverage the potential of all technology platforms across autoimmune diseases, inflammatory diseases, cardiovascular disease, neurodegenerative diseases, and regenerative medicines. Moreover, we plan to invest to build out our global development organization bringing in talent with the clinical and regulatory expertise needed to rapidly advance our diversified clinical pipeline.
Our mergers and acquisitions activity and business development efforts are focused on strengthening technology platforms and digital capabilities through selected strategic partnerships and acquisitions. We also plan to enhance capabilities through complementary acquisitions, technologies, infrastructure and manufacturing.
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Corporate Development
A key component of our corporate strategy is strengthening our technology platforms, digital capabilities and infrastructure through select strategic partnerships and acquisitions. In the first quarter of 2023, we executed our biggest acquisition since inception and entered into new collaborations and research agreements, as previously reported in our Annual Report on Form 20-F for the year ended December 31, 2022.
In January 2023, we entered into an agreement to acquire our long-standing strategic collaboration partner, InstaDeep Ltd., subject to customary closing conditions, which on closing would enable us to create a fully integrated, enterprise-wide capability that leverages artificial intelligence, or AI, and machine learning, or ML, technologies across our therapeutic platforms and operations. Once completed, the transaction is expected to add approximately 240 highly skilled professionals to our workforce, including teams in AI, ML, bioengineering, data science, and software development. The transaction is subject to customary closing conditions and regulatory approvals.
In January 2023, we signed a Memorandum of Understanding with the Government of the United Kingdom to provide personalized cancer therapies for up to 10,000 patients by the end of 2030, either in clinical trials or as authorized treatments. This initiative is part of a multi-year collaboration focused on three strategic pillars: cancer immunotherapies based on mRNA or other drug classes, infectious disease vaccines, and investments into expanding BioNTech’s footprint in the United Kingdom as one of our key markets.
In February 2023, we completed our first proprietary plasmid DNA manufacturing facility in Marburg, Germany. The plasmid DNA produced at this state-of-the-art facility is planned to be used globally and serve as the basis for the manufacturing of mRNA- and cell-based products on a clinical and commercial scale.
In March 2023, we announced the establishment of an interdisciplinary mRNA Excellence Center to conduct research jointly with scientists from the Weizmann Institute of Science in Israel. Our mRNA Excellence Center is expected to provide space for approximately 60 researchers to facilitate collaboration among various fields, including life science, computer science, mathematics, physics, and chemistry.
In March 2023, we announced that six ISO-sized shipping containers for the first BioNTainer, a turnkey manufacturing solution designed to enable scalable mRNA vaccine production in bulk, had been delivered to Kigali, Rwanda as part of our plans to establish scalable mRNA vaccine production in Africa.
In March 2023, we entered into an exclusive worldwide license and collaboration agreement with OncoC4, Inc. to co-develop and commercialize BNT316 (ONC-392), an anti-CTLA-4 monoclonal antibody candidate, as monotherapy or combination therapy in various cancer indications.
In March 2023, we initiated a new share repurchase program pursuant to which we may purchase American Depositary Shares, or ADSs, each representing one ordinary share of the Company, in the amount of up to $0.5 billion during the remainder of 2023.
In April 2023, we entered into exclusive license and collaboration agreements with Duality Biologics (Suzhou) Co. Ltd. to develop, manufacture and commercialize two antibody-drug conjugate, or ADC, therapeutics, BNT323 (DB-1303) and BNT324 (DB-1311).
Environmental, Social, and Governance (ESG)
We recognize our responsibility as a corporate citizen and are committed to supporting our local communities and beyond through donations, sponsorships and volunteer activities.
In February 2023, in response to the earthquakes that hit Türkiye and Syria, we contributed to the humanitarian aid in both countries by donating 500,000 Euro to the nonprofit organization ‘Aktionsbündnis Katastrophenhilfe’ (Action Alliance for Disaster Relief). For humanitarian aid in Ukraine, we donated 500,000 Euro to the refugee relief ‘UNO-Flüchtlingshilfe’ – the partner of UN Refugee Agency (UNHCR) in Germany.
In March 2023, we published our third ESG report (Sustainability Report 2022). The report shows our progress in developing novel medicines and introducing scalable technological innovations to improve the health of people worldwide. Furthermore, it describes our science-based climate goals, actions and climate risk management as well as the status of our human rights strategy and due diligence. The report also addresses diversity, inclusion, equity and belonging, and highlights the importance of our values and culture in the context of our continued growth as a company.
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Marketed Product: Comirnaty, our COVID-19 Vaccine Program (BNT162)
Under our collaboration with Pfizer Inc., or Pfizer, we are the Marketing Authorization Holder in the U.S., the European Union, the United Kingdom, Canada and other countries, and the holder of emergency use authorizations, or EUAs, or equivalents in the U.S. (jointly with Pfizer) and other countries for the COVID-19 vaccine program. Pfizer has marketing and distribution rights worldwide with the exception of Greater China, Germany, and Turkey. Fosun Pharmaceutical Industrial Development, Co., Ltd, or Fosun Pharma, has marketing and distribution rights in Mainland China, Hong Kong Special Administrative Region, or SAR, Macau SAR and the region of Taiwan. We have the marketing and distribution rights to Comirnaty in Germany and Turkey.
A. Commercial Updates
We expect that as SARS-CoV-2 continues to evolve, and the risk of severe COVID-19 disease and deaths continues especially for high risk populations, there will be continued demand for vaccine boosting and vaccinations, especially for at-risk and immunocompromised groups. To meet this need, in 2023, we plan to deliver doses originally scheduled for delivery in 2022 in some geographies. We also expect that in 2023, the transition from an advanced purchase agreement environment to commercial market ordering will start in some geographies and that there may be a regulatory recommendation to adapt the COVID-19 vaccines to address newly circulating variants or sublineages of SARS-CoV-2. Our estimated COVID-19 vaccine revenues reflect expected deliveries under existing or committed supply contracts and anticipated sales through traditional commercial orders. A re-negotiation of the existing supply contract with the European Commission is ongoing, with the potential for rephasing deliveries of doses across multiple years and/or a volume reduction.
B. Clinical Development and Regulatory Updates
In February 2023, we and Pfizer submitted a supplemental Biologics License Application (sBLA) to the U.S. Food and Drug Administration, or the FDA, for approval of the Original/Omicron BA.4-5-adapted bivalent COVID-19 vaccine as a primary series and booster dose(s) for individuals 12 years of age and older.
In March 2023, we and Pfizer received EUA from the FDA for a single booster dose of the Original/Omicron BA.4-5-adapted bivalent COVID-19 vaccine for children 6 months through 4 years of age at least 2 months after completion of primary vaccination with three doses of the original COVID-19 vaccine. The bivalent vaccine is also authorized in this age group as the third dose of a three dose-primary series; for these children, a booster (fourth) dose is not authorized at this time.
In April 2023, we and Pfizer received an update to the EUA to simplify the vaccination schedule for most individuals. This action included authorizing the current Omicron BA.4-5-adapted bivalent COVID-19 vaccine to be used for all doses administered to individuals 6 months of age and older.
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Pipeline of Product Candidates: First Quarter 2023 and Post Period-End Updates
Below is a summary of our authorized product and clinical product candidates, organized by platform and indication.
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A. Oncology Programs
1. mRNA Product Candidates in Oncology
a) FixVac
FixVac is our wholly owned, systemic, off-the-shelf, mRNA-based cancer immunotherapy approach, from which we are developing several first-in-human and potential first-in-class product candidates. FixVac product candidates contain our pharmacologically optimized uridine-RNA based nanoparticles delivered in our proprietary RNA-LPX formulation for intravenous administration, which are designed to trigger both innate and adaptive immune responses.
i.BNT111 in advanced melanoma.
A global, three-arm, randomized Phase 2 clinical trial evaluating BNT111 in combination with cemiplimab (Regeneron’s Libtayo), versus both agents as monotherapy, in patients with anti-PD1/anti-PD-L1-refractory/relapsed, unresectable Stage III or IV melanoma is ongoing. The trial is being conducted in collaboration with Regeneron.
A first-in-human, open-label Phase 1 dose escalation clinical trial evaluating BNT111 in patients with advanced melanoma has completed enrollment.
ii. BNT112 in prostate cancer.
A first-in-human Phase 1/2 clinical trial to evaluate safety, immunogenicity and preliminary efficacy of BNT112 monotherapy and in combination with cemiplimab is ongoing in patients with metastatic castration resistant prostate cancer (mCRPC) and in patients with high-risk localized prostate cancer (LPC) who are eligible for treatment with androgen deprivation therapy (ADT) followed by radical prostatectomy.
iii. BNT113 in HPV16+ head and neck cancer.
A randomized Phase 2 clinical trial evaluating BNT113 in combination with pembrolizumab versus pembrolizumab monotherapy as a first-line treatment in patients with unresectable recurrent or metastatic HPV16+ head and neck squamous cell carcinoma (HNSCC) expressing programmed cell death ligand-1 ( PD-L1) is ongoing.
An investigator-initiated and sponsored Phase 1/2 dose escalation basket trial evaluating BNT113 in patients with HPV16+ head and neck and other cancers is ongoing.
iv. BNT116 in advanced non-small-cell lung cancer (NSCLC).
A Phase 1 clinical trial is ongoing to evaluate the safety, tolerability and preliminary efficacy of BNT116 alone and in combination with cemiplimab (Regeneron’s Libtayo) in patients who have progressed on prior PD-1 inhibitor treatment or are not eligible for chemotherapy, and in combination with docetaxel in patients who have received prior platinum-based chemotherapy.
A second trial, sponsored by Regeneron, is planned to start in 2023 to evaluate cemiplimab (Regeneron’s Libtayo) alone and in combination with BNT116 as first-line treatment of patients with advanced NSCLC whose tumors express PD-L1 in ≥ 50% of tumor cells.
b) Individualized Neoantigen Specific Immunotherapy (iNeST)
iNeST is an individualized cancer immunotherapy product candidate based on specific neoantigens that are present on a patient’s tumor. Our iNeST approach is also based on a pharmacologically optimized uridine mRNA (uRNA) delivered in our proprietary RNA-LPX formulation. Each patient is treated with a vaccine informed by the mutation profile of their personal cancer and manufactured on-demand. The RNA encodes a unique composition of the patient’s own tumor mutations and results in generation of neoantigen specific CD4+ and CD8+ T-cell responses.
i.Autogene cevumeran (BNT122) is our lead iNeST product candidate and is being developed as part of a co-development and co-commercialization collaboration with Genentech, a member of the Roche Group.
A randomized Phase 2 clinical trial evaluating the efficacy and safety of autogene cevumeran in combination with pembrolizumab (Merck’s Keytruda) versus pembrolizumab alone as first line in patients with previously untreated advanced melanoma is ongoing. The primary endpoint is progression-free survival (PFS) of patients treated with autogene cevumeran compared with patients receiving pembrolizumab alone, according to RECIST v1.1. Secondary endpoints include objective response rate (ORR), overall survival (OS), duration of response (DOR) and safety.
A randomized Phase 2 clinical trial of autogene cevumeran as an adjuvant treatment of circulating tumor DNA (ctDNA) positive, surgically resected Stage II (high risk)/Stage III colorectal cancer is ongoing. The
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trial is expected to enroll about 200 patients to evaluate the efficacy of autogene cevumeran compared to watchful waiting after surgery and chemotherapy, the current standard of care for these high-risk patients. The primary endpoint for the study is disease-free survival (DFS). Secondary objectives include OS and safety.
An open-label, fully enrolled, Phase 1 basket trial evaluating the safety, immunogenicity and preliminary anti-tumor activity of autogene cevumeran as a single agent and in combination with atezolizumab in patients with locally advanced or metastatic solid tumors is fully enrolled and follow up is ongoing.
We and Genentech plan to initiate a randomized Phase 2 clinical trial to further evaluate the efficacy and safety of autogene cevumeran in combination with atezolizumab (Genentech’s Tecentriq) and chemotherapy in patients with resected pancreatic ductal adenocarcinoma in 2023 based on data from an investigator-initiated Phase 1 trial.
c) mRNA Intratumoral Immunotherapy
We have been developing intratumoral immunotherapies in collaboration with Sanofi.
i.BNT131 (SAR441000) consists of modified mRNA encoding immunomodulatory cytokines for direct intratumoral injection.
A Sanofi-sponsored, first-in-human, open-label, multi-center dose escalation and expansion clinical trial investigating BNT131 as monotherapy and in combination with cemiplimab in patients with advanced/metastatic solid tumors is active and not recruiting.
In April 2023, preliminary data from the dose escalation and expansion study trial were presented at the American Association for Cancer Research (AACR) 2023 Annual Meeting held in Orlando, Florida. Anti-tumor activity across multiple dose levels was observed with treatment with BNT131 (SAR441000) and was primarily limited to loco-regional disease setting. No significant overall distant non-injected lesion response was seen.
d) RiboMabs
Our RiboMab product candidates are mRNAs that encode cancer cell targeting antibodies. These fully-owned product candidates leverage our proprietary optimized mRNA technology combining nucleoside modifications to minimize immunogenicity with our improved mRNA backbone designs with the aim of maximizing protein expression. RiboMab product candidates are formulated using liver-targeting lipid nanoparticles (LNPs) for intravenous delivery.
i.BNT141 codes for an IgG1 antibody targeting the cancer cell surface marker CLDN18.2 and is being studied in an ongoing, open-label, multi-site Phase 1/2 clinical trial with expansion cohorts in patients with CLDN18.2-positive tumors. A Trial-in-Progress poster will be presented at the American Society of Clinical Oncology (ASCO) Annual Meeting to be held in Chicago, Illinois from June 2-6, 2023.
ii. BNT142 codes for a T cell engager targeting Claudin 6 (CLDN6) and is being studied in an ongoing, open-label, multi-center Phase 1/2 clinical trial in patients with CLDN6-positive advanced tumors that have exhausted available standard therapy or are not eligible for such available therapy. A Trial-in-Progress poster will be presented at the 2023 ASCO Annual Meeting.
e) RiboCytokines
Our RiboCytokine product candidates are designed to address the limitations of recombinantly expressed cytokines, including limited serum half-life and production costs. BNT151 and BNT152+153 are nucleoside-modified mRNAs encoding human cytokines fused to human serum albumin. The modified mRNA is formulated with liver-targeting LNPs for intravenous delivery. BNT151 encodes an IL-2 variant, BNT152 encodes IL-7 and BNT153 encodes IL-2.
i.BNT151 – A first-in-human, open-label, multi-center Phase 1/2 clinical trial in multiple solid tumor indications is ongoing.
ii. BNT152+153 – A first-in-human, open-label, multi-center Phase 1 clinical trial evaluating a combination of BNT152 and BNT153 in patients with various solid tumors is ongoing.
2. Cell Therapy Product Candidates in Oncology
a) Chimeric antigen receptor (CAR) T-cell therapy - CAR-T
i.BNT211 consists of two investigational medicinal products: our first CAR-T cell (CAR-T) product candidate, which targets CLDN6-positive solid tumors, in combination with a CAR-T cell-amplifying RNA vaccine (CARVac) encoding CLDN6. CARVac is also based on a pharmacologically optimized uRNA backbone
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delivered in our proprietary RNA-LPX formulation. The CAR-T cells are equipped with a second-generation CAR of high sensitivity and specificity for the tumor-specific carcino-embryonic antigen CLDN6. CARVac is intended to drive in vivo expansion of transferred CAR-T cells to increase their persistence and efficacy. BNT211 has been granted Priority Medicines (PRIME) designation by the European Medical Agency for the third- or later-line treatment of testicular germ cell tumors.
A first-in-human, open-label, multi-center Phase 1/2 dose escalation and dose expansion basket trial evaluating CLDN6 CAR-T cells as monotherapy or in combination with CLDN6 CARVac in patients with CLDN6-positive relapsed or refractory solid tumors is ongoing. BioNTech expects to provide a data update from the ongoing clinical trial at the 2023 ASCO Annual Meeting.
