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Moderna recently announced a strategic shift aimed at reducing expenses by approximately $1.1 billion by 2027, which comes as the company navigates the decline of its COVID-19-related business. The biotech firm has laid out plans for ten new product approvals by the specified year while indicating a need to pause certain projects and eliminate others from its developmental pipeline. This decision is primarily driven by a desire to moderate research and development (R&D) expenditures, targeting a budget reduction to $3.6 billion to $3.8 billion from an anticipated $4.8 billion by the end of this year.
Moderna’s CEO, Stephane Bancel, elaborated in an interview with CNBC that the company will cease some studies, suggesting that they need to “pace ourselves” regarding R&D investments. This includes putting on hold their latent virus portfolio, which consists of viruses that can remain dormant in a host for extended periods and potentially reactivate later in life.
Following this announcement, Moderna’s shares dropped over 15% in premarket trading. Analyst Mani Foroohar from Leerink Partners commented that the company’s updates have undermined key aspects of the optimistic outlook for its stock and signal a deterioration in financial health. He noted that the timelines for R&D cuts are too extended to be considered credible by a management team that has struggled with accurately forecasting its business performance.
Jefferies analyst Michael Yee echoed this sentiment in a research note, indicating that significant cost savings may not materialize until 2027, which would delay profitability until 2028.
In addition to cost-cutting measures, Moderna shared encouraging results from late-stage trials for its respiratory syncytial virus (RSV) vaccine, aimed at high-risk adults aged 18 to 59, with plans for regulatory approval later this year. The company also announced advancements in its standalone flu vaccine for older adults.
The information was disclosed during Moderna’s annual research and development day in New York, which focused on the future of its product pipeline and long-term business strategy. This event follows the approval of Moderna’s RSV vaccine for seniors, marking its second product launch after its COVID-19 vaccine.
Moderna is currently working on five respiratory vaccines that have shown positive phase three trial outcomes and anticipates submitting three of these for approval this year. Among these is a combination vaccine for COVID-19 and the flu, as well as a revised version of its existing COVID-19 vaccine.
The company is also advancing five non-respiratory products targeting cancer, latent viruses, and rare diseases, expecting potential approvals by 2027. For 2025, Moderna forecasts revenues between $2.5 billion and $3.5 billion. The company projects a compounded annual growth rate exceeding 25% from 2026 to 2028 as new products enter the market.
Bancel emphasized Moderna’s strong track record in drug development, noting that their success rate from phase one to phase three trials is “six times higher” than the industry average, highlighting the importance of strategic pacing in their R&D investments.
What’s in Moderna’s pipeline?
Among the updates, Moderna provided new findings on its RSV vaccine, mRESVIA, which has received clearance in the U.S. and Europe for adults aged 60 and above. The vaccine met all primary efficacy endpoints in a phase three study involving at-risk adults aged 18 to 59, with no safety issues reported during the trials.
There are currently no RSV vaccines approved globally for younger high-risk adults, prompting competition with major players like Pfizer and GSK, who are also pursuing expanded approvals for this demographic.
Bancel indicated that Moderna intends to utilize a “priority review voucher” when applying for approval for the younger age group, aiming to expedite the FDA review process from ten months to six. The target is to have mRESVIA available before the RSV season in 2025.
However, the company decided to discontinue its RSV vaccine development for infants under two years based on recent clinical findings. Additionally, Moderna’s experimental flu vaccine, mRNA-1010, has shown a stronger immune response than current flu shots in phase three trials and has maintained acceptable safety profiles.
Furthermore, Moderna is preparing to advance its norovirus vaccine into a phase three trial soon, with hopes of applying for approval within the following year if positive data emerges.
Finally, Moderna is collaborating with Merck to innovate a personalized cancer vaccine, currently under evaluation in combination with Keytruda for patients with various cancer types. Although the FDA has yet to show support for accelerated approval based on mid-stage trial data, Bancel remains optimistic about ongoing discussions with regulators and the generation of further data.
— CNBC’s Angelica Peebles contributed to this report
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