Q3 2024 Moderna Inc Earnings Call
and the next episode of The End of the World War II
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Speaker Change: Good day and thank you for standing by. Welcome to the Moderna Third Quarter 2024 conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during this session, you will need to press star 1 1 on your telephone. You will then hear an automated message device when your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lavina Talukdar. Please go ahead.
Lavina Talukdar: Thank you, Kevin. Good morning, everyone. And thank you for joining us on today's call to discuss Moderna's third quarter 2024 financial results and business updates.
Lavina Talukdar: You can access the press release issued this morning, as well as the slides that we'll be reviewing, by going to the Investor section of our website. On today's call are Stphane Bancel, our Chief Executive Officer, Stephen Hoge, our President, and Jamey Mock, our Chief Financial Officer.
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Lavina Talukdar: Before we begin, please note that this conference call will include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Lavina Talukdar: Please see slide 2 of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. I will now turn the call over to Stphane.
Speaker Change: Thank you, Lavina. Good morning or good afternoon, everyone. Thank you for joining us.
Stphane Bancel: I will start with a review of our business in the third quarter. Jamey will present our financial results and outlook.
Stephen will review our clinical programs.
Lavina Talukdar: I will then come back and share our key priorities before Q&A.
Lavina Talukdar: We delivered 1.9 billion dollars of revenue in the third quarter. Our net income was 13 million dollars.
Lavina Talukdar: We ended the quarter with cash and investments of $9.2 billion.
Lavina Talukdar: As you know, for over a year now, we have been working to improve productivity in the company.
Lavina Talukdar: In the first quarter of 2024, compared to the first quarter of 2023, we reduced operating expenses by $500 million.
Across Coastal Safe, Sandi, and SGM.
Lavina Talukdar: This figure excludes $1.4 billion of resizing charge in the first quarter of 2021.
Lavina Talukdar: I would like to thank our teams who have been working hard to achieve this cost savings and will continue our journey to improve our cost efficiencies.
Lavina Talukdar: This year, the COVID-19 market benefited from U.S. regulatory approval that was 19 days earlier than in 2023.
Lavina Talukdar: SPACTAX will be available across all segments of the U.S. health care system.
Lavina Talukdar: Our manufacturing and logistics teams were able to double the number of doses delivered to customers compared to the first week of last year's COVID vaccine season.
Lavina Talukdar: No turning to what we have seen so far this season for vaccinations in the U.S. retail market.
Lavina Talukdar: The grafts on site X are shot in arms in the retail channels as measured by IQVR, which includes retail pharmacies and long-term care.
Lavina Talukdar: As you can see the graph on the left, the early approval of a vaccine this year has helped to push total market vaccine dose above what they were last year at this point in the season.
Lavina Talukdar: The graph on the right shows weekly doses, which as you can see in the past few weeks have started to decline.
Lavina Talukdar: Moderna has a 40% share of retail shops in arms season today.
Lavina Talukdar: Coming to slide 7, we've been giving input to look at vaccination trends from last year to inform our understanding of where there are additional opportunities to grow the COVID market.
Lavina Talukdar: There are three major delivery channels for respiratory vaccines in the U.S.
Lavina Talukdar: There are retail pharmacies, integrated delivery networks, or IDNs, which basically serve hospitals and doctors who are part of these networks. And the third group, government programs and others.
Lavina Talukdar: As you can see, the Witten Channel compromised 73% of the total US market for COVID-19 vaccine doses last year, in 2023.
Lavina Talukdar: COVID vaccines have been overwhelmingly given to pharmacy settings with such smaller distribution in a two-week trial.
Lavina Talukdar: If now we look at flu, in the flu market, however, the distribution by channel is different, with much greater emphasis on IBM and government.
Lavina Talukdar: Since COVID-19 continues to present a much greater health burden than flu in the United States, we remain convinced that increasing the vaccination rate of COVID-19, relative to flu, provides a significant opportunity to improve public health, especially in the ideal segments and government and other segments.