We are planning a Phase 2 trial evaluating BNT211 in patients with testicular cancer with a potential start in 2024.
b) Neoantigen-Targeting T-Cell therapy
i.BNT221 is our individualized neoantigen-targeting T-cell therapy which targets selected sets of individualized neoantigens.
A first-in-human Phase 1 dose escalation clinical trial in patients with checkpoint inhibitor unresponsive or refractory metastatic melanoma is ongoing. Part 1 of the trial consists of a monotherapy dose escalation of BNT221. In Part 2, BNT221 will be dosed in combination with anti-PD-1 therapy after first-line treatment.
3. Antibody Product Candidates in Oncology
a) Next-Generation Immune Checkpoint Modulators
We are developing, in collaboration with Genmab, antibodies that function as tumor-targeted and dual immunomodulators, applying Genmab’s proprietary technologies in combination with our joint target identification and product concept expertise.
BNT311, BNT312, BNT313 and BNT322 are partnered with Genmab as part of a 50:50 collaboration in which development costs and future profits are shared.
i.BNT311 (GEN1046) is a potential first-in-class bispecific antibody product candidate combining PD-L1 checkpoint inhibition with 4-1BB checkpoint activation.
An open-label, multi-center, randomized Phase 2 clinical trial of BNT311 as monotherapy and in combination with pembrolizumab in subjects with relapsed/refractory metastatic NSCLC after treatment with standard of care therapy with an immune checkpoint inhibitor is ongoing. The primary endpoint of the study is ORR according to RECIST v1.1. Secondary endpoints include DOR, time to response, PFS, OS, and safety.
An open-label, single-arm Phase 1/2 clinical trial with expansion cohorts in patients with solid tumors is ongoing.
In April 2023, at the AACR Annual Meeting, we and Genmab presented preclinical data on BNT311 in combination with additional PD-1 blockade which we believe suggests that it can amplify the depth and duration of the anti-tumor immune response.
• Combining BNT311 with anti-PD-1 further potentiated cytokine release and T-cell expansion in vitro.
• Mice treated with anti-mPD-L1x4-1BB and anti-mPD-1 showed therapeutic synergy and a long-lasting immune memory response.
ii. BNT312 (GEN1042) is a potential first-in-class bispecific antibody product candidate designed to induce conditional immune activation by crosslinking CD40 and 4-1BB positive cells.
A Phase 1/2 clinical trial in patients with solid tumors is ongoing. We continue to actively recruit patients into the expansion cohorts across a range of solid tumors
In April 2023, at the AACR Annual Meeting, we and Genmab presented preclinical data on BNT312 in combination with additional PD-1 blockade in which we observed that it synergistically enhanced IFNγ release in an exhausted T-cell mixed lymphocyte reaction (MLR) model in vitro. We believe these results suggest that in addition to enhancing T-cell effector functions during T cell priming, BNT312 may amplify the magnitude of the immune response in combination with PD-1 blockade by re-establishing the functional activity of dysfunctional T cells.
iii. BNT322 (GEN1056) is an antibody product candidate being co-developed with Genmab for the treatment of solid tumors and for use in combination with other products.
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A first-in-human Phase 1 clinical trial in patients with advanced solid tumors is ongoing.
iv. BNT313 (GEN1053) - A Phase 1 clinical trial to evaluate the safety, tolerability, and preliminary efficacy of CD27-targetting antibody BNT313 on solid tumors as monotherapy is ongoing.
v. BNT316 (ONC-392) is an anti-CTLA-4 monoclonal antibody candidate being developed in collaboration with OncoC4, Inc. (OncoC4). BNT316 (ONC-392) offers a potentially differentiated safety profile that may allow for higher dosing and longer duration of treatment both as a monotherapy or in combination with other therapies.
We and OncoC4 plan to start a Phase 3 clinical trial to evaluate BNT316 (ONC-392) as monotherapy in NSCLC patients who progress on anti-PD-1/PD-L1 antibody-based therapy in 2023. A Trial in Progress poster will be presented at the 2023 ASCO Annual Meeting.
A Phase 2 clinical trial evaluating BNT316 (ONC-392) as combination therapy with pembrolizumab in platinum-resistant ovarian cancer is ongoing.
A first-in-human Phase 1/2 open-label dose escalation clinical trial evaluating BNT316 (ONC-392) as single agent and in combination with pembrolizumab in patients with advanced or metastatic solid tumors and non-small cell lung cancers is ongoing. We and OncoC4 plan to present data during a poster discussion session from an expansion cohort of NSCLC patients from the ongoing Phase 1/2 trial at the 2023 ASCO Annual Meeting.
b) Targeted Cancer Antibodies & Antibody-Drug Conjugates
i.BNT321 is a fully human IgG1 monoclonal antibody product candidate targeting sialyl Lewis A (sLea), an epitope on CA19-9 that is expressed in pancreatic and other solid tumors that plays a role in tumor adhesion and metastasis formation, and is a marker of an aggressive cancer phenotype.
An open-label, multi-center, non-randomized dose escalation and expansion Phase 1 clinical trial of BNT321 monotherapy and in combination with modified FOLFIRINOX in pancreatic cancer and other CA19-9 expressing solid tumors is ongoing.
ii. BNT323 (DB-1303) is a topoisomerase-1 inhibitor-based HER2-targeted ADC candidate, being developed in collaboration with Duality Biologics (Suzhou) Co. Ltd.
BNT323 (DB-1303) is currently being evaluated in a Phase 1/2 clinical trial in patients with advanced/unresectable, recurrent, or metastatic HER2-expressing solid tumors. BioNTech expects a data update from the ongoing trial at the 2023 ASCO Annual Meeting.
In January 2023, BNT323 (DB-1303) received Fast Track designation from the FDA for the treatment of patients with HER2-overexpressing advanced, recurrent, or metastatic endometrial cancer who have progressed on or after standard systemic treatment.
In April 2023, at the AACR Annual Meeting, we and Duality Biologics presented preclinical pharmacokinetics in cynomolgus monkeys and first in human dose prediction of BNT323 (DB-1303).
4. Small Molecule Immunomodulator Candidates in Oncology
i.BNT411 is a small molecule TLR7 agonist product candidate. BNT411 is designed to activate both the adaptive and innate immune system through the TLR7 pathway.
A first-in-human, open-label Phase 1/2 dose-escalation clinical trial of BNT411 as a monotherapy in patients with solid tumors and in combination with atezolizumab, carboplatin and etoposide in patients with chemotherapy-naïve extensive-stage small cell lung cancer (ES-SCLC) is ongoing.
B. Infectious Disease Programs
1. Next-generation COVID-19 Vaccine Programs - BNT162B5 and BNT162b2 + BNT162b4
i.BNT162b5 – This is one of multiple vaccine candidates with an engineered design aimed to increase the magnitude and breadth of antibody neutralization response to better protect against COVID-19.
A randomized, active controlled, observer-blind Phase 2 clinical trial to evaluate the safety, tolerability and immunogenicity of an enhanced spike antigen vaccine candidate is ongoing.
ii. BNT162b2 + BNT162b4 – The aim of this program is to develop a vaccine candidate that enhances and broadens SARS-CoV-2 T-cell responses. BNT162b4 is a next-generation COVID-19 vaccine component designed to elicit T-cell immunity across epitopes. BNT162b4 encodes variant-conserved, immunogenic segments of the SARS-CoV-2 nucleocapsid, membrane, and ORF1ab proteins, targeting diverse human leukocyte antigen (HLA) alleles.
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In April 2023, we reported preclinical data in which BNT162b4 and BNT162b2 combined after BNT162b2 vaccination were observed to elicit non-spike T-cell responses while maintaining spike-specific immunity. We also demonstrated that BNT162b4 protects animals from severe disease and enhances viral clearance by BNT162b2. The findings are in press in the peer-reviewed journal Cell.
A Phase 1 clinical trial to evaluate the safety, tolerability and immunogenicity of BNT162b4, in combination with BNT162b2 is ongoing.
Both programs are being developed in collaboration with Pfizer.
2. COVID-19 – Influenza Combination mRNA Vaccine Program – BNT162b2 + BNT161
The combination vaccine candidate consists of our Original/Omicron BA.4-5-adapted bivalent COVID-19 vaccine and Pfizer’s quadrivalent modified RNA (modRNA) influenza vaccine candidate. The ongoing Phase 1 trial is in partnership with Pfizer and has received Fast Track designation from the U.S. FDA. Further development is subject to reaching agreement.
An open-label, dose-finding Phase 1 clinical trial to evaluate the safety, tolerability and immunogenicity of a combination of the COVID-19 and influenza mRNA vaccines in healthy subjects 18 to 64 years of age is ongoing. A data update is expected in 2023.
3. Influenza Vaccine Program - BNT161
In 2018, we and Pfizer entered into an agreement to collaborate on an mRNA program in influenza for an initial period of three years, which ended in 2021. Pfizer has since had the sole responsibility, authority and control of the development, manufacturing and commercialization of all candidates and products related to the program. Upon potential approval and commercialization, BioNTech is eligible to receive a royalty on Pfizer’s sales.
A Pfizer-initiated randomized Phase 3 clinical trial to evaluate the efficacy, safety, tolerability and immunogenicity of a quadrivalent modRNA influenza vaccine candidate is ongoing.
4. HSV-2 Vaccine Program – BNT163
We have a research collaboration with the University of Pennsylvania under which we have the exclusive option to develop and commercialize prophylactic mRNA immunotherapies for the treatment of up to 10 infectious disease indications. As part of this collaboration, we are developing an Herpes Simplex Virus Type 2 (HSV-2) vaccine candidate.
A first-in-human, controlled, dose-escalation Phase 1 clinical trial evaluating the safety, tolerability and immunogenicity of BNT163, an HSV vaccine candidate for the prevention of genital lesions caused by HSV-2 and potentially HSV-1, is ongoing. A data update is expected in the second half of 2023.
5. Tuberculosis Vaccine Program – BNT164
We have collaborated with the Bill and Melinda Gates Foundation since 2019 to develop vaccine candidates aimed at preventing tuberculosis infection and disease.
In April 2023, BioNTech initiated a randomized, controlled, dose-finding Phase 1 clinical trial of BNT164 in partnership with the Bill and Melinda Gates Foundation. The clinical trial will evaluate the safety, reactogenicity, and immunogenicity of mRNA vaccine candidates against tuberculosis.
6. Malaria Vaccine Program – BNT165
Our Malaria program aims to develop a well-tolerated and highly effective mRNA vaccine with durable immunity to prevent blood-stage malaria infection, thereby reducing morbidity and mortality as well as onward transmission, and to develop sustainable vaccine production and supply solutions on the African continent. We plan to assess several vaccine candidates, featuring known targets such as circumsporozoite protein (CSP) as well as other antigens.
A first-in-human Phase 1 clinical trial to evaluate the safety, tolerability and exploratory immunogenicity of the vaccine candidate BNT165b1, the first candidate from our BNT165 program, is ongoing. A data update is expected in the second half of 2023.
7. Shingles Vaccine Program - BNT167
We are collaborating with Pfizer to develop the first mRNA-based vaccine candidate against shingles (also known as herpes zoster). While there are currently approved vaccines for shingles, the goal is to develop an mRNA vaccine candidate that potentially shows high efficacy and better tolerability and is more efficient to produce globally.
In February 2023, we and Pfizer initiated a randomized, controlled, dose-selection Phase 1/2 clinical trial to evaluate the safety, tolerability, and immunogenicity of BNT167 in healthy volunteers 50 through 69 years of age. A data update is expected in the second half of 2023.
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8. Anti-bacterial Programs
BioNTech R&D (Austria) GmbH is a wholly owned subsidiary of BioNTech SE focused on developing novel anti-bacterial drugs to treat persistent bacterial infections. The development programs are based on the proprietary LysinBuilder platform, which allows the targeted development of precision anti-bacterials. Our development pipeline focuses on chronic bacterial infections where antibiotics fail to cure or destroy the natural microbiomes.
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Financial Operations Overview
The following table shows our unaudited interim condensed consolidated statements of profit or loss for each period presented:
Three months ended
March 31,
20232022
(in millions €, except per share data)(unaudited)(unaudited)
Revenues
Commercial revenues1,276.56,362.2
Research & development revenues0.512.4
Total revenues1,277.06,374.6
Cost of sales(96.0)(1,294.1)
Research and development expenses(334.0)(285.8)
Sales and marketing expenses(12.2)(14.3)
General and administrative expenses (119.4)(90.8)
Other operating expenses (118.1)(71.6)
Other operating income 57.1134.7
Operating income654.44,752.7
Finance income82.3272.1
Finance expenses(29.0)(6.7)
Profit before tax707.75,018.1
Income taxes(205.5)(1,319.3)
Profit for the period502.23,698.8
Earnings per share
Basic profit for the period per share2.0715.13
Diluted profit for the period per share2.0514.24
Important financial and operating terms and concepts are described in Item 5 of our Annual Report on Form 20-F as of and for the year ended December 31, 2022.
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Comparison of the three months ended March 31, 2023 and 2022
Revenues
The following is a summary of revenues recognized for the periods indicated:
Three months ended
March 31,
Change
(in millions €)20232022%
Revenues
Commercial revenues1,276.56,362.2(5,085.7)(80)
COVID-19 vaccine revenues1,263.56,353.2(5,089.7)(80)
Sales to collaboration partners(1)
71.4603.2(531.8)(88)
Direct product sales to customers65.21,163.1(1,097.9)(94)
Share of collaboration partners' gross profit and sales milestones1,126.94,586.9(3,460.0)(75)
Other sales13.09.04.044
Research & development revenues from collaborations0.512.4(11.9)(96)
Total revenues1,277.06,374.6(5,097.6)(80)
(1)    Represents sales to our collaboration partners of products manufactured by us and reflects manufacturing costs and variances to the extent identified.
Commercial Revenues
From the three months ended March 31, 2023 compared to the three months ended March 31, 2022, commercial revenues decreased by €5,097.6 million from €6,374.6 million to €1,277.0 million, due to lower demand for our COVID-19 vaccine. We are the marketing authorization holder in the United States, the European Union, the United Kingdom, Canada and other countries, and holder of emergency use authorizations or equivalents in the United States (jointly with Pfizer) and other countries; submissions to pursue regulatory approvals in those countries where emergency use authorizations or equivalent were initially granted are ongoing. Pfizer has marketing and distribution rights worldwide with the exception of China, Germany and Turkey. Fosun Pharma, has marketing and distribution rights in China, Hong Kong special administrative region, or SAR, Macau SAR and the region of Taiwan. The allocation of marketing and distribution rights defines territories in which the collaboration partners act as a principal.
Sales to collaboration partners represent sales of products manufactured by us to collaboration partners. Whenever responsibilities in the manufacturing and supply process of the COVID-19 vaccine shift and the COVID-19 vaccine is transferred, the vaccine is sold from one partner to the other. Under the collaboration with Pfizer, from time to time, those sales are significantly influenced by amounts due to write-offs of inventories as well as costs related to production capacities derived from contracts with Contract Manufacturing Organizations (CMOs) that became redundant. Those costs represent accrued manufacturing variances and are charged to our partner once finally materialized. These manufacturing variances are reflected as transfer price adjustment once identified and assessed highly probable. Sales to collaboration partners during the three months ended March 31, 2023 and 2022, amounted to €71.4 million and €603.2 million, respectively. During the three months ended March 31, 2023, those sales included €47.8 million related to the aforementioned manufacturing variances (€367.6 million with respect to sales during the three months ended March 31, 2022).
By supplying our territories during the three months ended March 31, 2023 and 2022, we recognized €65.2 million and €1,163.1 million of revenues, respectively, from direct COVID-19 vaccine sales in Germany. The share of gross profit that we owe our collaboration partner Pfizer based on our sales is recognized as cost of sales.
