Moderna (MRNA) Earnings Call Transcript & Summary

Next presenting company, Moderna. My name is Ted Tenthoff. I'm a senior biotech analyst at Piper Sandler. And before I begin, I am required to point out certain disclosures regarding the relationship between Piper and Moderna that are listed at the back of the room and also at the registration desk. So as you know, Moderna is a leading developer of messenger RNA vaccines and medicines. Moderna shares have been under pressure over the last couple of years after really helping us through the COVID pandemic, in part as a result of decreasing immunization rates. I got my mNEXSPIKE vaccine. I think anyone who gets a flu shot should get a COVID vaccine as well as long as they're recommended by their doctor. And now under the FDA and RFK Jr., it really feels like they've declared war on mRNA vaccines. And then we recently had the setback with the same victory. So it's been a tough slog here. But you guys just recently had an R&D Day and really pointed to all of the new vaccines and medicines that are coming. And I think it's a really exciting time. And Jamie, you always do such a great job going through sort of the financial underpinnings of what Stephane and Stephen and everyone are working on and how you're going to get there. So I'm pleased to introduce Jamie Mock, CFO.

Jamie, I'm sorry to put you in the hot seat, but I have just gotten overwhelming number of questions, as I'm sure you guys have as well. What's really behind the FDA's claim that COVID vaccine caused these 10 children's deaths there's offsetting news too from experts that are refuting these claims. And I guess, firstly, what's really behind the sort of onslaught on mRNA? And then we can kind of get into what you guys know about sort of the findings.

Yes. Well, first off, thanks for having me, Ted. It's good to see you, and thank you for getting your COVID vaccine. That's always helpful and I think important. So look, I don't know what's behind it, to be honest. We haven't seen any data. We haven't seen the analysis. So here's what I can say. We take safety very seriously at Moderna, as you would expect. We have rigorous monitoring across ourselves, across the FDA, across over 90 countries across the globe that have been looking at it. And there are multiple overlapping safety systems that look for any new data point, any evolving safety consideration. And remember, we've delivered over 1 billion doses over the last few years. And so all those safety monitoring systems haven't really given us anything new or anything undisclosed at this point. And that's really all we can say. We haven't seen the data. We haven't seen the analysis. So it's inappropriate for me to comment on something that we haven't really got with it.

And I think I've seen someone said that 10 out of 96 were related to the vaccine. But then at the same time, I think over 800 children in their teens or below died from COVID in that time frame. So I think it's really -- we're going to have to weigh both sides of this for the 2. So I'll just pause. Are there any questions about that from anyone. Again, I think the answer pretty much is we're going to see what becomes of this and what additional data comes. So Jamie, I mentioned this in the beginning, you always do such a great job setting the framework for the company's commercial and financial performance. Let's start with COVID. Vaccine rates are down kind of high 20%, maybe 30% from last year. You're really now selling both Spikevax and mNEXSPIKE, which I think is a great product, like 1/5 the dose, lower side effects, higher potency. What's the current outlook for COVID vaccine revenues for the remainder of this year and beyond?

Yes. Thanks for the question. So yes, we really think this is a turning point financially for our company. And COVID will be the lion's share of our revenue until flu comes online and hopefully norovirus and our combination vaccine, which we'll get into. But let me just start with 2025 where we guided $1.6 billion to $2 billion. That was $1 billion to $1.3 billion in the United States and $600 million to $700 million outside the United States. And so let me start with the United States. The only thing -- all the contracting is done, I mean, we're 80% through the season at this point. So the only remaining variable is vaccination rates, as you mentioned. And at the time of our guidance, we provided for vaccination rates that could be down 20%, so that would be on the low end of $1 billion -- or on the high end of $1.3 billion or down 40%, which will be on the low end of $1 billion within the United States. And I think through last week, we're down 27% or 28%, as we said. So we feel very confident in our guide for the United States as well as outside the United States. The only remaining items are delivery timing. So a little bit that could push into the first quarter or maybe it happens this year. And there's only a few markets that are actually vaccination rate driven. Many are just contracted demand, but there are a few. So there's a little bit of variables there. So we -- for 2025, it's predominantly 99% COVID related. I'm sure we'll talk about RSV in a moment as well. Then when we look out to the next 3 years, I'd really encourage everybody to look at our Analyst Day webcast, which we really laid out, as you mentioned, what are the growth drivers for the next 3 years, which we see 10 of them. I won't get into all of them. But I think the punchline there is it's still largely COVID until flu and norovirus come along. And it's largely outside the United States. And it starts with a few contracts we have with 3 countries across the globe in the U.K., in Australia and in Canada, where these are long-term contracts that we believe we're fulfilling on right now in the case of all 3 of them. But the majority of the revenue, the full year revenue will be in 2026 versus 2025. So that's significant growth for us, particularly in those 3 areas. And then you mentioned mNEXSPIKE, which we're quite encouraged by. I think it's got 55% of our overall market share out of our Spikevax being the 45%. And we didn't even know coming into this year whether it would be approved. So it got approved in early June. So we had to double produce this year for both mNEXSPIKE and in Spikevax. And we're really encouraged that because of the product profile and the higher efficacy on mNEXSPIKE, it's doing extremely well, particularly in older adults. So we're really excited to go into 2026, knowing that we have this product approved, knowing that it's had terrific uptake already in the year that it was only approved in June, which I think provides another growth driver for 2026. And then -- and we said we'd grow up to 10%. So that's part of this whole story is that I think moving forward, starting in 2026, we believe we will start growing. And then in 2027, Europe opens up for us. We believe that we'll win in other regions around the world in 2028. We have norovirus coming on. We have the combination vaccine, which could come in '27 as well. And so we're quite excited for the growth rate of the company, and that's really just in the seasonal vaccine business. If we are able to have terrific data in INT, if we're able to have terrific data in our 4359 product, which I'm sure we'll talk about more in PA, that is upside to our overall revenue here. So we're really excited about the future here.