Lavina Talukdar: Therefore, as we execute our COVID strategy, we see the opportunity to drive the COVID vaccination rates closer to flu over time, especially in the under-penetrated charts.
Lavina Talukdar: Well, as you know, COVID-19 has been generated over time. It's a combination of COVID-19 vaccine, which Stephen will discuss shortly.
Lavina Talukdar: Let's now turn to what Moderna is doing to grow a vaccination rate.
Lavina Talukdar: The first objective of our effort is to educate healthcare providers on the importance of COVID as a public health threat.
Lavina Talukdar: It's negative impact has a much greater cause of severe illness than over-respiratory paralysis.
Lavina Talukdar: and the opportunity to improve public health by following vaccine recommendations.
Lavina Talukdar: Secondly, we are going direct to consumers to emphasize the benefits of getting vaccinated. And our most recent campaign highlights the danger of long COVID and the importance of vaccination to minimize the risk of it.
Lavina Talukdar: Additionally, public health authorities, including the CDC, recognize the importance of vaccination, which is reflected by the most recent ACIP recommendation, for additional COVID doses for immunocompromised people and those 60,000 of those in the spring of 2025.
Moving on to RISP.
Lavina Talukdar: More than a third quarter, MRESDR sells about $10 million. This was below expectations going into 2024. Unfortunately, the timing of approval and recommendation by the CDC on MRESDR resulted in us missing most of contracting season.
Lavina Talukdar: Additionally, the substantial buildup of inventory in the channel by competitors prior to our launch has had a negative impact on our sales.
Lavina Talukdar: Looking to 2025, we believe that we'll be able to participate from the beginning of the contracting season in the U.S.
Lavina Talukdar: We are also filing for approval of a broader NYSEA label that will allow to address the 18 to 59-year-old high-risk population.
Lavina Talukdar: Additionally, we see the potential for market expansion if regulators recommend revaccination.
Lavina Talukdar: And finally, we are now starting to receive approval outside the U.S., and we expect to have sales in those markets in 2025.
Lavina Talukdar: I am delighted to welcome Abbas Hussain to the Moana Board of Directors.
Lavina Talukdar: HABA has a strong commercial background, which makes it a great addition to our board.
Lavina Talukdar: He has more than 25 years of commercial experience, more recently as CFO of IFAW, and before that, Chief Commercial Officer of GSK.
Lavina Talukdar: ABAP is an ideal group member to guide Moderna forward as we continue to advance our broad portfolio of products towards commercialization in the next few years.
Lavina Talukdar: We very much look forward to working with us in the years ahead.
Lavina Talukdar: Finally, I am very pleased to announce the expansion of Moderna Executive Committee, expanding the responsibilities of two current members of the team and adding two new members to the team to help us ensure we execute our strategy and deliver on our mission to patients.
Lavina Talukdar: First, Stephen will explain his role to include oversight of a poor commercial organization, which was previously divided between he and I.
Lavina Talukdar: At Moderna for a Start, Stephen is responsible for strategy across the full lifecycle of a company, research and development, and medical and commercial.
Lavina Talukdar: Joining one another is the Executive Committee are Rose Loughin and Jacqueline Miller. Rose is being promoted to Executive Vice President, Research.
Lavina Talukdar: Jackie is being promoted to Chief Medical Officer, Legal Development Organization.
Lavina Talukdar: The promotion of Jackie and Rose to the Executive Committee is a special milestone for the company.
Lavina Talukdar: This is the first time in our history that we have promoted internal talent onto the Executive Committee.
Lavina Talukdar: It is a testament to both of these remarkable colleagues, who have each spent years building and leading critical areas of a company, and also reflect on our commitment to grow and develop our internal talents at Moderna.
Lavina Talukdar: Tracy Franklin, our Chief Human Resource Officer, will also expand our role, becoming the Chief People and Digital Technology Officer.
Lavina Talukdar: The expansion of our role emphasizes vital integration of people, culture, and digital innovation across the business.
Lavina Talukdar: As Tracy's team works to scale up our business processes, they ask the question of how we should do work, how should it be organized between people and digital technologies, being overshared software, AI solutions, including our own machine learning algorithm or GPT enterprise, and or robotic solutions.