Based on COVID-19 vaccine sales in the collaboration partners’ territories, we are eligible to receive a share of their gross profit, which represents a net figure and is recognized as collaboration revenue during the commercial phase. When determining the gross profit, manufacturing cost variances either reflected as transfer price adjustment as described above, or resulting from costs highly probable to be incurred by the partner were considered. During the three months ended March 31, 2023, €1,126.9 million in gross profit share was recognized as revenues. During the three months ended March 31, 2022 €4,586.9 million in gross profit share was recognized as revenues.
Research & Development Revenues from Collaborations
During the three months ended March 31, 2023 and 2022, research and development revenues were derived from our collaborations.
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Cost of Sales
The following table summarizes our cost of sales for the periods indicated:
Three months ended
March 31,
Change
(in millions €)20232022%
Cost of sales
Cost of sales related to COVID-19 vaccine revenues88.41,288.3(1,199.9)(93)
Cost related to other sales7.65.81.831
Total cost of sales96.01,294.1(1,198.1)(93)
From the three months ended March 31, 2023 compared to the three months ended March 31, 2022, our cost of sales decreased by €1,198.1 million or 93.0% from €1,294.1 million to €96.0 million, mainly due to decreasing sales from our COVID-19 vaccine sales.
Research and Development Expenses
The following table summarizes our research and development expenses for the periods indicated:
Three months ended
March 31,
Change
(in millions €)20232022%
Research and development expenses
Purchased services197.2131.465.850
Wages, benefits and social security expense86.670.815.822
Depreciation and amortization14.710.83.936
Laboratory supplies12.757.6(44.9)(78)
Other22.815.27.650
Total research and development expenses334.0285.848.217
From the three months ended March 31, 2023 compared to the three months ended March 31, 2022, our research and development expenses increased by €48.2 million or 17% from €285.8 million to €334.0 million mainly due to progressing the clinical studies for pipeline candidates. The increase was further driven by an increase in wages, benefits and social security expenses resulting from an increase in headcount.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the periods indicated:
Three months ended
March 31,
Change
(in millions €)20232022%
General and administrative expenses
Wages, benefits and social security expense38.027.510.538
IT and office equipment27.511.316.2143
Purchased services24.230.3(6.1)(20)
Insurance premiums15.46.09.4157
Other14.315.7(1.4)(9)
Total general and administrative expenses 119.490.828.631
From the three months ended March 31, 2023 compared to the three months ended March 31, 2022, our general and administrative expenses increased by €28.6 million or 31% from €90.8 million to €119.4 million mainly due to increased expenses for IT consulting and IT services as well as an increase in wages, benefits and social security expenses resulting mainly from an increase in headcount.
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Other Operating Income / Expenses
The following table summarizes our other result, including other operating income and expenses, for the periods indicated:
Three months ended
March 31,
Change
(in millions €)20232022%
Other operating result
Other operating income57.1134.7(77.6)(58)
Gain on derivative instruments at fair value through profit or loss41.92.839.1n.m.
Foreign exchange differences, net124.0(124.0)(100)
Other15.27.97.392
Other operating expenses(118.1)(71.6)(46.5)65
Foreign exchange differences, net(116.5)(116.5)
Loss on derivative instruments at fair value through profit or loss(69.3)69.3(100)
Other(1.6)(2.3)0.7(30)
Total other operating result(61.0)63.1(124.1)(197)
From the three months ended March 31, 2023 compared to the three months ended March 31, 2022, our total other operating result decreased by €124.1 million from a positive operating result of €63.1 million to a negative operating result of €61.0 million. The other operating result reflected the change in foreign exchange rates and included net negative foreign exchange differences during three months ended March 31, 2023 compared to net positive foreign exchange differences during the previous year period that related to our U.S. dollar denominated trade receivables which were mainly incurred under our COVID-19 collaboration with Pfizer, U.S. dollar denominated trade payables as well as U.S. dollar denominated other financial liabilities which mainly relate to obligations incurred from our license agreements. The amounts were offset by recording the change in fair value of foreign exchange forward contracts that were entered into during three months ended March 31, 2023 and 2022 to manage some of our transaction exposures but were not designated as hedging instruments under IFRS.
Finance Income / Expenses
The following table summarizes our finance result for the periods indicated:
Three months ended
March 31,
Change
(in millions)20232022%
Finance result
Finance income60.155.34.89
Interest income60.10.559.6n.m.
Foreign exchange differences, net54.8(54.8)(100)
Finance expenses(29.0)(6.7)(22.3)333
Foreign exchange differences, net(27.8)(27.8)
Interest expenses related to lease liabilities(1.3)(0.9)(0.4)44
Amortization of financial instruments0.1(2.6)2.7(104)
Interest expenses related to financial assets(3.2)3.2(100)
Total finance result31.148.6(17.5)(36)
From the three months ended March 31, 2023 compared to the three months ended March 31, 2022, our total financial result decreased by €17.5 million from €48.6 million to €31.1 million, mainly due to recognizing foreign exchange differences arising on financing items (i.e. U.S. dollar denominated cash and cash equivalents) and offsetting effects from interest income.
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Income Taxes
For the three months ended March 31, 2023 and 2022, income taxes were calculated based on the best estimate of the weighted average annual income tax rates expected for the full financial years (estimated annual effective income tax rates) on ordinary income before tax plus the tax effect of any discrete items. For the three months ended March 31, 2023 and 2022, our effective income tax rates were approximately 29.0% and 26.3%, respectively. The current shift of the ratio between the earnings before tax for the German entities and the losses for which no deferred tax assets has been recognized, led to the present increase of the effective income tax rate.  During the three months ended March 31, 2023 and 2022, current income taxes were recognized with respect to the German tax group. Deferred tax effects were recognized with respect to identified discrete items as well as share-based payments programs during the three months ended March 31, 2023 and 2022. As of March 31, 2023, we continue to maintain a valuation allowance against deferred tax assets of our U.S. tax group as there is not sufficient probability in terms of IAS 12 that there will be future taxable profits available against which the unused tax losses and temporary differences can be utilized.
Related Party Transactions
Related party transactions that occurred during the three months ended March 31, 2023 and 2022 are explained in Note 11 to the unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report.
Critical Accounting Policies and Use of Estimates
Our unaudited interim condensed consolidated financial statements for the three months ended March 31, 2023 have been prepared in accordance with IFRS, as issued by the IASB.
Our critical accounting policies and the use of estimates are discussed further in Note 3 to our audited consolidated financial statements of our Annual Report on Form 20-F as of and for the year ended December 31, 2022.
Legal Proceedings
Our contingencies include, but are not limited to, intellectual property disputes and product liability and other product-related litigation. From time to time, in the normal course and conduct of our business, we may be involved in discussions with third parties about considering, for example, the use and/or remuneration for use of such third party’s intellectual property. As of March 31, 2023, none of such intellectual property-related considerations that we have been notified of, and for which potential claims could be brought against us or our subsidiaries in the future, fulfill the criteria for recording a provision. We are subject to an increasing number of product liability claims. Such claims often involve highly complex issues related to medical causation, correctness and completeness of product information (Summary of Product Characteristics/package leaflet) as well as label warnings and reliance thereon, scientific evidence and findings, actual and provable injury, and other matters. These complexities vary from matter to matter. As of March 31, 2023, none of these claims fulfill the criteria for recording a provision. Substantially all of our contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, we are unable to estimate the range of reasonably possible loss. Our assessments, which result from a complex series of judgments about future events and uncertainties, are based on estimates and assumptions that have been deemed reasonable by management, but that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. We currently do not believe that any of these matters will have a material adverse effect on our financial position, and will continue to monitor the status of these and other claims that may arise. However, we could incur judgments, enter into settlements or revise our expectations regarding the outcome of matters, which could have a material adverse effect on our results of operations and/or our cash flows in the period in which the amounts are accrued or paid. We will continue to evaluate whether, if circumstances were to change in the future, the recording of a provision may be needed and whether potential indemnification entitlements exist against any such claim.
Certain pending matters to which we are a party are discussed below.
Alnylam Proceedings
In March 2022, Alnylam Pharmaceuticals, Inc., or Alnylam, filed a lawsuit against Pfizer and Pharmacia & Upjohn    Co. LLC in the U.S. District Court for the District of Delaware alleging that an existing patent owned by Alnylam, U.S. Patent No. 11,246,933, or the ‘933 Patent, is infringed by the cationic lipid used in Comirnaty, and seeking monetary relief, which is not specified in their filings. We filed a counterclaim to become party to the Alnylam proceeding, and in June 2022, Alnylam added to its claims allegations that we induced infringement of the ‘933 Patent. Additionally, in July 2022, Alnylam filed a lawsuit against us, our wholly owned subsidiary, BioNTech Manufacturing GmbH, Pfizer and Pharmacia & Upjohn Co. LLC in the U.S. District Court for the District of Delaware alleging that we
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also induced infringement of a newly issued patent, U.S. Patent No. 11,382,979, or the ‘979 Patent, which is a continuation of the ‘933 Patent. The two lawsuits were consolidated on July 28, 2022 and are currently pending.
We believe we have strong defenses against the allegations claimed relative to each of the patents and intend to vigorously defend ourselves in the proceedings mentioned above. However, our analysis of Alnylam’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
CureVac Proceedings
In July 2022, CureVac AG, or CureVac, filed a lawsuit against us and our wholly owned subsidiaries, BioNTech Manufacturing GmbH and BioNTech Manufacturing Marburg GmbH, in the Düsseldorf Regional Court, alleging Comirnaty’s infringement of one European patent, EP1857122B1, or the EP’122 Patent, and three Utility Models DE202015009961U1, DE202015009974U1, and DE202021003575U1. Later in July 2022, we and Pfizer filed a complaint for a declaratory judgment in the U.S. District Court for the District of Massachusetts, seeking a judgment of non-infringement by Comirnaty of U.S. Patent Nos. 11,135,312, 11,149,278 and 11,241,493. In August 2022, CureVac added European Patent EP3708668B1, or the EP’668 Patent, to its German lawsuit. In September 2022, we and Pfizer filed a declaration of non-infringement and revocation action against the EP’122 Patent and the EP’668 Patent in the Business and Property Courts of England and Wales. In addition, we filed a nullity action in the Federal Patent Court of Germany seeking a declaration that the EP’122 Patent is invalid. Lastly, on November 11, 2022, we filed cancellation actions seeking the cancellation of the three German Utility Models in the German Patent and Trademark Office. All of the proceedings are currently pending.
We believe we have strong defenses against the allegations claimed relative to each of the patents and utility models and intend to vigorously defend ourselves in the proceedings mentioned above. However, our analysis of CureVac’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
Moderna Proceedings
In August 2022, ModernaTX, Inc., or Moderna, filed three patent infringement lawsuits against us and Pfizer related to Comirnaty. Moderna filed a lawsuit against us and Pfizer and our wholly owned subsidiaries, BioNTech Manufacturing GmbH, BioNTech Europe GmbH and BioNTech Manufacturing Marburg GmbH, Pfizer Manufacturing Belgium NV, Pfizer Ireland Pharmaceuticals and Pfizer Inc. in the Düsseldorf Regional Court alleging Comirnaty’s infringement of two European Patents, 3590949B1, or the EP’949 Patent and 3718565B1, or the EP’565 Patent. Moderna filed a second lawsuit asserting infringement of the EP’949 Patent and EP’565 Patent against us and our wholly owned subsidiaries, BioNTech Manufacturing GmbH, BioNTech Europe GmbH and BioNTech Manufacturing Marburg GmbH, Pfizer Limited, Pfizer Manufacturing Belgium NV and Pfizer Inc. in the Business and Property Courts of England and Wales. Additionally, Moderna filed a lawsuit in the United States District Court for the District of Massachusetts against us and our wholly owned subsidiaries BioNTech Manufacturing GmbH and BioNTech US Inc. and Pfizer Inc. alleging infringement of U.S. Patent Nos. 10,898,574, 10,702,600 and 10,933,127 and seeking monetary relief, which was not specified in the filings. In September 2022, we and Pfizer filed a revocation action in the Business and Property Courts of England and Wales requesting revocation of the EP’949 Patent and EP’565 Patent. Later in September 2022, Moderna filed a lawsuit against us and our wholly owned subsidiary BioNTech Manufacturing GmbH and Pfizer B.V., Pfizer Export B.V., C.P. Pharmaceuticals International C.V. and Pfizer Inc. in the District Court of The Hague alleging Comirnaty’s infringement of the EP ‘949 Patent and EP’565 Patent. All of the proceedings are currently pending.
We believe we have strong defenses against the allegations claimed relative to each of the patents and intend to vigorously defend ourselves in the proceedings mentioned above. However, our analysis of Moderna’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
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Arbutus and Genevant Proceedings
On April 4, 2023, Arbutus Biopharma Corp., or Arbutus, and Genevant Sciences GmbH, or Genevant, filed a lawsuit against Pfizer and us in the U.S. District Court for the District of New Jersey alleging that Pfizer and we have infringed the following patents owned by Arbutus: U.S. Patent Nos. 9,504,651; 8,492,359; 11,141,378; 11,298,320; and 11,318,098, through the use of Genevant’s lipid nanoparticle technology and methods for producing such lipids in Comirnaty, and seeking monetary relief.
We believe we have strong defenses against the allegations claimed relative to each of the patents and intend to vigorously defend ourself in the lawsuit mentioned above. However, our analysis of Arbutus and Genevant’s claims is ongoing and complex, and we believe the outcome of the suit remains substantially uncertain. Taking into account discussions with our external lawyers, we do not consider the probability of an outflow of resources to be sufficient to recognize a provision at the balance sheet date. In our opinion, these matters constitute contingent liabilities as of the balance sheet date. However, it is currently impractical for us to estimate with sufficient reliability the respective contingent liabilities.
Liquidity and Capital Resources
Overview
Given our strong financial, scientific and operational accomplishments, we believe we have the resources to diligently allocate our current capital to drive a multi-platform strategy and deliver a fully integrated global biotechnology company. On the research and development (R&D) front, we are focused on developing next generation COVID-19 vaccines to maintain leadership and pandemic preparedness as well as broaden the label of and access to the vaccine. We also plan to invest heavily to build out our global development organization, bringing in talent with clinical and regulatory expertise needed to rapidly advance our diversified clinical pipeline. We are also diversifying our therapeutic area footprint which will enable us to fully leverage the potential of all technology platforms across autoimmune diseases, inflammatory diseases, cardiovascular disease, neurodegenerative diseases, and regenerative medicines. In addition, we plan to enhance capabilities through complementary acquisitions, technologies, infrastructure and manufacturing. To support our future trajectory, growing the organization and expanding our team is of utmost importance. We are on the way to develop our global footprint in key regions including Europe, the United States, Asia and Africa. Additionally, investing in manufacturing capabilities for key technologies and deploying our pandemic response capabilities remain priorities for us. As of March 31, 2023, we had cash and cash equivalents of €12,143.9 million and security investments of €671.9 million. When analyzing our liquidity, we anticipate certain significant balance sheet items that are expected to improve our cash and cash equivalents balance subsequent to the end of the reporting period. Our trade receivables remained outstanding as of March 31, 2023 mainly due to the contractual settlement of the gross profit share under our COVID-19 collaboration with Pfizer as described in Note 6 to the unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report. As of March 31, 2023, our trade receivables included, in addition to the profit share for the first quarter of 2023, trade receivables which related to the gross profit share for the fourth quarter of 2022. The payment settling our gross profit share for the fourth quarter of 2022 (as defined by the contract) in the amount of €3,961.3 million was received from our collaboration partner subsequent to the end of the reporting period as of April 14, 2023.
Cash and cash equivalents and financial investments are invested in accordance with our asset management and investment policy, primarily with a focus on liquidity and capital preservation, and consist primarily of cash in bank accounts and on hand as well as long- and short-term financial investments.
In November 2020, we entered into a sales agreement, or the Sales Agreement, with Jefferies LLC and SVB Leerink LLC (now known as SVB Securities LLC), as sales agents, to establish an at-the-market offering program, pursuant to which we may sell, from time to time, ADSs representing ordinary shares for aggregate gross proceeds of up to $500.0 million. We did not sell any ADS during three months ended March 31, 2023. As of March 31, 2023, the remaining capacity under the Sales Agreement is $207.1 million. Under the at-the-market offering program ADSs are sold via the stock exchange and therefore no shareholders’ subscription rights are affected.
