Moderna, Inc. ($MRNA)

Hi, guys. Good morning. Welcome to sunny Miami. I'm Ellie Merle, one of the biotech analysts here at Barclays. Very happy to have Lavina Talukdar here with us today, Head of Investor Relations at Moderna. It's been a very eventful year for you. So maybe if you could start with an overview of some of the key highlights from Moderna over '25 and into the first quarter of '26.

Sure. Thank you so much for having me, Ellie. This is great to be here. So for 2025, I'd characterize 2025 as a year of execution, and we really executed on all fronts. On the revenue side, we came in at $1.9 billion, which is towards the high end of the revenue range we gave on the third quarter call. And that was really driven by execution from the commercial teams. We were very happy to get mNEXSPIKE, our second COVID vaccine approved in June, and they really executed and made sure that, that was available on the market for the fall season. We also brought down costs. We set out in 2025 to take $1 billion of cost out, and we ended up achieving in excess of $1 billion. So in total, $2 billion of cost that came out in 2025. And that's really a testament to the finance team setting targets and the broader Moderna teams taking cost out of the system. So it really positions us nicely for 2026. It led to a cash balance of $8.1 billion, which also includes $600 million that we took down from a credit facility with Ares that we executed in 2025 as well. And that brings me to the pipeline, which was also a lot of progress that we saw. We had mNEXSPIKE approved. We had 2 other programs approved. RSV 18- to 59-year-old high-risk individuals saw a broadening of the indication there. And we also were able to get our COVID vaccine approved in the pediatric setting. We're the only ones that has an approval in 6 months old to 5 years of age. Aside from the approvals, we had positive data from our Phase III study in flu, which then led to the filing of the flu application in the U.S. and other territories around the world. So we're looking forward to that approval. And we also advanced our cancer pipeline, intismeran, which is already in a Phase III for adjuvant melanoma continues to accrue events there. But we -- in that program, we also fully enrolled the renal cell carcinoma study in 2025. PA in rare diseases was also fully enrolled. So it really sets us up nicely for 2026 as we look forward to pipeline readouts.

Yes. Certainly, a lot of exciting pipeline readouts, which I'm sure we'll get into. But maybe first, just starting with the respiratory vaccine franchise. So you're guiding for up to 10% revenue growth in 2026. I think that number may be surprised some investors given some of the trends that have been seen in the COVID landscape. I guess, what's underpinning your confidence in the potential for a return to growth this year?

Yes. So we have 2 contributors to growth that we see in 2026 that gets us to get up to 10% revenue growth that we've guided to. And the 2 major growth drivers is continuation of mNEXSPIKE penetration in the U.S. We have 24% market share as of the end of the fall season in 2025. So we expect that to continue to penetrate into the U.S. and also some approvals outside of the U.S. as well. And then the other major driver for that up to 10% growth is going to be from our strategic partnerships with the U.K., Canada and Australia. And in those partnerships, we've built facilities to make vaccines and other products. And so those facilities all came online in 2025 throughout the year, towards the end of the year. And they will go into full effect this year, those agreements. They are multiyear agreements that provide us visibility. We expect to see a major step-up in revenue from those 3 countries because of these strategic partnerships.

Interesting. And yes, I mean, the ex-U.S. revenue, I think that's particularly interesting considering a lot of that is essentially locked in through contracts.

That's right. And we'll have visibility for multiple years. The step-up in revenue from our guidance last year, we did $700 million in ex-U.S. revenue. The bulk of that $700 million was made up of Canada, Australia and the U.K., both the 3 strategic partnerships. This year, we're expecting international revenue to be $1 billion. So the key step-up in our up to 10% growth is predominantly coming from ex-U.S. revenues. In fact, in the U.S., last year, we ended the year with $1.2 billion in sales. And this year, we are planning for another decline in U.S. sales down to about $1 billion, which is a 20% decline to be prudent. Obviously, we're not aiming for a decline. But to be prudent, we don't actually need the U.S. to grow in order for us to meet the up to 10% growth.

That's interesting. And congratulations on the positive CHMP opinion with the flu, COVID combination. I think that's a very interesting program. It certainly differentiated from Pfizer-BioNTech, where you have the combination. I guess maybe starting first with in Europe, how we should think about the opportunity for this combo vaccine and when we could potentially start seeing revenues from these programs?