Lavina Talukdar: I would like to thank Stephen and Tracy for their new expanded role, and for their partnership over many years, and many years looking forward, and to congratulate Rose and Jackie for being part of the Company Executive Committee. With this, let me turn to Jamie.
Jamie: Thanks Stphane and hello everyone. Today I will provide an overview of our financial results for the third quarter and share our outlook for the remainder of 2024.
Jamie: Let's start by reviewing our commercial performance, which you can follow on slide 14.
Jamie: For the third quarter of 2024, our net product sales were $1.8 billion, bringing year-to-date product sales to $2.2 billion.
Jamie: We also had approximately $100 million in year-to-date other revenues from grants, collaboration, licensing, and royalties, which are not included in the figures on this slide.
Jamie: $1.2 billion of our 3Q2024 product sales were from the U.S. market, where we experienced an earlier launch to the 2024-2025 season.
Jamie: While our 3Q results exceeded expectations, this was mainly due to sales timing between the 3rd and 4th quarter, supported by receiving FDA approval of our updated COVID-19 vaccine 3 weeks earlier than last year.
Lavina Talukdar: Also included in our U.S. sales of $1.2 billion is a provisioned relief of approximately $140 million.
Lavina Talukdar: Primarily driven by lower product returns from the 2023-2024 season compared to our previous estimate.
Lavina Talukdar: Additionally, we commenced RSV vaccine sales in Q3. While initial RSV sales were limited at $10 million, we believe there is potential for long-term growth as we work to capture a larger market share over time.
Lavina Talukdar: For our full year 2024 outlook, we are reaffirming our product sales estimate of 3 to 3.5 billion dollars.
Lavina Talukdar: which implies a 14 product sales range of 0.8 to 1.3 billion dollars.
Lavina Talukdar: We expect our U.S. 4Q product sales to be between $200 and $500 million.
The range is given by the following three key variables.
Lavina Talukdar: Our SpiceX market share, which is currently tracking to approximately 40% in retail, at this time it's too early to call our share in IDMs and with the government.
Lavina Talukdar: Next, vaccination rates. A range assumes a market size which has COVID vaccinations flat to down 10% versus the prior year.
Lavina Talukdar: Finally, our performance in, and the ultimate size of, the RSV market in 2024.
Lavina Talukdar: To summarize, if our retail market share remains constant at 40% and the U.S. market finishes this season down 10% compared to last year, and there is no uptick in RSV sales, we expect to be on the low end of this sales range.
Lavina Talukdar: We expect our international 4Q product sales to be between $600 and $800 million.
Lavina Talukdar: We have a tighter range on our international sales as most of these sales are for contracted volume and confirmed orders.
Lavina Talukdar: The final international sales amount will be dependent upon revenue recognition timing and our performance in a few specific markets.
Lavina Talukdar: Moving to slide 15, I will talk about our 3Q financial results in more detail.
Lavina Talukdar: Net product sales for Q3 were $1.8 million, as I just discussed on the prior page.
Lavina Talukdar: Our cost of sales for 3Q2024 was $514 million, representing 28% of net product sales for the quarter.
Lavina Talukdar: This was a 77% year-over-year decline in our cost of sales from $2.2 billion in Q3 2023.
Lavina Talukdar: As a reminder, last year we undertook a strategic initiative to restructure our manufacturing footprint and recorded $1.4 billion of charges in 3Q2023 from inventory write-downs, CMO wind-down costs, and cancellation fees.
Lavina Talukdar: Excluding the $1.4 billion dollar charge, profit sales still declined by 38% year-over-year.
Lavina Talukdar: As we continue to make progress driving additional productivity improvements in our manufacturing operations.
Speaker Change: All right, and the expenses were $1.1 billion in Q3 2024, reflecting a 2% year-over-year decline from $1.2 billion last year.
Lavina Talukdar: We purchased a priority review voucher during the third quarter of 2024, which is included in our Q3 results.