In November 2022, our Management Board and Supervisory Board authorized the second tranche of our share repurchase program of ADSs, with a value of up to $0.5 billion, commencing on December 7, 2022. During the three months ended March 31, 2023, ADSs were repurchased at an average price of $142.04, for total consideration of $302.1 million (€279.8 million).
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On March 27, 2023, our Management Board and Supervisory Board authorized a new share repurchase program under which we may purchase ADSs, each representing one ordinary share, with a value of up to $0.5 billion until the end of 2023. No repurchases were made under the new program during the three months ended March 31, 2023.
Cash Flow
The following table summarizes the primary sources and uses of cash for each period presented:
Three months ended
March 31,
(in millions €)20232022
Net cash flows from (used in):
Operating activities(677.4)4,050.2
Investing activities(735.4)287.4
Financing activities(291.3)80.3
Total cash inflow (outflow)(1,704.1)4,417.9
Operating Activities
We derive cash flows from operations primarily from the sale of products and services rendered. Our cash flows from operating activities are significantly influenced by our use of cash for operating expenses and working capital to support the business. During the three months ended March 31, 2023, our cash flows from operating activities include the settlement payments of our gross profit share from our collaboration partner Pfizer as scheduled by the contractual arrangement. As described in Note 6 to the unaudited interim condensed consolidated financial statement included elsewhere in this Quarterly Report, the contractual settlement of the gross profit share has a temporal offset of more than one calendar quarter. Therefore, subsequent to the end of the reporting period, in April 2023, we further improved our cash position as we received the settlement payment of our gross profit share for the fourth quarter of 2022 (as defined by the contract).
Net cash used from operating activities for the three months ended March 31, 2023 was €677.4 million, comprising a profit before tax of €707.7 million, positive non-cash adjustments of €85.4 million, a net positive change in assets and liabilities of €47.7 million and income taxes paid of €844.9 million. Non-cash items primarily included net foreign exchange differences as well as fair value adjustments of derivatives without cash-effect. The net positive change in assets and liabilities was primarily due to a decrease in other financial liabilities and other liabilities mainly including wage tax and social security payments from our share-based payment settlement and royalty payments.
Net cash generated in operating activities for the three months ended March 31, 2022 was €4,050.2 million, comprising a profit before tax of €5,018.1 million, negative non-cash adjustments of €167.6 million, and a net positive change in assets and liabilities of €497.2 million. Non-cash items primarily included finance income related to our convertible bond fair value update. The net positive change in assets and liabilities was primarily due to an increase in other financial liabilities mainly including obligations incurred from our license agreements.
Investing Activities
Net cash used in investing activities for the three months ended March 31, 2023 was €735.4 million, mainly attributable to financial security investments in accordance with our asset management and investment policy.
Net cash generated in investing activities for the three months ended March 31, 2022 was €287.4 million, mainly derived from €375.2 million proceeds from cash deposit which returned to cash upon maturity of their original investments' term.
Financing Activities
During the three months ended March 31, 2023, net cash used in financing activities was 291.3 million, primarily with respect to a share repurchase program.
During the three months ended March 31, 2022, net cash generated in financing activities was €80.3 million, primarily with respect to an equity investment in our shares made by Pfizer alongside our new research, development and commercialization collaboration to develop a potential first mRNA-based vaccine for the prevention of shingles (herpes zoster virus, or HZV).
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Operation and Funding Requirements
As part of our capital allocation strategy, we expect to continue to incur significant and increasing operating expenses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we and our collaborators:
continue or expand our research or development of our programs in preclinical development;
continue or expand the scope of our clinical trials for our product candidates;
initiate additional preclinical, clinical, or other trials for our product candidates, including under our collaboration agreements;
continue to invest in our immunotherapy platforms to conduct research to identify novel technologies;
change or increase our manufacturing capacity or capability;
change or add additional suppliers;
add additional infrastructure to our quality control, quality assurance, legal, compliance and other groups to support our operations as a public company and our product development and commercialization efforts, including expansion of sites in Germany and new sites in the United States, and potentially others globally;
attract and retain skilled personnel;
seek marketing approvals and reimbursement for our product candidates;
develop our sales, marketing, and distribution infrastructure for our COVID-19 vaccine and any other products for which we may obtain marketing approval or emergency use authorization;
seek to identify and validate additional product candidates;
acquire or in-license other product candidates and technologies;
acquire other companies;
make milestone or other payments under any in-license agreements;
maintain, protect, defend, enforce and expand our intellectual property portfolio; and
experience any delays or encounter issues with any of the above.
We are a party to license and research and development agreements with universities and other third parties, as well as patent assignment agreements, under which we have obtained rights to patents, patent applications and know-how. We enter into contracts in the normal course of business with CROs for clinical trials, clinical and commercial supply manufacturing, with vendors for preclinical research studies and for other services and products for operating purposes. We work together with CMOs, who manufacture our product candidates and products and enter into lease agreements to lease laboratory, GMP manufacturing, storage and office spaces. Purchase obligations under our agreements to the extent that they are quantifiable and not cancelable have been considered when defining our guidance for future cash commitments. Most of the committed cash outflow within the remaining months in 2023 is related to CMO purchase obligations amounting to €36.8 million and lease payments amounting to €40.5 million. Further, we have CMO purchase obligations with an amount of €95.3 million and lease payment obligations of €192.0 million for the years 2024 and beyond.
We are subject to all of the risks related to the development and commercialization of pharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.
Our future funding requirements, both near and long term, will depend on many factors, including, but not limited to:
the initiation, progress, timing, costs, and results of preclinical or nonclinical studies and clinical trials for our product candidates;
the amount and timing of revenues and associated costs from sales of our COVID-19 vaccine;
the results of research and our other platform activities;
the clinical development plans we establish for our product candidates;
the terms of any agreements with our current or future collaborators, and the achievement of any milestone payments under such agreements to be paid to us or our collaborators;
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the number and characteristics of product candidates that we develop or may in-license;
the outcome, timing and cost of meeting regulatory requirements established by the FDA, the EMA and other comparable regulatory authorities;
the cost of filing, prosecuting, obtaining, maintaining, protecting, defending and enforcing our patent claims and other intellectual property rights, including actions for patent and other intellectual property infringement, misappropriation and other violations brought by third parties against us regarding our product candidates or actions by us challenging the patent or intellectual property rights of others;
the effect of competing technological and market developments, including other products that may compete with one or more of our product candidates;
the cost and timing of completion and further expansion of clinical and commercial scale manufacturing activities sufficient to support all of our current and future programs;
the cost of establishing sales, marketing, and distribution capabilities for any product candidates for which we may receive marketing approval and reimbursement in regions where we choose to commercialize our products on our own; and
the terms of any ADS repurchases we make.
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Risk Factors
Our business is subject to various risks, including those described below. You should consider carefully the risks and uncertainties described below and in our future filings. If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. Additionally, risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations and/or prospects.
Investing in the ADSs involves various risks. You should carefully read and consider the matters discussed in this Annual Report under the heading “Risk Factors,” which include the following risks:
Risk Factor Summary
Demand for our COVID-19 vaccine, though difficult to predict, is expected to decrease in the near future. Changing market dynamics will impact our revenue, which currently depends heavily on sales of our COVID-19 vaccine, and result in challenges relating to production of our COVID-19 vaccine.
Our reported commercial revenue is partially based on preliminary estimates of COVID-19 vaccine sales and costs from Pfizer Inc., or Pfizer, that are likely to change in future periods, which may impact our reported financial results.
We may be unsuccessful in adapting our COVID-19 vaccine or developing future versions of our COVID-19 vaccine to protect against variants of the SARS-CoV-2 virus and, even if we are successful, a market for vaccines against these variants may not develop.
Significant adverse events may occur during our clinical trials or even after receiving regulatory approval, which could delay or terminate clinical trials, delay or prevent regulatory approval or market acceptance of any of our product candidates.
We face significant competition from other makers of COVID-19 vaccines and may be unable to maintain a competitive market share for our COVID-19 vaccine.
We have only recently built our marketing and sales organization. If we are unable to continue to increase our marketing and sales capabilities on our own or through third parties, we may not be able to market and sell our product candidates effectively in the United States and other jurisdictions, if approved, or generate product sales revenue.
Other companies or organizations may challenge our intellectual property rights or may assert intellectual property rights that prevent us from developing and commercializing our COVID-19 vaccine or our product candidates and other technologies.
Even if we obtain regulatory approval for our product candidates, the products may not gain the market acceptance among physicians, patients, hospitals, treatment centers and others in the medical community necessary for commercial success.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict. If our operating results fall below expectations, the price of the ADSs representing our shares could decline.
We may require substantial additional financing to achieve our goals, and a failure to obtain this capital on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.
If we identify material weaknesses in our internal control over financial reporting and fail to remediate such material weaknesses, we may not be able to report our financial results accurately or to prevent fraud.
As a “foreign private issuer,” we are exempt from a number of rules under U.S. securities laws, as well as Nasdaq rules, and we are permitted to file less information with the SEC than U.S. companies. This may limit the information available to holders of the ADSs and may make our ordinary shares and the ADSs less attractive to investors.
Clinical development involves a lengthy and expensive process with an uncertain outcome, and delays can occur for a variety of reasons outside of our control. Clinical trials of our product candidates may be delayed, and certain programs may never advance in the clinic or may be more costly to conduct than we anticipate, any of which can affect our ability to fund our company and would have a material adverse impact on our business.
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mRNA drug development has substantial clinical development and regulatory risks due to limited regulatory experience with mRNA immunotherapies.
Our approved product and product candidates are based on novel technologies and they may be complex and difficult to manufacture. We may encounter difficulties in manufacturing, product release, shelf life, testing, storage, supply chain management or shipping. If we or any of the third-party manufacturers we work with encounter such difficulties, our ability to supply materials for clinical trials or any approved product could be delayed or stopped.
If our efforts to obtain, maintain, protect, defend and/or enforce the intellectual property related to our COVID-19 vaccine or our product candidates and technologies are not adequate, we may not be able to compete effectively in our market.
We have experienced and may continue to experience significant volatility in the market price of the ADSs representing our ordinary shares.
Our principal shareholders and management own a significant percentage of our ordinary shares and will be able to exert significant control over matters subject to shareholder approval.
Risks Related to our COVID-19 Vaccine and the Commercialization of our Pipeline
Demand for our COVID-19 vaccine, though difficult to predict, is expected to decrease in the near future. Changing market dynamics will impact our revenue, which currently depends heavily on sales of our COVID-19 vaccine, and result in challenges relating to production of our COVID-19 vaccine.
Prior to the commercialization of our COVID-19 vaccine, we had not sold or marketed any products in our pipeline. As a result, a majority of our total revenues to date are attributable to sales of our COVID-19 vaccine. However, we expect to experience increasing reductions in demand for COVID-19 vaccination generally, including for our vaccine, as the virus becomes endemic and as a growing proportion of the population becomes vaccinated. We expect that future revenues from sales of our COVID-19 vaccine will decrease as demand for vaccination wanes. Such revenues will depend on numerous factors, including:
the extent to which a COVID-19 vaccine, including any booster shot, continues to be necessary beyond the current pandemic, including when COVID-19 becomes an endemic virus;
competition from other COVID-19 vaccines, including those with different mechanisms of action and different manufacturing and distribution constraints, on the basis of, among other things, efficacy, cost, convenience of storage and distribution, breadth of approved use, side-effect profile and durability of immune response;
our ability to successfully and timely develop effective vaccines targeting new variants and mutations of COVID-19;
our ability to receive full regulatory approvals where we currently have emergency use authorizations or equivalents;
our ability to expand our geographic customer base;
our pricing and coverage negotiations with governmental authorities, private health insurers and other third-party payors after our initial sales to national governments, including the transition towards ordinary-course insurance coverage in the public and private sectors;
the ability of countries and jurisdictions to store and distribute doses of our COVID-19 vaccine to end users at cold temperatures;
the safety profile of our COVID-19 vaccine, including if previously unknown undesirable effects or increased incidence or severity of known undesirable effects are identified with our COVID-19 vaccine;
intellectual property litigation involving our COVID-19 vaccine and COVID-19 vaccines in general; and
our manufacturing and distribution capabilities for our COVID-19 vaccine.
We cannot accurately predict the revenues our COVID-19 vaccine will generate in future periods or for how long our COVID-19 vaccine will continue to generate material revenues and we cannot ensure it will maintain its competitive position. Uncertainty in the demand for our COVID-19 vaccine and difficulties in targeting appropriate supply of our COVID-19 vaccines have in the past resulted, and may in the future result, in significant inventory write-offs and cancellations of contract manufacturing orders. Our business and financial condition could be materially affected by lowered COVID-19 vaccine revenues resulting from any of the above factors, or by production and supply chain difficulties. In addition, if our revenues or market share of, or other financial metrics relating to our COVID-19
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vaccine do not meet the expectations of investors or securities analysts, the market price of the ADSs representing our ordinary shares may decline.
Our reported commercial revenue is based on preliminary estimates of COVID-19 vaccine sales and costs from Pfizer that are likely to change in future periods, which may impact our reported financial results.
Our reported commercial revenue is based on preliminary estimates from Pfizer, and other assumptions and judgments that we have made, which may be subject to significant uncertainties. Our commercial revenue includes preliminary estimates in part due to a difference in Pfizer’s fiscal quarter for subsidiaries outside the United States, which consequently creates an additional time lag between the recognition of revenues and the receipt of payment. Although our revenue recognition policy is based on facts and circumstances known to us and various other assumptions that we believe to be reasonable under the circumstances, our actual results may deviate from such reported revenue.
We depend on Pfizer to determine and provide estimates of the costs and profits to be shared with us in the countries where it is commercializing our COVID-19 vaccine under our collaboration agreement with Pfizer for our COVID-19 vaccine, which we refer to as the Pfizer Agreement. Because the information supplied by Pfizer is preliminary and subject to change, the commercial revenue we report based on such information is also subject to finalization. This is particularly true for vaccine sales outside of the United States, where Pfizer has a different reporting cycle than ours. As a result, we may not have the complete sales and costs results outside of the United States for months not covered by the reporting period, but we are nonetheless required to report estimated figures.
Pfizer has historically provided us with profit figures for our COVID-19 vaccine sales in the United States using standard U.S. transfer prices and manufacturing and shipping cost variances (as far as those have been identified) that could be subject to adjustment (e.g., due to changes in manufacturing costs or the price of our COVID-19 vaccine). Pfizer has also provided estimated profits for COVID-19 vaccine sales outside of the United States that were preliminary in nature for the last month of a quarter, as Pfizer’s subsidiaries outside of the United States have a different reporting cycle than ours. These estimated figures have changed, and in the future such estimated figures are likely to change, as we receive final data from Pfizer for the applicable period in accordance with the reporting cycle of Pfizer's ex-U.S. subsidiaries and as actual costs become known. Further, to the extent that Pfizer does not provide such preliminary information in the future, our provisional sales figures for territories outside of the United States will be subject to an even greater level of estimate and judgment. Any changes to the preliminary data we report herein may have an impact on our reported revenues and expenses, profitability or financial position.
Our COVID-19 vaccine is sensitive to temperature, shipping and storage conditions and could be subject to risk of loss or damage.
Our COVID-19 vaccine is, and other product candidates we develop could be, sensitive to temperature, storage and handling conditions. In particular, while we have improved the required shipping and storage conditions of our COVID-19 vaccine, it must be shipped and stored at cold temperatures. Loss in supply of our COVID-19 vaccine and our product candidates could occur if the product or product intermediates are not stored or handled properly. Shelf life for our product candidates may vary by product, and it is possible that supply of our COVID-19 vaccine or our product candidates could be lost due to expiration prior to use. This has in the past led, and could in the future lead, to additional manufacturing costs and delays in our ability to supply required quantities for clinical trials or for commercial purposes. Such distribution challenges may make our COVID-19 vaccine a less attractive product than other COVID-19 vaccines that do not require as cold storage, and our COVID-19 vaccine may become increasingly less competitive as additional other vaccines become authorized for emergency use. If we, our partners and customers are unable to adequately manage these issues, we may be exposed to product liability claims and the market opportunity for our COVID-19 vaccine may be reduced, each of which could adversely affect our business prospects and materially harm our financial condition.