So we are very excited about the combination flu plus COVID product. In Europe, you're right, we just received the CHMP positive opinion. So we do expect an approval later this year. However, it will be contributing to revenue in the 2027 time frame. I'll remind you that, Europe, is right now a territory that we're not selling in because it has been locked up by a competitor contract in COVID. And that contract will lapse later this year, opening the territory up to us in 2027. So we'll be ready with the approval in flu plus COVID with that product, but it won't contribute to revenue until 2027.

Okay. Makes sense. And the U.S., a little bit more of a complicated situation. Sort of -- and I'll leave it to you in terms of what you can or can't say here. But how should we think about the latest in terms of the 1010 filing for flu, got the RTF, now the filing is accepted. How are you thinking about the outlook for this in the U.S.?

So you're right. We did have the RTF reversed and it's now accepted to have a PDUFA date of August 5 later this year. So we look forward to continuing the engagement we have with the FDA review staff. They've been phenomenal with all of our applications in the past. And so we look forward to continuing that collaborative work on the flu application. For the combination flu plus COVID, we still are seeking guidance from the FDA in terms of when we will refile that program. So as we have more information, we will update you.

How should we think about the uptake of the COVID flu vaccine? I mean I think just there's more investor skepticism on sort of the vaccine landscape. But then again, you'd be the only ones with this combination. How can we think about how this could impact, say, market share from a pricing dynamic, how this might play out?

So I'll answer that question ex-U.S. and in U.S. as well. So ex-U.S., we've received a lot of feedback from health ministers about the combination of flu plus COVID. They're pretty excited about that program. It's mainly because in countries outside of the U.S., you have single-payer systems, and it's those single-payer systems that are very incented to make sure that their populations are protected against pathogens that could lead to bad outcomes or hospitalizations, because it ends up costing the system more -- it's more expensive for the system, for the medical system. Preventing those hospitalizations is something that health ministers are very keen on. And when you can do it through one vaccine and you're protecting the individual against 2 different pathogens, it actually is -- leads to better compliance, lower administration costs. It's something that health ministers are looking forward to. So internationally, we think it's going to be a great product. In the U.S., we also think there's a place for a combination flu plus COVID vaccine that could be competitively advantaged. And that's because, again, you have compliance, you have lower health care costs and potentially a better economic backdrop for the customers as well. In terms of the pricing, we're still strategically thinking through what that might look like. It's a little bit premature. But obviously, there's lots of ways to think about that. We can just price it some of the parts or we can price it at a premium to some of the parts and possibly even at a discount. It's still yet to be determined.

I think an interesting contributor potentially to keep an eye on in the coming years. So in terms of the pipeline, an incredible amount of focus on the upcoming melanoma data. Maybe can you frame for us first sort of just how we should think about from a timing perspective? You said 2026. I think a lot of investors are curious as to the confidence that it will come in 2026 or if you have any granularity on when in 2026, we might see this data?

So it's really difficult to pinpoint when we think the data is going to read out because it is an event-driven trial. The confidence around 2026 really just comes from using the Phase II data set as a proxy. And the Phase II data read out 18 months, you started to see the separation in the curves around the 18-month time frame after the last patient was enrolled. And so since the Phase III study was enrolled in September of 2024, we hit the target enrollment. If you add 18 months to that time frame, you get to about the first quarter of -- early second quarter of this year. However, there are differences in the study. First and foremost, it's a Phase III study, so much larger, you'll need more events to actually get to the point where you can look at the data. It also has patients that are Stage II patients, which may lead to longer time frame before we start seeing recurrences. And so when you put all of that together, you're still solidly in that 2026 time frame, but it is event-driven. So it's impossible for us to know exactly when in '26 or possibly even in early '27, it may read out.

Makes sense. I had to try. Can you frame for us maybe what the relevant benchmarks are here from a data perspective and what you would consider, I guess, good data from this Phase III?

