Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Moderna Inc (MRNA, Financial) reported positive Phase III results for its flu vaccine candidate, mRNA-1010, meeting all immunogenicity endpoints in adults 18 and older.
- The company launched its second respiratory product, the RSV vaccine mRESVIA, in the US and received a positive opinion from the European Medicines Agency.
- Moderna Inc (MRNA) has a strong cash and investment position, ending the quarter with $10.8 billion.
- The company has made significant progress in reducing operating expenses, with a year-over-year decrease of more than $600 million in Q2 2024.
- Moderna Inc (MRNA) announced a partnership with BARDA to address the H5 influenza virus, securing $176 million in funding to accelerate the development of mRNA-based pandemic flu vaccines.
Negative Points
- Net product sales for Q2 were $184 million, down 37% year over year, primarily due to lower sales volumes of the COVID-19 vaccine outside the United States.
- The company reported a net loss of $1.3 billion for the quarter.
- Moderna Inc (MRNA) revised its 2024 net product sales expectations to a range of $3.0 billion to $3.5 billion, citing low sales from EU member states and increased competitive pressures in the US.
- The company is facing increased competitive pressure for its COVID and RSV vaccines, impacting market share and pricing.
- There is a potential risk of revenue deferrals from 2024 into 2025, which could affect future financial performance.
Q & A Highlights
Q: Can you help us understand the factors contributing to maintenance of the year-end cash balance guidance following the lowered product revenue guidance range? And then with regard to competitive pressures noted regarding contracts for COVID into the second half, can you be more specific on the factors here, whether it's contracting logistics or the clinical profile, competitive dynamics or what that might be? And third, how much visibility do you have on second half demand for the RSV vaccine based on contracting to date?
A: James Mock (CFO): There are a few factors contributing to maintaining the year-end cash balance guidance. First, some of the deferred revenue has already been collected as prepayments. Second, we have been working on improving working capital, including accounts payable, inventory balances, and receivables. Third, we had a cushion coming into the year. Stephane Bancel (CEO): On competitive pressure, we are seeing bundling from larger competitors with portfolios of products, aggressive activities in supply chain, pricing, and marketing funding. For RSV, we have some contracts signed and are actively supplying customers, with more contracts being finalized.
Q: On the guidance cut, can you 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 in the difference in language there?
A: James Mock (CFO): The guidance cut is driven by three primary factors, all similar in size. Deferrals and EU impacts are related to COVID, while competitive pressures affect both COVID and RSV. Stephen Hoge (President): For the flu-COVID combo, we are engaging with regulators and sharing data. For the standalone flu vaccine, we intend to file in 2024.
Q: Looking forward on guidance, you have revenue guidance this year and OpEx guidance. Can you speak to the math there and the importance of flexing OpEx more aggressively? And on RSV, is the projection perhaps in half due to lower share or lower price?
A: James Mock (CFO): We expect to end 2024 with $9 billion in cash and $6 billion to $7 billion in 2025. This year’s cash loss included prepayments that won't repeat. We plan to return to growth in 2025. On RSV, we were third to market this year, and some contracts were already negotiated. We hope to gain a fairer market share in 2025.
Q: Can you elaborate on the latest timing you expect for the Phase III CMV study based on how event rates are tracking? And what is the likelihood of potential deferral again in 2025 for international COVID revenues?
A: Stephen Hoge (President): We believe the interim analysis for the CMV program could happen this year. James Mock (CFO): Deferrals could happen in 2025, but we have resilience contracts in the UK, Australia, and Canada, which provide additional growth opportunities.
Q: Regarding the guidance for this year, particularly COVID revenue in the US, what could lead to lower COVID revenue this year from the prior $2 billion guidance?
A: James Mock (CFO): We define competitiveness in terms of share and price. We are relatively pleased with our market share but are seeing some price pressure. We believe the US will perform well compared to last year, but there is more competitive pressure this year.
Q: On the recent ACIP meeting, were you surprised by the decision on RSV being a one-and-done vaccine? How should we think about the market potential for RSV long term? And what is the opportunity for bird flu?
A: Stephen Hoge (President): We were pleased with the parity recommendation for older adults. The ACIP took a prudent choice based on one year of real-world data. We believe that as more data is gathered, there will be a need for boosting. On bird flu, we have an agreement with BARDA to advance into Phase III with our pandemic bird flu vaccine.
Q: How do results for [BS522] in collaboration for [KEYTRUDA] provide positive proof of concept for mRNA and liponanoparticles? What additional indications might you be interested in?
A: Stephen Hoge (President): There are many pulmonary diseases for which respiratory delivery could be impactful. We are in the research and discovery phase for additional indications. Our current partnership with Vertex is limited to the cystic fibrosis program.
Q: Can you provide a little bit of color on what the regulatory path might look like in MMA and PA?
A: Stephen Hoge (President): For MMA, we are seeing good movement of a biomarker and will engage with regulators on validating it. For PA, we are following events and evaluating pre and post-treatment rates of metabolic decompensations. We are in early discussions with regulators.
Q: For RSV, what is your take on Pfizer's comment that customers want an RSV vaccine for both maternal and older adult populations? And for INT, when do you expect to complete enrollment of the Phase III adjuvant melanoma trial?
A: Stephen Hoge (President): The majority of the recommended population is older adults. We are focusing on expanding the label for high-risk individuals aged 18 to 59. On INT, enrollment has been brisk, and we expect it to conclude quickly. We are making great progress in manufacturing.
Q: Given the higher competitive environment, how are you thinking longer term about the outlook for RSV and COVID? And what is your level of confidence in the EU being a meaningful contributor in the future?
A: Stephane Bancel (CEO): We believe that as customers experience our PFS product, we will gain better share in 2025. For the EU, the current contract with Pfizer ends in 2026, and we expect growth opportunities with our next-gen COVID and flu plus COVID vaccines.
Q: Has the recent summer COVID wave caused any concern for fall vaccination? And is the base case for US COVID revenue similar to last year?
A: Stephen Hoge (President): The summer wave highlights the need for protection during the winter season. We are confident that vaccination coverage rates will be similar to last year in the United States.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