Lavina Talukdar: Excluding the PRV purchase, we've had a strong year-over-year spending decline for research, development, and clinical manufacturing as we continue to drive cost efficiencies across all areas of the organization.
Lavina Talukdar: FD&A expenses for Q3 2024 were $281 million, representing a 36% year-over-year reduction.
Lavina Talukdar: This decline reflects our focus on driving cost efficiency and making targeted investments that continue to strengthen our overall productivity.
I will provide further details in the following slides.
Lavina Talukdar: We recognize an income tax of $8 million for the third quarter, a significant reduction from the $1.7 billion in the same period last year.
Lavina Talukdar: The decrease was largely attributable to the establishment of a $1.7 billion valuation allowance on deferred tax assets in Q3 2023.
Lavina Talukdar: The Valuation Allowance has remained in place since its initial recognition and continues to impact our tax expense.
Lavina Talukdar: Our net income for the period was $13 million, a notable improvement from the net loss of $3.6 billion recorded in Q3 2023.
Lavina Talukdar: Earnings per share for the quarter were $0.03 compared to a loss of $9.53 per share in the same period last year.
Lavina Talukdar: We ended the quarter with cash and investments totaling $9.2 billion, down from $10.8 billion at the end of Q2, primarily due to ongoing research and development expenses and operating activities.
Lavina Talukdar: Moving to slide 16, I want to provide additional detail on the cost reductions we are driving across the company.
Lavina Talukdar: As discussed on previous calls, as a platform company, we are building a unique operating model.
Lavina Talukdar: And over the last few years, we have invested purposefully into people, processes, and technologies to build foundational capabilities that will allow us to scale efficiently.
Lavina Talukdar: We continue to see these efficiency gains in our 2024 results.
Lavina Talukdar: As mentioned on the previous slide, we reduce 3QFC&A expenses by 36% year-over-year.
Lavina Talukdar: We had year-over-year reductions across all areas of our SG&A categories, commercial, medical, and G&A functional spending.
Lavina Talukdar: Major drivers were from reductions in purchase services and external consultants as we better leverage digital technology and AI.
Year-to-date RSG&A spending is down 24% year-over-year.
Lavina Talukdar: While we continue to drive productivity improvement, we are also committed to increasing COVID-19 vaccination rates with investments in HCP education and consumer ad campaigns.
Lavina Talukdar: as well as increasing our COVID-19 and RFC market share in competitive markets.
Lavina Talukdar: Therefore, we don't expect as large a year-over-year decline in 4Q SG&A spending versus the prior year.
Lavina Talukdar: For the full year, we expect SG&A to be down approximately 20% to $1.2 billion.
Lavina Talukdar: which is reflected in our financial framework update on the next slide.
Turning to that 2024 financial framework on slide 17.
Lavina Talukdar: Our net product sales guidance remains at $3 to $3.5 billion. As reviewed earlier, there are a handful of factors we are monitoring as the season progresses.
Lavina Talukdar: For cost of sales, we are narrowing our guidance to 40-45% of product sales as a result of the continued manufacturing productivity improvements we are driving in the company.
Lavina Talukdar: For R&D, we are lowering our full-year estimate to $4.6 to $4.7 billion from our previous guidance of $4.8 billion.
Lavina Talukdar: The reduction is due to cost savings from productivity improvements, as well as clinical study timing.
Lavina Talukdar: For SG&A, we continue to expect full-year expenses to be approximately $1.2 billion, down from $1.5 billion in 2023, a decrease of approximately 20% year-over-year.
We continue to expect taxes to be negligible in 2024.
Lavina Talukdar: And we are updating our capital expenditures outlook to approximately 1.2 billion dollars, which reflects the purchase of our Norwood campus from our landlord for approximately 400 million dollars.
Partially offset by approximately $100 million of other CapEx reductions.
Lavina Talukdar: The purchase of this highly strategic asset allows us full control to expand and build out the campus to drive future productivity and innovation.
We anticipate this transaction will close in December.
Lavina Talukdar: We continue to expect ending 2024 with approximately $9 billion of cash in investments.