If we discover safety issues with our products, including our COVID-19 vaccine, that were not known at the time of approval, commercialization efforts for our products could be negatively affected, approved products could lose their approval or sales could be suspended, we could be subject to product liability claims and our business and reputation could be materially harmed.
Our COVID-19 vaccine and any other product candidates for which we receive approval or emergency use authorization are subject to continuing regulatory oversight, including the review of additional safety information. Billions of doses of our COVID-19 vaccination have now been delivered worldwide, and our COVID-19 vaccine is being more widely used by patients as an authorized product than it was used in clinical trials. As a result, undesirable effects and other problems may be observed that were not seen or anticipated, or were not as prevalent or severe, during clinical trials. We cannot provide assurance that newly discovered or developed safety issues will not arise, and we have received, and expect to continue to receive, product liability claims relating to our COVID-19 vaccine. With the use of any vaccine by a wide patient population, serious adverse events may occur from time to time that did not arise in
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clinical trials or that initially appeared to be unrelated to the vaccine itself and only with the collection of subsequent information were found to be causally related to the product. Safety events that arise outside of a clinical trial setting are difficult to monitor, and given the widespread use of our COVID-19 vaccine, we have experienced difficulty tracking potential treatment-related adverse events on a global basis. Any safety issues could cause us to suspend or cease marketing of our approved products, possibly subject us to substantial liabilities and adversely affect our ability to generate revenue and our financial condition. The subsequent discovery of previously unknown problems with a product could negatively affect commercial sales of the product, result in restrictions on the product or lead to the withdrawal of the product from the market. The reporting of adverse safety events involving our products or public speculation about such events could cause the price of the ADSs representing our ordinary shares to decline or experience periods of volatility.
Unexpected safety issues, including any that we have not yet observed in our clinical trials for our COVID-19 vaccine or in real world data, could lead to significant reputational damage for us and our product development platforms going forward and other issues, including delays in our other programs, the need for re-design of our clinical trials and the need for significant additional financial resources.
Failure to comply with continuing regulatory requirements by us or our collaboration partners could adversely impact regulatory approvals for our products, result in product recalls or suspensions, subject us to fines and/or other types of liabilities.
If we or our collaborators fail to comply with applicable continuing regulatory requirements, including good industry practices, such as good manufacturing practices (GMP), we or our collaborators may be subject to fines, suspension or withdrawal of regulatory approvals for specific drugs, product recalls and seizures, operating restrictions and/or criminal prosecutions. In addition, the manufacturers we engage to make our products and the manufacturing facilities in which our products are made are subject to periodic review and inspection by the U.S. Food and Drug Administration, or the FDA, and foreign regulatory authorities. If problems are identified during the review or inspection of these manufacturers or manufacturing facilities, it could result in our inability to use the facility to make our product or a determination that inventories are not safe for commercial sale. Any of these factors could adversely affect our business prospects and our financial position could be materially harmed.
We may be unsuccessful in adapting our COVID-19 vaccine or developing future versions of our COVID-19 vaccine to protect against variants of the SARS-CoV-2 virus, and even if we are successful, a market for vaccines against these variants may not develop.
Our COVID-19 vaccine was developed based upon the genetic sequence of the original SARS-CoV-2 virus that was first detected. The SARS-CoV-2 virus continues to evolve, and new strains of the virus or those that are already in circulation may prove more transmissible or cause more severe forms of COVID-19 disease than the predominant strains observed to date. Our vaccine may not be as effective in protecting against existing and future variant strains of the SARS-CoV-2 virus as it is against the original virus. While we continue to monitor emerging SARS-CoV-2 strains, undertake preclinical investigations into the immunogenicity of our COVID-19 vaccine against new variants as they emerge and develop modified versions of our COVID-19 vaccine against new variants, these efforts may be unsuccessful, and failure to timely and successfully adapt our vaccine to variants of the SARS-CoV-2 virus could lead to significant reputational harm and adversely affect our financial results. It is also possible that we may expend significant resources adapting our COVID-19 vaccine to protect against certain variants of the SARS-CoV-2 virus, but that a market for adapted vaccines does not develop for one or more variants or that demand does not align with our projections or cost expenditures. Moreover, even if we are successful in developing an adapted vaccine and there is a market for the new vaccine, new variants continue to emerge and any adapted vaccine may not be as effective in protecting against such future variant strains.
The successful commercialization of our product candidates will depend in part on the extent to which governmental authorities, private health insurers and other third-party payors provide coverage and adequate reimbursement levels and implement pricing policies favorable to our product candidates. Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, and/or delayed payments from government authorities could limit our ability to market those products and decrease our ability to generate revenue.
The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford certain treatments, including our COVID-19 vaccine and other product candidates we may develop and sell. In addition, because our mRNA product candidates represent an entirely new therapeutic modality, we cannot accurately estimate how future products we may develop and sell would be priced, whether reimbursement could be obtained, or any potential revenue. Sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursement is not
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available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize an adequate return on our investment in any of our products. Additionally, even if pricing terms with governmental authorities are agreed upon, there may be delayed or denied payments.
There is significant uncertainty related to the insurance coverage and reimbursement for newly approved products in particular in the United States, including genetic medicines. In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, or HHS, as CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for novel products such as ours. Reimbursement agencies in Europe may be more conservative than CMS. For example, a number of cancer drugs have been approved for reimbursement in the United States but have not been approved for reimbursement in certain European countries.
Outside the United States, certain countries, including a number of member states of the European Union, set prices and reimbursement for pharmaceutical products, with limited participation from the marketing authorization holders. We cannot be sure that such prices and reimbursement will be acceptable to us or our collaborators. If the regulatory authorities in these jurisdictions set prices or reimbursement levels that are not commercially attractive for us or our collaborators, our revenues from sales by us or our collaborators, and the potential profitability of our drug products, in those countries would be negatively affected. An increasing number of countries are taking initiatives to attempt to reduce large budget deficits by focusing cost-cutting efforts on pharmaceuticals for their state-run health care systems. These international price control efforts have impacted all regions of the world but have been most drastic in the European Union. Additionally, some countries require approval of the sale price of a product before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then may experience delays in the reimbursement approval of our product or be subject to price regulations that would delay our commercial launch of the product, possibly for lengthy time periods, which could negatively impact the revenues we are able to generate from the sale of the product in that particular country.
Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. For example, the U.S. government released a “blueprint,” which is a plan to reduce the cost of drugs. The blueprint contains certain measures that the HHS is already working to implement. At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importing from other countries and bulk purchasing.
We expect to experience pricing pressures in connection with the sale of any of our product candidates, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs, surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products in the marketplace.
The imposing of export controls on our COVID-19 vaccine in the European Union or in other jurisdictions could severely and adversely impact our manufacturing activities, commercial activities and financial results.
Governments of the jurisdictions in which we or our partners produce our COVID-19 vaccine may prohibit us from delivering orders of our COVID-19 vaccine to customers in other jurisdictions.
The European Union and other regions have imposed, or threatened to impose, export controls that would limit or block the delivery of COVID-19 vaccines manufactured in or outside their territories in instances where manufacturers have been delayed or have not fully satisfied their delivery obligations to such governments. The European Union ended this export authorization scheme as of December 31, 2021, however, if they reenact this scheme, we may be prohibited from exporting commercial supplies of the vaccine from our manufacturing site in Germany to non-EU countries (and Pfizer may likewise be prohibited from exporting out of its manufacturing site in Belgium). Such restrictions may have a material impact on our manufacturing or distribution activities, and the commercialization of our COVID-19 vaccine.
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Our ability to continue to generate income from sales of our COVID-19 vaccine is uncertain, due to government interest and public perception regarding a vaccine, as well as the evolving nature of the disease more generally.
The COVID-19 disease itself is unpredictable and each variant comes with varying levels of transmissibility and severity. Consequently, the burden of the disease may wane or dissipate such that our and other COVID-19 vaccines may be less essential from individual and public health perspectives.
In addition, there is a heightened risk that a COVID-19 vaccine may be subject to adverse emergency actions taken by governmental entities in certain countries, including intellectual property expropriation, compulsory licenses, strict price controls or other actions. In the U.S., the Defense Production Act of 1950, as amended, or the Defense Production Act, gives the U.S. government rights and authorities that may directly or indirectly diminish our own rights or economic opportunities with respect to our COVID-19 vaccine. Our current and potential third-party service providers may be impacted by government entities potentially invoking the Defense Production Act or other potential restrictions to all or a portion of services they might otherwise offer. The Biden administration has previously invoked the Defense Production Act to expand manufacturing capacity of vaccine and vaccine supplies as well as COVID-19 tests and testing supplies.
Additionally, we may need to, or we may be required by governmental or non-governmental authorities to, set aside specific quantities of doses of our COVID-19 vaccine for designated purposes or geographic areas. We face challenges related to the allocation of supply of our COVID-19 vaccine, particularly with respect to geographic distribution.
Furthermore, public sentiment regarding commercialization of a COVID-19 vaccine, the safety and efficacy of our COVID-19 vaccine, other COVID-19 vaccines and treatments, the COVID-19 pandemic generally, as well as public perception of the severity of SARS-CoV-2 virus may limit or negate our ability to generate income from sales of our COVID-19 vaccine. We believe that social media is increasingly being used to communicate information and misinformation about the COVID-19 pandemic and our and other COVID-19 vaccines. If social media posts and other communications contain negative, inaccurate or misleading information about our COVID-19 vaccine, demand for our COVID-19 vaccine may be diminished and we may suffer reputational damage.
We face significant competition with other makers of COVID-19 vaccines and may be unable to maintain a competitive market share for our COVID-19 vaccine.
A large number of vaccine manufacturers, academic institutions and other organizations currently have programs to develop COVID-19 vaccine candidates and more than thirty other vaccines have been authorized for emergency use or approved in various countries, including vaccines developed by Moderna, Inc., Johnson & Johnson, University of Oxford/AstraZeneca plc, China National Pharmaceutical Group (Sinopharm)/Beijing Institute of Biological Products and Wuhan Institute of Biological Products, Novavax, Inc., Valneva SE/Dynavax Technologies Corporation, Sinovac Biotech Ltd., Bharat Biotech International Limited, CSPC Pharmaceutical Group Ltd. and other companies are in late stages of clinical development or have been authorized for emergency use or approved in certain countries. Our competitors pursuing vaccine candidates may have greater financial, product candidate development, manufacturing and marketing resources than we do. Larger pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products, and may have the resources to invest heavily to accelerate discovery and development of their vaccine candidates.
Our efforts to continue successful commercialization of our COVID-19 vaccine may fail if competitors develop and commercialize COVID-19 vaccines that are safer, more effective, produce longer immunity against COVID-19, require fewer administrations, have fewer or less severe undesirable effects, have broader market acceptance, are more convenient to administer or distribute or are less expensive than any vaccine candidate that we have developed or we may develop.
We may not be able to demonstrate sufficient efficacy or safety of our COVID-19 vaccine to obtain permanent regulatory approval in jurisdictions where it has been authorized for emergency use or granted conditional marketing approval.
Our COVID-19 vaccine has been granted full U.S. FDA approval for individuals 12 years and older, emergency or limited use authorization in a number of countries and in the U.S. for individuals 6 months to 12 years of age and approval for use in certain other countries. Our COVID-19 vaccine has not yet received full approval by regulatory authorities in certain countries where it has been authorized for emergency or temporary use. We and Pfizer intend to continue to observe our COVID-19 vaccine, including vaccine candidates that we may develop for other variants of COVID-19, in global clinical trials. It is possible that subsequent data from these clinical trials may not be as favorable as data we submitted to regulatory authorities to support our applications for emergency use authorization or marketing or conditional marketing approval or that concerns about the safety of our COVID-19 vaccine will arise from the widespread use of our COVID-19 vaccine outside of clinical trials. Our COVID-19 vaccine may not receive approval
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outside of the emergency use setting in the countries where it is not currently approved, which could adversely affect our business prospects.
We are developing other product candidates in an environment of rapid technological and scientific change, and our failure to effectively compete would prevent us from achieving significant market penetration. Most of our competitors have significantly greater resources than we do and we may not be able to compete successfully.
The pharmaceutical market is intensely competitive and rapidly changing. Many large pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and other public and private research organizations are pursuing the development of novel drugs for the same diseases that we are targeting or expect to target. Many of our competitors have:
greater financial, technical and human resources than we have at every stage of the discovery, development, manufacture and commercialization of products;
more extensive experience in preclinical testing, conducting clinical trials, obtaining regulatory approvals and manufacturing, marketing and selling drug products;
product candidates that are based on previously tested or accepted technologies;
products that have been approved or are in late stages of development; and
collaborative arrangements in our target markets with leading companies and research institutions.
We will face intense competition from drugs that have already been approved and accepted by the medical community for the treatment of the conditions for which we may develop drugs in the future. We also expect to face competition from new drugs that enter the market. There are a number of drugs currently under development, which may become commercially available in the future, for the treatment of conditions for which we are trying, or may in the future try, to develop drugs. These drugs may be more effective, safer, less expensive, or marketed and sold more effectively than any products we develop.
We anticipate competing with the largest pharmaceutical companies in the world, many of which are all currently conducting research in the fields of infectious diseases, immuno-oncology, rare genetic diseases and cancer immunotherapies. Some of these companies have greater financial and human resources than we currently have. In addition to these large pharmaceutical companies, we may directly compete with fully-integrated biopharmaceutical companies and other immunotherapy-focused oncology companies, as well as a number of companies focused on immunotherapies or shared tumor antigen and neoantigen therapeutics, some of which have entered into collaboration and funding agreements with larger pharmaceutical or biotechnology companies.
If we successfully develop other product candidates, and obtain approval for them, we will face competition based on many different factors, including:
the safety and effectiveness of our products relative to alternative therapies, if any;
the ease with which our products can be administered and the extent to which patients accept relatively new routes of administration;
the timing and scope of regulatory approvals for these products;
the availability and cost of manufacturing, marketing and sales capabilities;
the price of any approved immunotherapy;
reimbursement coverage; and
intellectual property position.
Our competitors may develop or commercialize products with significant advantages over any products we develop based on any of the factors listed above or on other factors. In addition, our competitors may develop collaborations with or receive funding from larger pharmaceutical or biotechnology companies, providing them with an advantage over us. Our competitors therefore may be more successful in commercializing their products than we are, which could adversely affect our competitive position and business. Competitive products may make any products we develop obsolete or non-competitive before we can recover the expenses of developing and commercializing our products, if approved.
The market opportunities for some of our product candidates may be small due to the rarity of the disease, or limited to those patients who are ineligible for or have failed prior treatments. As the target patient populations for
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some of our programs are small, we may be unable to maintain profitability without obtaining regulatory approval for additional indications.
The FDA often approves new cancer therapies initially only for use by patients with relapsed or refractory advanced cancer. We expect to seek approval initially for some of our product candidates in this context. Subsequently, for those products that prove to be sufficiently beneficial, we would expect to seek approval in earlier lines of treatment and potentially as a first-line therapy but there is no guarantee that our product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals, we may have to conduct additional clinical trials. We are also developing product candidates for the treatment of rare diseases.
Our projections of the number of people who have or will have the diseases we may be targeting may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of trial participants may turn out to be lower than expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates. Even if we obtain significant market share for our products, if approved, because the potential target populations may be small, we may never achieve or maintain profitability without obtaining regulatory approval for additional indications.
If we are unable to continue to increase our marketing and sales capabilities on our own or through third parties, we may not be able to market and sell our product candidates effectively in the United States and other jurisdictions, if approved, or generate sufficient product sales revenue.