Yes, I agree. I think at the R&D Day, I kept feeling that you guys are turning the corner. So it's what really came through. So we'll go into a couple of these vaccines individually. So for seasonal flu, I believe you guys are preparing to complete regulatory filings by January. Could they be approved this year? And how do you really envision kind of penetrating into the traditional seasonal flu market?

No, we're excited about it. So yes, we will complete our filings for the U.S., Europe, Australia, Canada by January, as you mentioned. And if the filing is done in January, it's really not a 2026 product. This is really the 2027 market that we are shooting for. And we love the product profile, and it really starts with the efficacy of the product and how it compares to standard dose. And so we believe that will play well in older adults, which often have enhanced dose or high-dose flu, and that's where they compete. And if you look at the relative vaccine efficacy of our product versus -- that we showed in the Phase III trial versus standard dose, it's 26.6% better than standard dose. So we really do think we'll compete in that market well. And that, I think, speaks to our entire strategy here, which is we really need the breadth of products. I'm sure we'll get into the other ones. But in the seasonal vaccine business, you have more power -- purchasing power if you have COVID, if you have 2 products in COVID, mNEXSPIKE and Spikevax, you have RSV and you have flu, perhaps a combination vaccine and norovirus. We think that, that bundling effect is really helpful when we go to market with all of our customers.

I really think the combo product is a game changer, and it combines 110 with mNEXSPIKE right?

That's right...

So it's really the top of the 2 products. When do you think this could get gained licensure? I know it's under review in Europe, which is promising and could start to open up that market again. But what's sort of the FDA waiting on to try to understand?

Yes. So yes, as you mentioned, it's already under review in Europe. So that is 2026 outcome. In Canada, we have refiled. And then for the U.S., we're really -- they wanted to see our flu package and our flu filing first before they can give us guidance on what to do with our combination vaccine. So I think actually, we might see a combination product that is actually approved internationally before the U.S., particularly if Europe goes well, maybe that's a 2026 product or maybe it's a 2027 product, but it is relatively imminent as well as Canada. So we're -- in terms of the growth profile, I think there's 2 drivers. One is everywhere where we sell a COVID vaccine, if somebody also wants a flu vaccine, they get 2 and 1. So we already have the COVID revenue, but you add that flu revenue as well. And if you look at what we've studied the last 2 seasons, people that go into a doctor's office or retail or pharmacy to get a shot. In 2 seasons ago, I think it was roughly 30% on the same day got flu and COVID vaccines. Last season, it was almost 50% -- so people know they want COVID and flu on the same day. And if we have a combination vaccine, perhaps we can capture some of that flu revenue as well. I think the second driver is anybody that's getting a flu vaccine, if it is one shot, perhaps it will increase the COVID market. We're not banking on that, but that is something that a combination vaccine, the ease of it and the fact that you're double protected, perhaps that will grow the actual COVID market for us as well.

We got a third driver. So I'm allergic to the adjuvant in the flu vaccine, so I can't get flu. So -- but I will be able to get 110. I'm seeing when it comes to my seasonal vaccine preparedness.

Terrific.

So you guys also gained approval for RSV vaccine mRESVIA. This was last year then had some label expansion this year. It's gotten off to a slow start. You have competition here from Pfizer and GSK who had a solid year at start. How do you sort of see this market evolving in mRESVIA's share within it or within it?