Lavina Talukdar: The additional cash outlay for purchasing our Norwood campus will be offset by reductions in our cost of sales, R&D, and other capital expenditures.
Lavina Talukdar: Based on our 3Q actual product sales of 1.8 billion dollars, we have strong visibility into our expected cash collection timing from our customers in 4Q.
Speaker Change: With that, I will now hand the call over to Stephen.
Stephen Hoge: Thank you, Jamey, and good morning or good afternoon, everyone. Today, I'll do a quick review of our pipeline. At our R&D event in September, we discussed our focus on 10 product approvals over the next three years. Today, I'll briefly summarize the status of those programs.
Starting with our respiratory vaccines portfolio.
Lavina Talukdar: For our next-generation COVID vaccine, mRNA-1283, we are pleased with the positive phase 3 safety, immunogenicity, and vaccine efficacy data we presented at R&D Day.
Lavina Talukdar: including a 13.5% higher vaccine efficacy compared to spike vacs in participants aged 65 and older in that study.
Lavina Talukdar: As previously shared, we intend to file MRNA-1283 for approval in 2024 and will use a priority review voucher.
Lavina Talukdar: For our RSV vaccine, mRNA-1345, we also shared positive safety and immunogenicity data from our Phase 3 trial in participants 18 to 59 years old who are at high risk from RSV.
Lavina Talukdar: We are also using a Prior Review Voucher for this program, which we intend to submit this year.
Lavina Talukdar: We also shared positive Phase 3 data from our combination flu COVID vaccine, mRNA-1083, and intend to file for approval in 2024, subject to ongoing discussions with FDA.
Lavina Talukdar: We've decided not to use a priority review voucher for this program, given the timing of submission and the potential launch relative to the respiratory virus season in 2025.
Lavina Talukdar: We will announce PDUPA dates for these programs if and when they are confirmed by the FDA.
Lavina Talukdar: Moving now to our stand-alone flu program, mRNA-1010, we have initiated and substantially enrolled the first season of our Phase III vaccine efficacy study.
Lavina Talukdar: As a reminder, this phase 3 study is funded within our project financing agreement with Blackstone Life Sciences.
Lavina Talukdar: 520 shows the study design for that phase 3 stand-alone flu vaccine.
Lavina Talukdar: This is a randomized, observer-blind, active control study for mRNA 1010 against the standard dose comparator. It is designed to be enrolled over two seasons, so the study has the possibility to declare early success after a single season.
Now turning to our non-rescuitory portfolio.
Starting with our latent and other virus vaccines.
Lavina Talukdar: For our CMV vaccine, we continue to expect that we will approve the 81 cases required for the interim analysis in our Phase 3 study by the end of this year.
Lavina Talukdar: Following the accrual of these cases, the Data Safety and Monitoring Board will conduct a statistical analysis.
Lavina Talukdar: Should they recommend unblinding at the interim analysis, we will share those results.
Lavina Talukdar: For norovirus, I'm happy to announce that we are rapidly enrolling our Phase 3 trial. In a moment, I will take you through the design of that norovirus Phase 3 study.
and the other.
Lavina Talukdar: In oncology, we and our partner Merck have initiated a Phase III trial evaluating adjuvant INT, or mRNA-4157, in combination with Keytruda after neoadjuvant Keytruda and chemotherapy in patients with certain types of resected non-small cell lung cancer.
Lavina Talukdar: This is the second phase 3 trial for INT in non-small cell lung cancer and is targeting patients who may not respond to neoadjuvant therapy alone. I will also review this study design in the upcoming slides.
Lavina Talukdar: For our rare disease therapeutics, we intend to begin to generate pivotal trial data for our PA program in 2024. And for MMA, we have an agreement with FDA on our pivotal trial design. We now expect to start that study in the first half of 2025.
Lavina Talukdar: On slide 22 is the design of our phase 3 study for our norovirus vaccine candidate. As a reminder, norovirus is a gastrointestinal disease with high unmet need and no approved vaccines on the market.
Lavina Talukdar: The Phase 3 study is designed to test the efficacy, safety, and immunogenicity of our vaccine in 25,000 adults age 18 and older.
