Moderna, Inc. (MRNA) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Respiratory Franchise Progress

  Moderna's respiratory franchise, including the mRNA-1273 vaccine (Spikevax) and the newly launched RSV vaccine (mRESVIA), has shown remarkable progress, with positive Phase III results for their flu vaccine candidate (mRNA-1010) and flu + COVID combo vaccine candidate (mRNA-1083).

• Financial Performance

  Q2 revenues were up $241 million, reflecting the seasonal nature of the respiratory vaccine business. Operating expenses decreased by more than $600 million compared to Q2 2023, highlighting a commitment to operational efficiency.

• Strategic Partnerships

  Announced a partnership with BARDA for pandemic flu vaccines and a co-promotion agreement with Mitsubishi Tanabe Pharma Corporation for respiratory vaccines in Japan.

• Board Enhancements

  Welcomed David Rubinstein to the Moderna board, bringing extensive experience in investing, business growth, and public policy.

Pessimistic Highlights

• Competitive Pressures

  Increased competitive pressures in the U.S. have impacted contracting for COVID vaccines, with expectations of very low sales to EU member states in 2024 due to recent feedback from country health officials.

• Financial Adjustments

  Lowered 2024 net product sales guidance to a range of $3.0 billion to $3.5 billion, reflecting challenges in the EU market, increased competitive pressures, and potential revenue deferrals.

Company Outlook

• Revised Financial Expectations

  Moderna has revised its 2024 net product sales outlook due to lower expected sales in the EU, increased competitive pressures in the U.S., and potential risk of revenue deferrals. Despite these challenges, the company remains committed to growth and innovation in its vaccine portfolio.

Q & A Highlights

• Q: Can you help us understand the factors contributing to the maintenance of the year-end cash balance guidance following the lowered product revenue guidance range? And with regard to competitive pressures noted regarding contracts for COVID into the second half, can you be more specific on the factors here? How much visibility do you have on second half demand for the RSV vaccine based on contracting to date? (Salveen Richter, Goldman Sachs)

  A: Factors include prepayments already collected, working capital improvements, and a cushion coming into the year. Competitive pressures stem from larger competitors' aggressive strategies, impacting both COVID and RSV market shares and pricing. Some RSV contracts are signed, with ongoing negotiations for others. (Jamey Mock and Stéphane Bancel)

• Q: Was just wondering on the guidance cut, if you can quantify how much was from COVID versus RSV, and on the seasonal flu and the seasonal flu plus COVID combo, can you help us think through the gating factors for each of those? (Terence Flynn, Morgan Stanley)

  A: The guidance cut reflects similar impacts from COVID and RSV, with deferrals related to COVID. The flu and flu + COVID combo vaccine submissions are at different stages of regulatory engagement. (Jamey Mock and Stephen Hoge)

• Q: Looking forward on guidance, how do you reconcile the change in guidance with cash flow projections, and is opex prioritization changing? Also, regarding RSV projections, could you provide more specifics on the impact of market share contracting and price? (Michael Yee, Jefferies)

  A: No change in cash flow projections for 2025, with a focus on returning to growth and managing opex. RSV projections for 2024 are impacted by competitive dynamics, with efforts to improve market share in 2025. (Jamey Mock)

• Q: Can you elaborate on the latest timing for the Phase III CMV study and the likelihood of potential deferral again in 2025 for international COVID revenues? (Elliott Bosco, UBS)

  A: The interim analysis for efficacy in the CMV program could happen this year. Deferrals could occur in 2025, but growth from resilience contracts and other factors may mitigate risks. (Stephen Hoge and Jamey Mock)

• Q: Regarding the guidance for this year, particularly regarding the COVID revenue in the U.S., what could lead to the lower COVID revenue this year from prior guidance? (Gena Wang, Barclays)

  A: Competitive pressures in terms of share and price, with a focus on maintaining market share and managing price dynamics in the U.S. (Stephen Hoge)

• Q: On RSV, were you surprised by ACIP's decision for a one-and-done recommendation, and how should we think about the market potential long term? Also, what's the latest thinking on the opportunity for bird flu? (Luca Issi, RBC Capital)

  A: Not surprised by ACIP's initial conservative approach, expecting future discussions on re-vaccination as real-world data accumulates. The partnership with BARDA for bird flu vaccine development is progressing. (Stephen Hoge)

• Q: Ahead of results for VX-522 in collaboration with Vertex for CF, can you walk us through additional indications you may be interested in, and should we expect you to develop these indications in partnership with Vertex? (Alexandria Hammond, BofA)

  A: Focused on the cystic fibrosis program with Vertex, with early-stage research on other pulmonary diseases. Future partnerships depend on the specific indication and progress. (Stephen Hoge)

• Q: What's the regulatory path for orphan disease programs like MMA and PA, and what's the latest on manufacturing progress for the INT program? (Edward Tenthoff, Piper Sandler)

  A: Early regulatory discussions for MMA and PA, with different approaches based on biomarkers and clinical outcomes. Manufacturing for INT is progressing well, with commercial volumes being achieved. (Stephen Hoge)

• Q: Given the recent summer COVID surge, has there been any concern for fall vaccinations, and is the base case for U.S. COVID revenue similar to last year's vaccination rates? (Adi, Evercore)

  A: The summer wave doesn't significantly impact the fall vaccination outlook, with expectations for similar or better vaccination coverage rates in the U.S. (Stephen Hoge)

• Q: How are you thinking longer term about the outlook for RSV and COVID given the higher competitive environment, and what's the level of confidence in the EU being a meaningful contributor in 2025? Also, was the PRV purchased for use on the combo or the standalone flu vaccine? (Evan Wang, Guggenheim Securities)

  A: Long-term growth expected from RSV and COVID portfolios, with strategic focus on overcoming competitive pressures. EU contributions in 2025 may be limited, with potential growth from combo vaccines. The PRV purchase details were not specified. (Stéphane Bancel)

• Q: What are your thoughts on the magnitude of the RSV market compared to previous expectations, and how does the recent ACIP decision impact long-term market potential? (Greg, TD Securities)

  A: The RSV market size remains significant, with expectations for future growth as vaccination guidelines evolve and real-world data accumulates. (Stéphane Bancel and Stephen Hoge)