No doubt, it's a slow start for us. And I think that there's a couple of reasons for that. One is in 2023, when RSV launched, that was the highest year. You've seen a contraction in the market since then, every year since then. The second is we were a year behind. So we came out with our 60-plus indication, 60-year-old plus indication in 2024. So we were third to market. And then this year, as you mentioned, we got 18 years old to 59 broaden label. But you've seen that market contract. So that's number one. So I think what -- we think what will happen is we really need clear public guidance around when do people need to be revaccinated. And when those health guidelines are out there, and they could be hopefully in the next year or 2, that will really increase the market again because you'll go back to the original shots and that will have a higher market. There's other -- a couple of other Moderna-specific items. One is our competitors have some inventory in the channel, so they kind of need to work through that as well as we have to get reimbursement across all of the countries that we want to compete in. And our mRESVIA is approved in 40-plus countries, so we're in the process of doing that. So I think when the revaccination guidance comes out, we'll be well prepared. We'll have a more fulsome portfolio at that time to be able to compete. And so that's what we're kind of hoping for. The last thing I'd say is if you look at those 10 growth drivers that we laid out, RSV actually wasn't one of them. Now Stephen mentioned, it is part of the contract in the U.K., Canada and Australia. So -- and we will have some growth. But if there is a substantial increase in RSV growth, I would add that actually as an 11th driver to our growth plan.

And you did at the R&D Day show some really compelling data about how the vaccination rates do tail off year 2 and year 3. So the science is there to support revaccination. So I think it will be interesting to see sort of as that comes in. So I'm going to bring in norovirus real quick. This is mRNA-1403. Tell us about this condition first in this vaccine. I think it's gotten a little bit more press recently. It's not one of those that everybody necessarily knows where it is. You guys are running a Phase III trial. I think it may be the only Phase III norovirus trial, if I'm not mistaken. So really not the competitive issues that you had in COVID or flu or RSV. So tell us a little bit about this vaccine and disease and maybe when we could get data.

Yes. So it's one of the leading causes for gastroenteritis out there. And I think in the U.S., we had this at our Analyst Day presentation, there might be 20 million incident rate per year for norovirus in the U.S. and maybe 700 million globally. And when you get it, it spreads quickly and it's not very good. So it can be really tough from getting that disease. So yes, you're right. We -- there is no vaccine. So it's an unmet need that we're excited about. We are in a Phase III trial. We announced recently that we didn't accrue enough cases. So we are starting another cohort in the fall right now, and it will stretch into the spring of 2026. And so we're optimistic that we'll have an interim analysis next year that will indicate what does our efficacy look like. So that's in terms of the other thing around the product profile is we think it can serve in the U.S., 150 million-plus patients or individuals. And those are people that are in a high risk from an occupation standpoint. So that can be -- think of health care workers, think of school teachers. Obviously, it still serves the older adults. That's where it's most acute and actually, it does can lead to death and hospitalizations. And think of lifestyle like travel, a lot of people tend to joke that it's often caught on cruises. So that's kind of the patient population. So we think it's a material market. And I think the last thing kind of building on my prior point, it's -- we think it's going to be administered through retail. So yet it's another one of our products that we think we can bring to the retail channel and hopefully, by 2028, if all goes well. And then as I mentioned, we'll have 5 or 6 products by that time that should really allow us to compete very well.

Yes. Great. So I'm going to transition to oncology. We just wrote a big 190-something gauge report on RNA medicines and really talking about RNA medicines being the next major therapeutic class. So if anybody is interested, reach out, we really highlighted a lot of different technologies, including antisense oligonucleotides RNA interference and of course, mRNA medicines. So one of the real things that came out of this was the potential for RNA medicines to move into oncology. And you guys are really leading the charge here. You mentioned Intismeran auto cell, which is the partnered product, the individualized neoantigen therapy with Merck. And you guys are going to report Phase III melanoma data this year. Maybe you can kind of tell us a little bit about this product, about the Merck collaboration and really what this could mean for Moderna.

Yes. So first, it's a 50-50 partnership with Merck, all sales, all investments, all manufacturing facilities, research and development. We jointly go in and decide on which trials we're going to do and what's the development plan. So we feel like we're partnered with a terrific oncology player and with a terrific product. In terms of the product, it is a combination with KEYTRUDA in the market end of this. Basically it tries to train the immune system to target the right cancer cells. So it is individualized. We look for -- we take somebody's blood, and we look for 34 proteins in the blood and try to identify and create a vaccine that is specific to it so that we can target the right cancer cells. So that's a little bit about the product. In terms of data, so we've been tracking our Phase II trial, which was 150 patients. And [Technical Difficulty] and it reduced the risk of death or recurrence by 49% and it reduced the risk of distant metastases by 62%. So it was terrific 3-year data, which is what's encouraged us, and I'll get into the pipeline and why we continue to invest behind it with Merck. So that Phase II trial is now coming up on 5 years. That was 2 years ago. So we should be getting that data soon. And so we are excited to see what that says at the 5-year mark, and you can really start to see the separation of the curves. The Phase III trial, we started and completed enrollment in September of 2024. So if you track what happened in Phase II versus this latest first our Phase III, which is over 1,000 patients, it really -- we're optimistic that we're going to see something from a data readout in 2026. So we're excited to see what that has and that's, as I mentioned, given us and Merck confidence to invest in 7 other trials, all Phase II or Phase IIIs in non-small cell lung cancer. Our renal cell trial is fully enrolled, and we might see data on that in 2026, which we're excited about as well. So I think there's lots to come there.