So I'll remind everyone about the Phase II data set. We had a hazard ratio at the 3-year follow-up of 0.51, which is remarkable and on the recurrence-free survival endpoint. That continued and sustained itself at the 5-year mark, which we just reported earlier this year. And that data is really remarkable. In terms of benchmarks, we would be thrilled to see data like that, but I don't think it's necessary. If you were to look through the oncology landscape, you would quickly realize that there are products on the market that have had hazard ratios in the 0.75, 0.8, that are now successful products on the market. So that hopefully gives you a sense of what may be necessary to have a meaningful benefit. And the other thing I'd say is this is intismeran plus KEYTRUDA, which is above and beyond a very active drug in KEYTRUDA monotherapy. And so even seeing a 0.8 hazard ratio, I think, would be a clinically meaningful result.

And how should we think about the market opportunity in adjuvant melanoma?

So in adjuvant melanoma, the way we characterize the market opportunity there is worldwide, it's a multibillion-dollar opportunity. We are 50-50 with our partners, Merck. And in that scenario, we would still consider our share as a multibillion-dollar opportunity at peak worldwide.

And I guess if this data are positive, how should we think about the read-through to other indications?

It's a great question. We believe that there is a synergism between intismeran and KEYTRUDA. And we've seen that in a number of tumor types during our Phase I study, the basket study, where we saw data in adjuvant melanoma, in non-small cell lung cancer. But again, it's a Phase I study. So the synergism we think, is there. However, we do have to run these studies to see what the magnitude of benefit there may be in all the different tumor types and the different histologies. So we're running a pretty extensive development program with our partners, Merck. We have 8 late-stage studies and the different cancer types, obviously, are adjuvant melanoma as we just talked about, renal cell carcinoma in a Phase II study. Muscle invasive bladder cancer also in a randomized Phase II study. All 3 of those studies are fully enrolled. We continue to enroll 2 studies in Phase III for non-small cell lung cancer. And we just initiated Phase II studies in first-line melanoma and first-line non-small cell squamous lung cancer. So we're active in the program for sure and really eagerly looking for additional histologies that may read out in the future.

And I know you mentioned some of these studies are fully enrolled like RCC. How should we think about the cadence of readouts after we get the melanoma data?

So the Phase II studies, RCC as well as muscle invasive bladder cancer, our Phase II studies. So the number of events you need there are lower than a Phase III study. They also have different rates of when recurrences happen. So I would say that after the adjuvant melanoma data, you should think a cadence of several months for each of these potential programs to read out. And then when we update you on full enrollment for non-small cell lung cancer, then that's when the clock starts ticking for when that particular histology reads out as well.

And how long from when non-small cell finishes enrolling, should we think about when we would get data?

It's really hard to speculate on that. But I think the key thing to hear -- to listen for is when that study -- when those 2 studies are fully enrolled.

Great. Well, certainly an exciting program. I know a lot of eyes are on it this year. Turning to some of your other pipeline programs. So, norovirus, we could potentially see Phase III data this year. I guess, can you help frame what you're looking for in the data and what benchmarks would be for good data here?

Sure. So norovirus, we just announced that it was fully enrolled in that second Northern Hemisphere season. And we're accruing cases. So this is another event-driven or case accrual dependent readout. We do anticipate that, that will happen in 2026. In terms of what we expect on the vaccine efficacy side there, because there aren't any products or any vaccines approved for norovirus, we do think that a minimum of a 50% vaccine efficacy rate would be needed to get this product through and on to the market. And that's because you've had other vaccines come to market with a 50% vaccine efficacy rate. Obviously, we're shooting for better than that, but a minimum of 50% is what we think you would need to come to market.

And obviously, a huge opportunity, but it's been challenging from a vaccine development perspective. What are some of the reasons why Moderna could be successful, whereas our focus in the past have faced challenges?

Great question. So we are targeting the adult population with a predominance in our clinical study of the older adult population. I think other programs that have failed in the past we were looking at children or infants. And in that population, I do think you need to vaccinate people multiple times in order to get them primed against the pathogen. And so having the benefit of going into seropositives in that adult population, I think, gives us a benefit. The other thing is that it is an mRNA therapy that we're using versus some of the others that have failed, our recombinant protein. So there is something to be said about that as well.