We have only recently developed our sales, distribution or marketing capabilities in Germany and Turkey, and, other than for our COVID-19 vaccine, we have not historically designed our preclinical studies and clinical trials with specific commercialization or marketing considerations in mind. To further successfully commercialize our COVID-19 vaccine and any other products that may result from our development programs, we will need to continue developing sales and marketing capabilities in the United States, Europe and other regions, either on our own or with others. We may enter into collaborations with other entities to utilize their mature marketing and distribution capabilities, but we may be unable to enter into marketing agreements on favorable terms, if at all. If our current and future collaborators do not commit sufficient resources to further commercialize our COVID-19 vaccine and our future products, if any, and we are unable to develop the necessary marketing capabilities on our own, we may be unable to generate sufficient product sales revenue to sustain our business. We compete with many companies that currently have extensive and well-funded marketing and sales operations. Without a significant internal team or the support of third parties to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.
Our ability to maintain profitability depends in part on our and our collaborators’ ability to penetrate global markets, where we would be subject to additional regulatory burdens and other risks and uncertainties associated with international operations that could materially adversely affect our business.
Our ability to maintain profitability will depend in part on our ability and the ability of our collaborators to commercialize any products that we or our collaborators may develop in markets throughout the world. Commercialization of products in various markets could subject us to risks and uncertainties, including:
obtaining, on a country-by-country basis, the applicable marketing authorization from the competent regulatory authority;
the burden of complying with complex and changing regulatory, tax, accounting, labor and other legal requirements in each jurisdiction that we or our collaborators pursue;
reduced protection for intellectual property rights;
differing medical practices and customs affecting acceptance in the marketplace;
import or export licensing requirements;
governmental controls, trade restrictions or changes in tariffs;
economic weakness, including inflation, or political instability, particularly in non-U.S. economies and markets;
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
longer accounts receivable collection times;
longer lead times for shipping;
language barriers;
foreign currency exchange rate fluctuations;
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the impact of epidemics and pandemics, such as the COVID-19 pandemic, on employees and the global economy;
reimbursement, pricing and insurance regimes; and
the interpretation of contractual provisions governed by local laws in the event of a contract dispute.
We do not have prior experience in all of these areas, and the experience we do have in some of these areas is limited. Our collaborators may have limited experience in these areas as well. Failure to successfully navigate these risks and uncertainties may limit or prevent market penetration for any products that we or our collaborators may develop, which would limit their commercial potential and our revenues.
Even if we obtain regulatory approval for our product candidates, the products may not gain the market acceptance among physicians, patients, hospitals, treatment centers and others in the medical community necessary for commercial success.
Even with the requisite approvals, the commercial success of our products will depend in part on the medical community, patients, and third- party or governmental payors accepting immunotherapies in general, and our products in particular, as medically useful, cost-effective and safe.
Any product that we bring to the market may not gain market acceptance by physicians, trial participants, third-party payors, and others in the medical community. Additionally, ethical, social and legal concerns about genetic research could result in additional regulations restricting or prohibiting the products and processes we may use. If these products do not achieve an adequate level of acceptance, we may not generate significant product sales revenue and may not be able to achieve or maintain profitability. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:
the potential efficacy and potential advantages over alternative treatments;
the ability to offer our products, if approved, at competitive prices;
the prevalence and severity of any undesirable effects, including any limitations or warnings contained in a product’s approved labeling;
the prevalence and severity of any undesirable effects resulting from checkpoint inhibitors or other drugs or therapies with which our products are administered;
the relative convenience and ease of transportation, storage and administration;
any restrictions on the use of our products, if approved, together with other medications;
the willingness of the target patient population to try new therapies, such as mRNA vaccines and therapies, and of physicians to prescribe these therapies;
the strength of marketing and distribution support and timing of market introduction of competitive products;
publicity concerning our products or competing products and treatments; and
sufficient third-party insurance coverage or reimbursement, and patients’ willingness to pay out-of-pocket in the absence of third- party coverage or adequate reimbursement.
Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the products may require significant resources and may never be successful. Our efforts to educate the marketplace may require more resources than are required by the conventional technologies marketed by our competitors due to the complexity and uniqueness of our programs.
In addition, if any of our products are approved for marketing, we or a collaborator will be subject to significant regulatory obligations regarding the submission of safety and other post-marketing information and reports for such product, and will need to continue to comply (or ensure that our third-party providers comply) with current good manufacturing practices, or GMP, and current good clinical practices, or GCP, for any clinical trials that we or a collaborator conduct post-approval. In addition, there is always the risk that we or a collaborator or regulatory authority might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated severity or frequency. Compliance with these requirements is costly, and any such failure to comply or other issues with our product candidates identified post-approval could have a material adverse impact on our business, financial condition and results of operations.
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Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, which could make it difficult for us to sell our product candidates, if approved, profitably.
Successful sales of our product candidates, if approved, depend on the availability of coverage and adequate reimbursement from third-party payors including governmental healthcare programs, such as Medicare and Medicaid in the United States, managed care organizations and commercial payors, among others. Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtain regulatory approval. In addition, because certain of our product candidates represent new approaches to the treatment of cancer, we cannot accurately estimate the potential revenue from our product candidates.
Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Obtaining coverage and adequate reimbursement from third-party payors is critical to new product acceptance.
Third-party payors decide which drugs and treatments they will cover and the amount of reimbursement. Reimbursement by a third-party payor may depend upon a number of factors, including, but not limited to, the third-party payor’s determination that use of a product is:
a covered benefit under its health plan;
safe, effective and medically necessary;
appropriate for the specific patient;
cost-effective; and
neither experimental nor investigational.
Obtaining coverage and reimbursement of a product from a government or other third-party payor is a time- consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data for the use of our products. Third-party payors could require us to conduct additional studies, including post-marketing studies related to the cost effectiveness of a product, to qualify for reimbursement, which could be costly and divert our resources. Even if we obtain coverage for a given product, if the resulting reimbursement rates are insufficient, hospitals may not approve our product for use in their facility or third-party payors may require co-payments that patients find unacceptably high. Patients are unlikely to use our product candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our product candidates. Separate reimbursement for the product itself may or may not be available. Instead, the hospital or administering physician may be reimbursed only for providing the treatment or procedure in which our product is used. Further, from time to time, CMS revises the reimbursement systems used to reimburse healthcare providers, including the Medicare Physician Fee Schedule and Outpatient Prospective Payment System, which may result in reduced Medicare payments. In some cases, private third-party payors rely on all or portions of Medicare payment systems to determine payment rates. Changes to government healthcare programs that reduce payments under these programs may negatively impact payments from private third-party payors, and reduce the willingness of physicians to use our product candidates.
In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.
We intend to seek approval to market our product candidates in the United States, the European Union and other selected jurisdictions. If we obtain approval for our product candidates in any particular jurisdiction, we will be subject to rules and regulations in that jurisdiction. In some countries, particularly those in Europe, the pricing of biologics is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a product candidate. Some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs has become very intense. As a result, increasingly high barriers are being erected to the entry of new products into the marketplace. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country.
The marketability of any product candidates for which we receive regulatory approval for commercial sale may suffer if government and other third-party payors fail to provide coverage and adequate reimbursement. We expect downward pressure on pharmaceutical pricing to continue. Further, coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products
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for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
The advancement of healthcare reform legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize any product candidates we or our collaborators develop and may adversely affect the prices for such product candidates.
In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or the ACA, was passed, which substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The ACA, among other things, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs, and promoted a new Medicare Part D coverage gap discount program. Considerable uncertainty remains regarding the implementation and impact of the ACA.
In August 2022, the U.S. Inflation Reduction Act, or the IRA, was enacted, which sets forth meaningful changes to drug product reimbursement by Medicare. The IRA is anticipated to have significant effects on the pharmaceutical industry and may reduce the prices we can charge and reimbursement we can receive for our products in the United States, among other effects. Any reduction in reimbursement from Medicare resulting from the IRA or other legislative or policy changes, or from other government programs may result in a similar reduction in payments from private payers. We cannot be sure whether additional legislative changes will be enacted, or the effect of forthcoming guidance implementing the IRA, or what the impact of such changes on our products and product candidates may be.
The delivery of healthcare in the European Union, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments and health service providers have different priorities and approaches to the delivery of healthcare and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing European Union and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities, and affect our ability to commercialize any products for which we obtain marketing approval.
We expect that additional healthcare reform measures or proposals will be adopted in the future, any of which could limit the amounts that governments will pay for healthcare products and services, which could result in reduced demand for our products and product candidates or additional pricing pressures. In the event that the pricing structures for healthcare products, such as the product candidates we are developing, change materially and limit payments for such product candidates, our business will be adversely impacted as our products may no longer be commercially viable based on their expected net present value; we may have invested significant resources in product candidates that cannot be commercially developed; or we may determine that assets that have reached an early phase of development cannot or will not be taken into further development, notwithstanding their clinical viability. In addition, development assets or clinical programs that are part of our collaborations may no longer be deemed commercially viable to pursue based on our collaborators’ assessments of the impact of any proposed, announced, or legislated pricing reforms.
We cannot predict what healthcare reform initiatives may be adopted in the future. Further legislative and regulatory developments are likely, and we expect ongoing initiatives to increase pressure on drug pricing. Such reforms could have an adverse effect on anticipated revenues from our approved products and from product candidates that we may successfully develop and for which we may obtain regulatory approval, and may affect our overall financial condition and ability to develop product candidates.
European Union drug marketing and reimbursement regulations may materially affect our ability to market and receive coverage for our products in the member states of the European Union.
We intend to seek approval to market our product candidates in both the United States and in other selected jurisdictions. If we obtain approval for our product candidates in a particular jurisdiction, we will be subject to rules and regulations in that jurisdiction. In some countries, particularly those in the European Union, the pricing of biologics is subject to governmental control and other market regulations that could put pressure on the pricing and usage of our product candidates. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a product candidate. In addition, market acceptance and sales of our product candidates will depend significantly on the availability of adequate coverage and reimbursement from third-party payors for our product candidates and may be affected by existing and future healthcare reform measures.
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In addition, in most countries outside the United States, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. Reference pricing used by various member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. In some countries, we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of any of our product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States and, generally, prices tend to be significantly lower in the European Union. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If pricing is set at unsatisfactory levels or if reimbursement of our products is unavailable or limited in scope or amount, our revenues from sales by us or our collaborators and the potential profitability of any of our product candidates in those countries would be negatively affected.
Risks Related to our Financial Condition and Capital Requirements
Profitability is difficult to maintain over time and highly dependent on various factors.
Our ability to continue to generate revenue and maintain profitability depends on our ability, alone or with collaborators, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize, our product candidates. Although we generate revenue from sales of our COVID-19 vaccine and additional limited revenue from other sales transactions, the amount of long-term revenue from such sales, including the sales of our COVID-19 vaccine, is uncertain at this time. Our ability to generate future revenues from pharmaceutical product sales depends heavily on our success in:
completing research and preclinical and clinical development of our product candidates;
seeking and obtaining U.S. and non-U.S. marketing approvals for product candidates for which we complete clinical trials;
seeking and obtaining market access and favorable pricing terms in the United States, the European Union, and other key geographies;
furthering the development of our own manufacturing capabilities and manufacturing relationships with third parties in order to provide adequate (in amount and quality) products and services to support clinical development and the market demand for our approved products and product candidates, if approved;
obtaining market acceptance of our approved products and product candidates as a treatment option;
launching and commercializing products for which we obtain marketing approval and reimbursement, either through collaborations or, if launched independently, by establishing a sales force, marketing and distribution infrastructure;
addressing any competing technological and market developments, in particular, declining demand for any of our approved products;
implementing additional internal systems and infrastructure;
negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter;
maintaining, defending, protecting, enforcing and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and
attracting, hiring and retaining qualified personnel.
Additionally, we have incurred significant costs associated with the commercialization of our COVID-19 vaccine. Our expenses could increase beyond our expectations if we are required by the FDA, the European Medicines Agency, or EMA, or other regulatory agencies to perform clinical and other trials or make changes to our manufacturing or quality systems in addition to those that we currently anticipate. Accordingly, such costs could adversely affect our future profitability.
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Our operating results may fluctuate significantly, which makes our future operating results difficult to predict. If our operating results fall below expectations, the price of the ADSs representing our shares could decline.
Our financial condition and operating results have varied in the past and will continue to fluctuate from one financial period to the next due to a variety of factors, many of which are beyond our control.
Factors relating to our business that may contribute to these fluctuations include the following, as well as other factors described elsewhere in this report:
the size and timing of orders for our COVID-19 vaccine;
delays or failures in advancement of existing or future product candidates into the clinic or in clinical trials;
the occurrence of adverse events during our clinical trials or post marketing authorization;
our ability to develop and manufacture our product candidates and commercialize and manufacture our COVID-19 vaccine at commercial scale;
our ability to manage our growth;
our ability to execute our corporate objectives;
the outcomes of research programs, clinical trials, or other product development or approval processes conducted by us and our collaborators;
the ability of our collaborators to develop and successfully commercialize products developed from our suite of therapeutic classes;
our relationships, and any associated exclusivity terms, with collaborators;
our contractual or other obligations to provide resources to fund our product candidates, and to provide resources to our collaborators or to the collaborations themselves, including take-or-pay or similar obligations;
the extent to which we repurchase outstanding ADSs under our share repurchase plan;
risks associated with the international aspects of our business outside Germany, including the conduct of clinical trials in multiple locations and potential commercialization in such locations;
our ability to minimize and manage product recalls or inventory losses caused by unforeseen events, cold chain interruption, testing difficulties or decreased demand, and our ability to write off certain inventory;
our ability to report our financial results accurately and in a timely manner;
our dependence on, and the need to attract and retain, key management and other personnel;
our ability to obtain, protect, maintain, defend and enforce our intellectual property rights;
our ability to prevent the theft or infringement, misappropriation or other violation of our intellectual property, trade secrets, know-how or technologies;
our and our collaborators’ ability to defend against claims of infringement of the intellectual property rights of third parties;
potential advantages that our competitors and potential competitors may have in securing funding, obtaining the rights to critical intellectual property or developing competing technologies or products;
our ability to obtain additional capital that may be necessary to expand our business;
our collaborators’ ability to obtain and devote additional capital that may be necessary to develop and commercialize products under our collaboration agreements, including our COVID-19 vaccine;
our ability to minimize and manage product liability claims arising from the use of our COVID-19 vaccine and our product candidates and other future products, if approved;
business interruptions such as power outages, strikes, acts of terrorism or natural disasters;
our ability to use our net operating loss carryforwards to offset future taxable income;
risks of counterparty defaults within our asset management portfolio; and
increased or unpredictable pricing for the commodities we rely on, including as a result of inflation.

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Each of the factors listed above may be affected by the COVID-19 pandemic or its impact on the global community and the global economy.
Due to the various factors mentioned above, and others, the results of any of our periods should not be relied upon as indications of our future operating performance. Our operating results may fluctuate significantly from one reporting period to the next, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.
In any particular period, our operating results could be below the expectations of securities analysts or investors, which could cause the price of the ADSs to decline. While as a general matter we intend to periodically report on the status of our product candidate pipeline, including articulating anticipated next steps in the form of development plans or potential data readouts, we may not always be able to provide forward-looking guidance on the timing of those next steps. In addition, we do not control the timing of disclosures of any milestones related to any of our programs that are managed by our collaborators. Any disclosure by a collaborator of data that are perceived as negative, whether or not such data are related to other data that we or others release, may have a material adverse impact on the price of the ADSs or our overall valuation. The price of the ADSs may decline as a result of unexpected clinical trial results in one or more of our programs, including adverse safety events reported for any of our programs.
We have incurred significant losses in the past and we may incur significant losses in the future.