Yes. And that's a Phase II in RCC that we could get data on this year. So definitely, I think, one of the biggest drivers, obviously, for Moderna, but really for the field in general. And you guys also sort of dropped a new program, not as new, but really starting to get data on it, which is your PD-L1 IDO cancer therapy where you're really kind of using those antigens to target cancer cells. Tell us a little bit about this and sort of what the status is?

Yes. So I think one of the other -- there's 2 takeaways for our story is I think we're really turning around the seasonal vaccines business, and I think the next 3 years are quite exciting. And I think the second story as we lead hopefully to breakeven by 2028. And the second story is we're investing a lot more in oncology, which is what you've mentioned. And I think it starts with what we're seeing in cancer vaccines. So INT, which is individualized, is different than 4359, which is more off the shelf, and it attacks both cancer cells and immunosuppressive cells. And we only had a small Phase I trial on this, but it was quite encouraging. I think it was a 67% response rate. But again, a very small end. But it's given us the confidence. And I think in general, as we see INT hopefully unlocks cancer vaccines, we think that we have a handful, but 4359 is the leading one. And so that's like priority #1 in oncology for us. We are in many other areas. The second one is around T cell engagers. We've dosed our first patient in multiple myeloma. In your report also talked about in vivo cell therapy as well, which is very different than ex vivo from a manufacturing and a disruption perspective. So we're quite encouraged by what we have going on in oncology.

I always have envisioned that being able to produce a protein endogenously makes a lot of sense for enzyme replacement, and there's a lot of different orphan diseases where children basically require lifelong therapies. You guys have been active both with propionic acidemia and also methylmalonic acidemia. Maybe just in a minute or so, you can tell because I think we could get fees or registrational data from the PA program.

Yes, we're excited. Yes, it's fully enrolled. PA, propionic acidemia is fully enrolled. And we believe that we could have a readout in '26 or 2027. And what we said at Analyst Day is we think it could be on the market by 2028. So that is relatively imminent for us, and we're quite excited by everything we've seen thus far. And MMA is just -- is not too far behind that. It's hopefully going to enroll next year on a registrational study. So you can think of it as a year or 2 behind from what might come to market at the right time.

And Jamie, you always do a great job. You guys ended the third quarter with $6.6 billion. You recently entered into a credit facility with Ares and reiterated guidance of breakeven in 2028. Why take down the debt now? And how are you guys focusing investment to get to breakeven?

Yes, it's a great question. So we are super confident in our base plan, which I laid out, and we think we'll end absent the loan 2027 before we break even in the following year with $3 billion to $4 billion in cash. But we -- there's always uncertainties and opportunities. And this is a 5-year loan and a lot can happen in 5 years, both on the upside and on the downside. So we just thought it was the right time. If we were actually in a position of weakness, that's not the right time to borrow. And in terms of the cost of this, it's actually quite low cost. It's nondilutive. It's very flexible. We can pay it back anytime we want to. The uncalled portion is like a 1% interest rate. We're going to take the cash that we get out of the gates, put it into the bank, and so that really nets down the low cost of it. And so -- and a lot of people have asked why take $600 million upfront. Well, we really can't get a revolving credit facility when you are losing money. Nobody really can. So you have to do a loan. And the counterparty, Ares, who is terrific to work for, also needs to make a return. And their return, what's traditional in the marketplace is actually 50% funded upfront. They worked with us to only do 40%, $600 million on $1.5 billion. So I know that was kind of lost out there in terms of all the investors asking, why are you drawing it now? Because when you look at -- we didn't think a convertible made sense at our stock price. We weren't going to issue equity at our stock price. You can't get a revolving credit facility when you're losing money. So this was the next best alternative. And I think it is low cost, and I think it positions us well over the next few years to be highly profitable.

Great. Excellent. Well, it's going to be a really exciting 12 and 24 months. I always appreciate you guys coming down, all the support. It's been a long road. It's been a roller coaster ride. So we are starting to go back to.

Thank you so much. Really appreciate it. Great to see you.

Thanks, everybody.