Great. Turning to operating expenses and your assumptions for breakeven. This is another area where we get a lot of investor questions given sort of the degree of investment in R&D. Maybe can you walk us through what your current assumptions are in terms of time to breakeven and what some of the levers are in terms of the ability to ramp down spend if, say, some of these Phase III trials are not successful?

Yes, great question. So obviously, we're planning for many of the Phase IIIs to be successful. But there are Phase IIIs that will be rolling off, particularly in the seasonal vaccine space. So norovirus is the last of the Phase IIIs in the seasonal vaccine portfolio that we're still running and that will run through 2026, and it will start winding down after that. So we do anticipate the anniversarying of the data sets in Phase III to be a big contributor of why our R&D spend comes down. We're going to continue to spend in oncology and invest in the clinical programs there, both with our partner, Merck, on the intismeran programs, but also our emerging oncology programs. The cost of oncology Phase III development or Phase II development is much, much lower than the cost of developing vaccines because of the sheer number of participants in vaccine studies versus the patients that we treat in the studies for oncology. And so all of that being said, we do anticipate that costs overall, cash cost for the company will be coming down to the tune of $3.5 billion to $3.7 billion in 2027, which would mean that we would need to be in that range for revenue in 2028 to breakeven. And we've got multiple growth drivers, 2 of which we talked about for 2026. Next year, we have Europe opening up, and that's a $1.8 billion respiratory vaccine market where currently, our sales are less than $100 million. So that's a big opportunity for us in 2027. Flu is a big opportunity as well in 2027 around the world, should we get the approvals as they come through later this year as well as partnerships now internationally in Lat Am, Latin America as well as Asia Pacific. So we just announced a deal with Mexico and Taiwan. Brazil was one that we announced last year. Those are also multiyear contracts that start to go into effect in 2027. And in 2028, on top of all of that growth, we anticipate the combination flu plus COVID coming to market as well as norovirus, both of which could be multibillion-dollar products at peak.

How should we think about the time frame for when the strain selection might vary for your flu products, I guess, thinking ex U.S. now because we'll have to wait to see what happens in the U.S. But I mean, there's so much data that shows that better strain selection and strain selection closer to the season leads to better efficacy. So I mean, now that you have the approval in Europe, how should we think about when we could potentially see you targeting different strains?

Yes, I think that's an excellent question. So one of the advantages of mRNA vaccines is that we can make a vaccine very close to the flu season. In fact, we've already demonstrated that in COVID, where we typically just need 2 months of heads up on the strain selection for COVID before having enough product to supply to the market. And indeed, for COVID, selections for the strain are happening in the May, June time frame, and we're able to have product on the market by late August. Similarly, with flu, we'll be able to do that as well. The difference between mRNA technology and traditional flu vaccine technology is that traditional vaccine makers require 6, maybe 9 months of lead time to make the product for the fall season, at which point you may have the flu virus mutate away from what's in those traditional vaccines, which leads to this mismatch that you're talking about. If you can minimize that mismatch because you're closer to the flu vaccine season, then that should, in theory, lead to better vaccine efficacy. And mRNA vaccines are the only ones that can actually achieve that at the current time. And so we look forward to that opportunity. There are many years. Last year was a big year where there was a mismatch in terms of what was in the flu vaccines versus what was circulating that, another opportunity like that could really help mRNA technology shine in that respect.

Yes, it's really interesting. On the rare disease side, you mentioned the PA study being fully enrolled. Can you talk about sort of how we should think about the opportunity here and the landscape for treatment?

Sure. So yes, we fully enrolled that study in 2025. We're expecting the readout later in 2026. It will be our first rare disease program, knock on wood, that comes to market. And we recently had some news, in a partnership with Recordati, who is already a major player in the PA landscape, which is our first rare disease that we're bringing to market. So we're thrilled at this partnership with Recordati, because they have a commercial presence, have the infrastructure already set and in place, identify the patients already. So it could be a very quick launch. And from that deal, we expect $160 million in milestone payments and then a royalty rate based on tiered sales. So we're looking forward to the data set first, and then this partnership with Recordati on that program.

Great. Well, an exciting year ahead. So Lavina, thank you so much for joining us, and thanks for everyone in the room for attending.

Thank you so much.

Thank you.