Prior to the commercialization of our COVID-19 vaccines, we incurred significant losses and negative cash flows from operations due to our significant research and development expenses and our investment in our manufacturing capabilities, and funded our operations primarily from private placements or issuances of ordinary shares (including in the form of ADSs) in connection with our public offerings, generation of proceeds under our collaboration agreements, secured bank loans and issuance of a convertible note. We plan to invest heavily in R&D as we make a strong drive to build out our global development organization and diversify our therapeutic area footprint. Additionally, we plan to enhance capabilities through complementary acquisitions, technologies, infrastructure and manufacturing. Even for those products for which we have obtained or may obtain regulatory approval or emergency use authorization, our future revenues will depend upon the size of any markets in which such products have received approval or authorization to market, our ability to achieve sufficient market acceptance, reimbursement from third-party payors, and adequate market share in those markets. If achieved, profitability is difficult to maintain over time and is highly dependent on various factors. Our future financial results will depend, in part, on the rate of our future expenditures, the extent to which we experience long-term success of our commercial products and our ability to obtain funding through revenue from commercial sales, equity or debt financings, sales of assets, collaborations or grants.
As part of our capital allocation strategy, we expect to continue to incur significant and increasing operating expenses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we and our collaborators:
continue or expand our research or development of our programs in preclinical development;
continue or expand the scope of our clinical trials for our product candidates;
initiate additional preclinical, clinical, or other trials for our product candidates, including under our collaboration agreements;
continue to invest in our immunotherapy platforms to conduct research to identify novel technologies;
change or increase our manufacturing capacity or capability;
change or add additional suppliers;
add additional infrastructure to our quality control, quality assurance, legal, compliance and other groups to support our operations as a public company and our product development and commercialization efforts, including expansion of sites in Germany and new sites in the United States, and potentially others globally;
attract and retain skilled personnel;
seek marketing approvals and reimbursement for our product candidates;
develop our sales, marketing, and distribution infrastructure for our COVID-19 vaccine and any other products for which we may obtain marketing approval or emergency use authorization;
seek to identify and validate additional product candidates;
acquire or in-license other product candidates and technologies;
acquire other companies;
make milestone or other payments under any in-license agreements;
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maintain, protect, defend, enforce and expand our intellectual property portfolio; and
experience any delays or encounter issues with any of the above.
The amount of, and our ability to use, net operating losses and research and development credits to offset future taxable income may be subject to certain limitations and uncertainty. In addition, pending and future tax audits within our group, disputes with tax authorities and changes in tax law or fiscal regulations could lead to additional tax liabilities. We are subject to routine tax audits by the respective local tax authorities. Any additional tax liability could have an adverse effect on our business, financial conditions, results of operations or prospects.
In Germany, we have unused German tax loss carryforwards for corporate taxes for German non-tax group entities, though we have not recognized deferred tax assets related to such loss carryforwards for International Financial Reporting Standards, or IFRS, reporting purposes as of March 31, 2023. Deferred tax assets are recognized for unused tax losses only to the extent that it is probable that taxable profit will be available against which the losses can be utilized. In general, net operating loss, or NOL, carryforwards in Germany do not expire. Furthermore, under current German tax laws, certain substantial changes in the Company’s ownership and business may further limit the amount of NOL carryforwards that can be used annually to offset future taxable income.
For the German tax group we incurred tax losses up to and including December 31, 2020. Even though we recognized deferred tax assets on a majority of German tax loss carry forwards in 2020 which were fully utilized in 2021, they are, however, subject to review and possible adjustment by the German tax authorities.
In addition, we have U.S. federal and state NOL carryforwards due to our subsidiaries in the United States, which may be subject to limitations on use after an ownership change.
We may not be able to utilize a material portion of our historic or current NOLs or credits in either Germany (resulting from our German tax group or non-tax group entities in Germany) or the United States until these have been finally assessed by the tax authorities or when the limitation period has passed. In addition, the rules regarding the timing of revenue and expense recognition for tax purposes in connection with various transactions are complex and uncertain in many respects, and, if challenged, our recognition may be subject to a revised assessment. In the event any such challenge is sustained, our NOLs could be materially reduced or we could be determined to be a material cash taxpayer for one or more years, which could have an adverse effect on our business, financial conditions, results of operations or prospects.
Furthermore, our ability to use our NOLs or credits is conditioned upon our attaining profitability and generating taxable income. Taxable income exceeding NOLs will be subject to taxation resulting tax liabilities. As described above, we incurred significant net losses in every year since our inception other than 2018, 2021 and 2022 and anticipate that in the future, we may incur significant losses for some of the group entities. Our ability to utilize our NOL or credit carryforwards in the United States and for some German group entities is uncertain.
Under German tax laws, we are obligated to withhold a percentage of wage tax and social security contributions on personnel expenses if contract services providers are considered to be our internal employees and remit those withholdings to German tax authorities and social security institutions. Late payments may subject us to penalties and fees.
Under German tax and social security laws, we are obligated to withhold a percentage of payments we make to third parties in consideration of the services provided, in case these are considered employment payments, and remit those withholdings to German tax authorities and social security institutions. As a result of an internal review, we discovered that especially in the most recent years, where a significant volume of service providers have been engaged to ensure research, development, manufacturing and general supply capabilities of our COVID-19 vaccine, we and certain of our subsidiaries did not withhold, report and remit certain wage taxes and social security contributions in connection with the contract service providers where some have been engaged in a manner comparable to internal employees as required to be withheld under German tax and social security laws, and had not made the requisite recordings in our and their financial books and records in relation to such wage taxes and social security contributions. We notified the tax authorities of these possible late payments. No administrative offense or criminal proceeding has been opened as of the date of this report.
It is not possible to seek the refund of these wage taxes or social security contributions from either the German tax authorities or social security institutions after filing returns. In Germany, employers are considered secondarily liable for wage taxes.
In addition, value added taxes on invoices received by contract services providers who are considered internal employees are considered non-deductible and must be repaid to the German tax authorities. It is possible to reclaim the VAT repaid to the German tax authorities from the service provider. There is a possibility that the relevant input VAT claims against the contract service providers may, in some instances, not be enforceable as a result of a contract service provider no longer existing, the lapse of time or any other facts preventing the enforcement of such claims.
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We may require substantial additional financing to achieve our goals, and a failure to obtain this capital on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.
Our operating plans may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, sales of assets, marketing and distribution arrangements, other collaborations and licensing arrangements, or a combination of these approaches. We may require additional capital to obtain regulatory approval for, and to commercialize, future product candidates. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations. Our spending will vary based on new and ongoing development and corporate activities. Due to the high uncertainty of the length of time and activities associated with discovery and development of our product candidates, we are unable to estimate the actual funds we will require for development, marketing and commercialization activities.
Our future funding requirements, both near and long term, will depend on many factors, including, but not limited to:
the initiation, progress, timing, costs, and results of preclinical or nonclinical studies and clinical trials for our product candidates;
the amount and timing of revenues and associated costs from sales of our COVID-19 vaccine;
the results of research and our other platform activities;
the clinical development plans we establish for our product candidates;
the terms of any agreements with our current or future collaborators, and the achievement of any milestone payments under such agreements to be paid to us or our collaborators;
the terms of any other strategic transactions, including relating to any acquisitions, into which we enter;
the number and characteristics of product candidates that we develop or may in-license;
the outcome, timing and cost of meeting regulatory requirements established by the FDA, the EMA and other comparable regulatory authorities;
the cost of filing, prosecuting, obtaining, maintaining, protecting, defending and enforcing our patent claims and other intellectual property rights, including actions for patent and other intellectual property infringement, misappropriation and other violations brought by third parties against us regarding our product candidates or actions by us challenging the patent or intellectual property rights of others;
the effect of competing technological and market developments, including other products that may compete with one or more of our product candidates;
the cost and timing of completion and further expansion of clinical and commercial scale manufacturing activities sufficient to support all of our current and future programs, including the development of modular production and clinical facilities in various markets via our BioNTainer network; and
the cost of establishing sales, marketing, and distribution capabilities for any product candidates for which we may receive marketing approval and reimbursement in regions where we choose to commercialize our products on our own.
To date, we have financed our operations primarily through the sale of equity securities, revenue from collaborations, and revenue from sales of our COVID-19 vaccine, and we cannot be certain that additional funding will be available on favorable terms, or at all. We are currently generating product sales or royalty revenue to finance our operations. However, should this change in the future, we expect to finance our future cash needs through a combination of product sales, public or private equity offerings, debt financings, collaborations, licensing arrangements, and other marketing or distribution arrangements. Any fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts, at the right time, on favorable terms, or at all, including as a result of the impact that the changing nature of the COVID-19 pandemic and other global events, such as political upheavals and economic downturns, may have on the capital markets.
Negative clinical trial data or setbacks, or perceived setbacks, in our programs or with respect to our technology could impair our ability to raise additional financing on favorable terms, or at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders, and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of the ADSs representing our
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ordinary shares to decline. If we raise additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that may adversely affect our shareholders’ rights.
Further, to the extent that we raise additional capital through the sale of ADSs, ordinary shares or securities convertible or exchangeable into ordinary shares, share ownership interests will be diluted. If we raise additional capital through debt financing, we would be subject to fixed payment obligations and may be subject to security interests in our assets and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional capital through marketing and distribution arrangements, sales of assets, collaborations, or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs. We also could be required to seek collaborators for one or more of our current or future product candidates at an earlier stage than otherwise would be desirable or relinquish our rights to product candidates or intellectual property that we otherwise would seek to develop or commercialize ourselves. If we are unable to raise additional capital in sufficient amounts, at the right time, on favorable terms, or at all, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our products or product candidates, or one or more of our other research and development initiatives. Any of the above events could significantly harm our business, prospects, financial condition and results of operations, cause the price of the ADSs to decline, and negatively impact our ability to fund operations.
We will need to continue to develop and expand our company, and we may encounter difficulties in managing this development and expansion, which could disrupt our operations.
To manage our anticipated development and expansion, we must continue to implement and improve our managerial, operational, legal, compliance and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. In addition, our management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these development activities.
As a growing biotechnology company, we are actively pursuing drug classes, platforms and product candidates in many therapeutic areas and across a wide range of diseases. Successfully developing products for, and fully understanding the regulatory and manufacturing pathways to, all of these therapeutic areas and disease states requires a significant depth of talent, resources and corporate processes in order to allow simultaneous execution across multiple areas. Due to our limited resources, we may not be able to effectively manage this simultaneous execution and the expansion of our operations or recruit and train additional qualified personnel. This may result in weaknesses in our infrastructure and/or give rise to operational mistakes, legal or regulatory compliance failures, loss of business opportunities, loss of employees and reduced productivity among remaining employees. The physical expansion of our operations may lead to significant costs and may divert financial resources from other projects, such as the development of our product candidates. If our management is unable to effectively manage our expected development and expansion, our expenses may increase more than expected, our ability to generate or increase our revenue could be reduced and we may not be able to effectively implement our business strategy. Our future financial performance and our ability to compete effectively and commercialize our COVID-19 vaccine and our product candidates, if approved, will depend in part on our ability to effectively manage the current and future development and expansion of our company.
We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives. We are subject to financial reporting and other requirements for which our accounting and other management systems and resources may not be adequately prepared. We may fail to comply with the rules that apply to public companies, including Section 404 of the Sarbanes-Oxley Act of 2002, which could result in sanctions or other penalties that would harm the business.
As a public company, we incur significant legal, accounting and other expenses. The U.S. federal securities laws, including the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and rules subsequently implemented by the SEC and the Nasdaq Stock Market LLC, or Nasdaq, have imposed various requirements on public companies, including requirements to file annual and event-driven reports with respect to our business and financial condition, and to establish and maintain effective disclosure and financial controls and corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations result in substantial legal and financial compliance costs and have made some activities time-consuming and costly. We may not be able to produce reliable financial statements or file these financial statements as part of a periodic report in a timely manner with the SEC or comply with Nasdaq listing requirements. In addition, we could make errors in our financial statements that could require us to restate our financial statements.
Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we are required to furnish a report by our management on our internal control over financial reporting, including the attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To maintain compliance with Section 404, we document and evaluate our internal control over financial reporting, which is both costly and challenging. In
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this regard, we have needed to continue to dedicate internal resources, have engaged outside consultants, and have adopted a detailed work plan to assess and document the adequacy of internal control over financial reporting. We will continue to implement steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that in the future neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, contains significant corporate governance and executive compensation related provisions that require the SEC to adopt additional rules and regulations in these areas such as “say on pay” and proxy access. Shareholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives.
If we identify material weaknesses in our internal control over financial reporting and fail to remediate such material weaknesses, we may not be able to report our financial results accurately or to prevent fraud.
Our management is responsible for establishing and maintaining internal control over financial reporting, disclosure controls, and compliance with the other requirements of the Sarbanes-Oxley Act and the rules promulgated by the SEC thereunder. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with international financial reporting standards. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected by the company’s internal controls on a timely basis.
Prior to our initial public offering, we identified a material weakness in our internal control which has been fully remediated, but there can be no guarantee that we will not identify additional material weaknesses in the future.
If we are unable to successfully remediate any future material weaknesses or successfully supervise and rely on outside advisors with expertise in these matters to assist us in the preparation of our financial statements, our financial statements could contain material misstatements discovered in the future that could cause us to fail to meet our future reporting obligations and cause the price of the ADSs to decline.
We have various international trade obligations including customs value calculation, customs tariff number classification and other related securities requirements. Late payments to customs authorities may subject us to penalties and fees.
Our supply chain, production and distribution network across the globe creates an increasing level of complexity in customs and foreign trade processes. The requirements for internal control systems are increasing and must be developed simultaneously. The risk management system for customs and foreign trade, which we are continuously improving, determines which stakeholders, goods, and means of transport should be examined and to what extent. These risks include the potential for non-compliance with customs value calculation, customs tariff number classification, trade restrictions, security regulations as well as the potential failure to facilitate international trade.
We are, and will likely continue to be, subject to various audits that arise from time to time, including customs and potential future foreign trade audits.
As a result of an internal review, we discovered that especially in the most recent years, where a significant increase of shipments took place, international trade obligations such as correct customs value calculation of our and certain of our subsidiaries had not been applied correctly and we have made the requisite recordings in our financial books and records in relation to such customs duties. We notified the customs authorities of these possible late payments. No administrative offense or criminal proceeding has been opened as of the date of this report. The expenses are partially subject to reimbursement under our collaboration agreement with Pfizer.
As a “foreign private issuer,” we are exempt from a number of rules under the U.S. securities laws, as well as Nasdaq rules, and we are permitted to file less information with the SEC than U.S. companies. This may limit the information available to holders of the ADSs and may make our ordinary shares and the ADSs less attractive to investors.
We are a “foreign private issuer,” as defined in the rules and regulations of the SEC, and, consequently, we are not subject to all of the disclosure requirements applicable to companies organized within the United States. For example, we are exempt from certain rules under the U.S. Securities Exchange Act of 1934, as amended, or the
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Exchange Act, that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public companies.
As a foreign private issuer, we file an Annual Report on Form 20-F within four months of the close of each fiscal year ending December 31 and reports on Form 6-K relating to certain material events promptly after we publicly announce these events. Additionally, we rely on a provision in Nasdaq’s Listed Company Manual that allows us to follow German company law and European law applicable to European stock corporations in general, the German Stock Corporation Act (Aktiengesetz), the Council Regulation (EC) No 2157/2001 of October 8, 2001 on the Statute for a European company (SE), or the SE Regulation, and the German Act on the Implementation of Council Regulation (EC) No 2157/2001 of October 8, 2001 on the Statute for a European company (SE) (Gesetz zur Ausführung der Verordnung (EG) NR. 2157/2001 des Rates vom 8. Oktober 2001 über das Statut der Europäischen Gesellschaft (SE)) (SE-Ausführungsgesetz-SEAG), in particular with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on Nasdaq.
For example, we are exempt from regulations of Nasdaq that require a listed U.S. company to:
have a majority of the board of directors consist of independent directors;
require non-management directors to meet on a regular basis without management present;
adopt a code of conduct and promptly disclose any waivers of the code for directors or executive officers that should address certain specified items;
have an independent compensation committee;
have an independent nominating committee;
solicit proxies and provide proxy statements for all shareholder meetings;
review related party transactions; and
seek shareholder approval for the implementation of certain equity compensation plans and issuances of ordinary shares.
As a foreign private issuer, we are permitted to follow home country practice in lieu of the above requirements. We therefore continue to follow German corporate governance practices in lieu of the corporate governance requirements of Nasdaq in certain respects. In particular, we follow German corporate governance practices in connection with the distribution of annual and interim reports to shareholders, the application of our code of conduct to our Supervisory Board, executive remuneration disclosure, proxy solicitation in connection with shareholders’ meetings, and obtaining shareholder approval in connection with the establishment of, or material amendment to, certain equity-based compensation plans.
In accordance with our Nasdaq listing, our audit committee is required to comply with the provisions of Section 301 of the Sarbanes-Oxley Act and Rule 10A-3 of the Exchange Act, both of which are also applicable to U.S. companies listed on Nasdaq. As we are a foreign private issuer, however, our audit committee is not subject to additional requirements of Nasdaq applicable to listed U.S. companies, including an affirmative determination that all members of the audit committee are “independent,” using more stringent criteria than those applicable to us as a foreign private issuer.
Due to the above exemptions for foreign private issuers, our shareholders will not be afforded the same protections or information generally available to investors holding shares in public companies organized in the United States, some investors may find the ADSs less attractive as a result, and there may be a less active trading market for the ADSs.
We face risks related to catastrophic global events including natural disasters, political crises, or public health epidemics and pandemics, such as the COVID-19 pandemic, that could adversely affect our operations.
Our business could be adversely impacted by the effects of catastrophic global events including natural disasters such as an earthquake, fire, hurricane, tornado, flood or significant power outage; public health crises such as the COVID-19 pandemic; political crises, such as terrorist attacks, war and other political instability, including the ongoing geopolitical tensions related to Russia’s actions in Ukraine, resulting sanctions imposed by the United States and other countries and retaliatory actions taken by Russia in response to such sanctions; or other catastrophic events.
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For example, the ongoing conflict between Russia and Ukraine, and resulting sanctions and other economic actions, have contributed to, and are expected to continue to contribute to, rising prices and shortages of crude oil and natural gas. Prolonged or expanded conflict between Russia and Ukraine, and political responses to Russia’s actions, could further reduce oil and gas supplies, increase energy volatility and have severe adverse effects on regional and global supply chains and economies and our business. Our commercial production of our COVID-19 vaccine is currently run on natural gas, although we believe our production could be powered by alternative fuel sources if needed. Additionally, we continue to evaluate the impacts that a growing or subsequent energy shortage may have on our partners, suppliers and service providers. Were any of these parties to experience significant impacts from this or any other energy shortage, our business could be materially harmed. We cannot predict with certainty the impact a continuing or more severe natural gas shortage would have on our or their operations, including on the manufacturing of our COVID-19 vaccine and the manufacturing and testing of our product candidates.
Although we have generated revenues from sales of our COVID-19 vaccine, there remains uncertainty regarding other potential effects of COVID-19 on our business. For example, if a new variant of COVID-19 emerges for which existing vaccines, including our COVID-19 vaccine, are ineffective, infections may become even more widespread, negatively impact our ability to enroll patients in clinical studies and complete clinical trials on the timelines we currently anticipate, or result in an economic downturn that could affect demand for our products and services or our ability to raise capital, which could have a material adverse effect on our business, operating results and financial condition. Our suppliers, licensors or collaborators could also be disrupted by conditions related to COVID-19 or other pandemics and epidemics, possibly resulting in disruption to our supply chain, clinical trials, partnerships or operations.
Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities.
We do not carry insurance for all categories of risk that our business may encounter and insurance coverage is becoming increasingly expensive. We do not know if we will be able to maintain existing insurance with adequate levels of coverage, and any liability insurance coverage we acquire in the future may not be sufficient to reimburse us for any expenses or losses we may suffer. We currently maintain insurance coverage for losses relating to property damage, business interruption and clinical trials. We are dedicating resources to exploring additional avenues for more adequate coverage as our business evolves. With the grant of marketing approvals for our COVID-19 vaccine we have acquired additional insurance coverage for losses relating to transportation and storage of our COVID-19 vaccine and product liability claims arising from its use. However, the coverage or coverage limits of our insurance policies may not be adequate. If our losses exceed our insurance coverage, our financial condition would be adversely affected. In the event of contamination or injury, we could be held liable for damages or be penalized with fines in an amount exceeding our resources. Clinical trials or regulatory approvals for any of our product candidates could be suspended, which could adversely affect our results of operations and business, including by preventing or limiting the development and commercialization of any product candidates that we or our collaborators may develop.
Additionally, operating as a public company has made it more expensive for us to obtain director and officer liability insurance. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Supervisory Board, our Management Board, or our board committees.
Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank, or SVB, a bank which we used to support operations in the U.S., was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver.
While a statement by the U.S. Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day following the date of closure and we received such access on March 13, 2023, and neither the amount in question nor any delays in access were material to our operations, uncertainty and liquidity concerns in the broader financial services industry remain. Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. The U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments. However, widespread demands for customer withdrawals or other needs of financial institutions for immediate liquidity may exceed the capacity of such program. There is no guarantee that the U.S. Department of Treasury, FDIC and Federal
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Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions in a timely fashion or at all.
While we maintain our cash and cash equivalents in multiple financial institutions worldwide, our access to our cash and cash equivalents in amounts adequate to finance our operations could be significantly impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures. In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any material decline in available funding or our ability to access our cash and cash equivalents could adversely impact our ability to meet our operating expenses, result in breaches of our contractual obligations or result in violations of federal or state wage and hour laws, any of which could have material adverse impacts on our operations and liquidity.
Risks Related to our Business
Our business is dependent on the successful development, regulatory approval and commercialization of product candidates based on our technology platforms. If we and our collaborators are unable to obtain approval for and effectively commercialize our product candidates for the treatment of patients in their intended indications, our business would be significantly harmed.
Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain, and we may not be able to obtain approvals for the commercialization of product candidates we may develop. Any product candidates we may develop and the activities associated with their development and commercialization, including design, testing, manufacture, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and by comparable global health authorities. To obtain the requisite regulatory approvals to commercialize any of our product candidates, we and our collaborators must demonstrate through extensive preclinical studies and clinical trials that our products are safe and effective, including in the target populations. Successful completion of clinical trials is a prerequisite to submitting a biologics license application, or BLA, or a new drug application, or NDA, to the FDA, a Marketing Authorization Application, or MAA, to the EMA, and similar marketing applications to comparable global regulatory authorities, for each product candidate and, consequently, the ultimate approval and commercial marketing of any product candidates.
Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate in a given jurisdiction. Although our COVID-19 vaccine has received emergency use authorization and/or regulatory approvals in certain countries, it is possible that none of our other product candidates, or any product candidates we may seek to develop in the future, will ever obtain regulatory approval. We have limited experience in filing and supporting the applications necessary to gain marketing approvals and may need to rely on third-party CROs, regulatory consultants or collaborators to assist us in this process. We expect to submit initial BLAs/MAAs for our mRNA-based product candidates in the United States, the European Union and in other countries globally. In some of these jurisdictions, mRNA-based medicinal products may be classified in different ways and may be subject to specific requirements. Securing regulatory approval requires the submission of extensive quality, preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Benefit and risk are regularly assessed, and any product candidates we develop may not be effective, may be only moderately effective, or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.
The process of obtaining marketing approvals in the United States, the European Union and elsewhere, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies and standards of care during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application. The FDA, EMA and comparable regulatory authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that the data are insufficient for approval and require additional preclinical, clinical or other trials. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable. Additional delays or non-approval may result if an FDA panel of experts, referred to as an Advisory Committee, or other regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays
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or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials, and the review process.
Regulatory agencies also may approve a product candidate for fewer or more limited indications or patient populations than requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates.
The FDA, EMA and other regulatory agencies review the Quality or Chemistry, Manufacturing and Controls, or CMC, section of regulatory filings. Any aspects found unsatisfactory by regulatory agencies may result in delays in clinical trials and commercialization. In addition, the regulatory agencies typically conduct pre-approval inspections at the time of a BLA, MAA or comparable filing. Any findings by regulatory agencies and failure to comply with requirements may lead to delay in approval and failure to commercialize the potential mRNA product candidate.
If we experience delays in obtaining, or if we fail to obtain, approval of any product candidates we may develop, the commercial prospects for those product candidates will be harmed, and our ability to generate revenues will be materially impaired. Additionally, even if we are successful in obtaining marketing approval for product candidates, because our preclinical studies and clinical trials have not been designed with specific commercialization considerations, the commercial prospects for those product candidates could be harmed, and our ability to generate revenues could be materially impaired.
mRNA drug development carries substantial clinical development and regulatory risks due to limited regulatory experience with mRNA immunotherapies.
To our knowledge, other than our COVID-19 vaccine and Moderna, Inc.’s mRNA-1273, no mRNA immunotherapies have been approved or received emergency use authorization or conditional marketing authorization to date by the FDA or the EMA. Successful discovery and development of mRNA-based (and other) immunotherapies by either us or our collaborators is highly uncertain and depends on numerous factors, many of which are beyond our or their control. Our product candidates that appear promising in the early phases of development may fail to advance, experience delays in the clinic or clinical holds, or fail to reach the market for many reasons, including:
discovery efforts aimed at identifying potential immunotherapies may not be successful;
nonclinical or preclinical study results may show product candidates to be less effective than desired or have harmful or problematic side effects;
clinical trial results may show the product candidates to be less effective than expected, including a failure to meet one or more endpoints or have unacceptable side effects or toxicities;
manufacturing or distribution failures or insufficient supply of GMP materials for clinical trials, or higher than expected cost could delay or set back clinical trials, or make our product candidates commercially unattractive;
our improvements in the manufacturing processes may not be sufficient to satisfy the clinical or commercial demand of our product candidates or regulatory requirements for clinical trials;
changes that we make to optimize our manufacturing, testing or formulating of GMP materials could impact the safety, tolerability and efficacy of our product candidates;
pricing or reimbursement issues or other factors could delay clinical trials or make any immunotherapy uneconomical or noncompetitive with other therapies;
the failure to timely advance our programs or receive the necessary regulatory approvals, or a delay in receiving such approvals, due to, among other reasons, slow or failure to complete enrollment in clinical trials, withdrawal by trial participants from trials, failure to achieve trial endpoints, additional time requirements for data analysis, data integrity issues, BLA, MAA or the equivalent application, discussions with the FDA or the EMA, a regulatory request for additional nonclinical or clinical data, or safety formulation or manufacturing issues may lead to our inability to obtain sufficient funding; and
the proprietary rights, products and technologies of our competitors may prevent our immunotherapies from being commercialized.
For administrative purposes, mRNA products are classified together with gene therapy products by the FDA. Unlike certain gene therapies that irreversibly alter cell DNA and may cause certain side effects, mRNA-based medicines do not irreversibly change cell DNA. Side effects observed in other gene therapies, however, could
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negatively impact the perception of immunotherapies despite the differences in mechanism. In addition, the regulatory pathway in the United States and many other jurisdictions for approval is uncertain. Our COVID-19 vaccine is not currently classified as a gene therapy. The regulatory pathway for an individualized therapy, such as our iNeST mRNA-based immunotherapy where each patient receives a different combination of mRNAs, remains undetermined. The number and design of the clinical and preclinical studies required for the approval of these types of medicines have not been established, may be different from those required for advanced medicinal therapy products or therapies that are not individualized or may require safety testing like gene therapy products. Moreover, the length of time necessary to complete clinical trials and submit an application for marketing approval by a regulatory authority varies significantly from one pharmaceutical product to the next and may be difficult to predict.
Our product candidates may not work as intended, may cause undesirable effects or may have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.
As with most biological products, use of our product candidates could be associated with undesirable effects or adverse events which can vary in severity from minor reactions to death and in frequency from infrequent to prevalent. The potential for adverse events is especially acute in the oncology setting, where patients may have advanced disease, have impaired organ function, compromised immune and other systems and may be receiving numerous other therapies. Undesirable side effects or unacceptable toxicities caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA, the EMA or comparable regulatory authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects.
If unacceptable side effects arise in the development of our product candidates, we, the FDA, competent authorities of EU member states, ethics committees, the institutional review boards, or IRBs, at the institutions in which our studies are conducted, or the Data Safety Monitoring Board, or DSMB, could suspend or terminate our clinical trials. The FDA or comparable regulatory authorities could also order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete any of our clinical trials or result in product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We expect to have to train medical personnel using our product candidates to understand the side effect profiles for our clinical trials and upon any commercialization of any of our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death. Any of these occurrences may harm our business, financial condition and prospects significantly.
Monitoring the safety of patients receiving our product candidates is challenging, which could adversely affect our ability to obtain regulatory approval and commercialize our product candidates.
In our ongoing and planned clinical trials, we have contracted, and are expected to continue to contract, with academic medical centers and hospitals experienced in the assessment and management of toxicities arising during clinical trials. Nonetheless, these centers and hospitals may have difficulty observing patients and treating toxicities, which may be more challenging due to personnel changes, inexperience, shift changes, house staff coverage or related issues. Additionally, the COVID-19 pandemic continues to have an impact on our ability to monitor trial safety related to, for example, staff shortages due to contracting COVID-19 or the global shortage in healthcare professionals, re-assignment of staff to treat COVID-19 patients and restricted clinical site access. This could lead to more severe or prolonged toxicities or even patient deaths, which could result in us or the FDA, the EMA or other comparable regulatory authority delaying, suspending or terminating one or more of our clinical trials, and which could jeopardize regulatory approval. The centers using our products, if and when approved, could also have difficulty managing any adverse effects of our products, or use medicines that do not adequately control such undesirable effects or that have a detrimental impact on the efficacy of the treatment.
In addition, even if we successfully advance our product candidates into and through clinical trials, such trials will likely only include a limited number of patients and limited duration of exposure to our product candidates. As a result, we cannot be assured that adverse effects of our product candidates will not be uncovered when a significantly larger number of patients are exposed to the product candidate. Further, any clinical trials may not be sufficient to determine the effects and safety consequences of taking our product candidates over a multi-year period.
If any of our product candidates receives marketing approval and we or others later identify undesirable effects caused by such products, a number of potentially significant negative consequences could result, including:
regulatory authorities may withdraw their approval of the product;
we may be required to recall a product or change the way such product is administered to patients;
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additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;
regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a Medication Guide outlining the risks of such side effects for distribution to patients;
we could be sued and held liable for harm caused to patients;
the product may become less competitive; and
our reputation may suffer.
Any of the foregoing events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and result in the loss of significant revenues to us, which would materially and adversely affect our results of operations and business. In addition, if one or more of our product candidates or our immunotherapy approach generally prove to be unsafe, our technology platforms and pipeline could be affected, which would have a material and adverse effect on our business, financial condition, results of operations and prospects.
Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all and would have an adverse effect on our business.
Much of our pipeline is in preclinical development and these programs could be delayed or not advance into the clinic. Before we can initiate clinical trials for product candidates, we must complete extensive preclinical studies, including IND-enabling Good Laboratory Practice toxicology testing, that support our planned Investigational New Drug applications, or INDs, in the United States or similar applications in other jurisdictions. We must also complete extensive work on CMC activities (including collecting yield, purity and stability data) to be included in the IND filing. CMC activities for a new category of medicines such as mRNA therapies require extensive manufacturing processes and analytical development, which are uncertain and lengthy. For instance, batch failures have occurred as we scale up our manufacturing and may occur in the future. In addition, we have had in the past, and may in the future have, difficulty identifying appropriate buffers and storage conditions to enable sufficient shelf life of batches of our preclinical or clinical product candidates. If we are required to produce new batches of our product candidates due to insufficient shelf life, it may delay the commencement or completion of