It is randomized one-to-one, observer blind, and placebo controlled.
Speaker Change: Turning now to the trial design for our second Phase 3 study in non-small cell lung cancer for INT in collaboration with Merck, which complements the Phase 3 INTERPATH-002 trial.
This phase 3 study, called InterPath-009,
Lavina Talukdar: We'll enroll more than 1,200 patients with stage 2 to 3b non-small cell lung cancer without an EGFR mutation and who are able to undergo surgery. These patients will receive neoadjuvant therapy of Keytruda plus chemotherapy followed by surgery.
Lavina Talukdar: Following surgery, the study will randomize approximately 680 patients who have not achieved a pathologic complete response into two arms, a combination of INT plus Keytruda or Keytruda plus placebo.
Lavina Talukdar: The primary endpoint for the study is disease-free survival, and the secondary endpoints include distant metastasis-free survival and overall survival.
Speaker Change: With that, I will now turn the call back over to Stphane.
Thank you, Stephen and Jamey.
During R&D day in September, we share the company priorities.
Speaker Change: Priority 1, to drive sales of approved products, SPICe VACs, and mRNAs via. Priority 2, focus on our next-stage pipeline, where we believe we can have up to 10 product approvals over the next 3 years, and we should be drivers of sales growth.
Speaker Change: Priority 3, to deliver cost efficiency across the business and slow the pace of R&D investments, reducing annual R&D expenses by $1.1 billion starting in 2027.
Speaker Change: Of course, priorities will rest with us back there in Ambrosia.
Lavina Talukdar: which we believe are the foundation of a respiratory vaccine bot for Europe.
Lavina Talukdar: We will continue to work with all market channels to maximize product availability.
We are focusing on marketing and medical education.
Lavina Talukdar: to try to drive the COVID vaccination rate closer to that of flu over time.
Lavina Talukdar: Internationally, we plan to bring manufacturing plants online in the UK, in Canada, and in Australia in 2025, and will start to fulfill multi-year contracts in those countries.
Lavina Talukdar: And with a full season of RSV contracting in the U.S. and the Lockdown 3D 2025, we expect to increase emigres here, sales and market share.
Lavina Talukdar: We are focused on delivering up to 10 products and products over the next three years, which we believe will drive sales growth and fund the next wave of R&D investments.
For iHealthyPrograms, we have ESM Microsoft.
Lavina Talukdar: For CMV, we expect to trigger the interim analysis for phase 3 vaccine efficacy study by the end of this year. We are looking forward to those results. For PNFMA, we plan to initiate pivotal studies.
All Novavax and flu pre-vaccine efficacy studies are now underway.
Lavina Talukdar: Finally, we intend to file three products in 2024 for the next-gen COVID vaccine, or IV vaccine for high-risk 18- to 19-year-olds, and our combination COVID-19 flu vaccine, which is subject to ongoing discussions with the U.S. Health Care.
Lavina Talukdar: We will continue to focus on improving efficiency by keeping our R&D and SDN expenses flat without in 2025.
Lavina Talukdar: And as demonstrated in the quarter, we're making progress on our cost-saving initiatives already.
Lavina Talukdar: By 2027, we expect to decrease annual RE expenditures by $1.1 billion. On the cost of sales, we will continue to grow efficiency, and we expect to achieve more proactive leverage that we were lacking in the framework we shared previously.
Lavina Talukdar: We have two products approved that help protect people every day. We have the largest next-stage pipeline of any amount in the company, and we will continue to focus on delivering the greatest possible impact to people for amount in medicine.
Lavina Talukdar: Well, there is work to be done to meet our execution target, and I'm confident our team will be able to achieve our goals.
Lavina Talukdar: I continue to be excited about the potential we have to deliver for patients.
Lavina Talukdar: The actions we are taking to help people is becoming a reality. With this, I will be happy to take questions.
Speaker Change: Our first question comes from Salveen Richter with Goldman Sachs. Your line is open.
Salveen Richter: Thank you. Good morning. Two questions for me. One is, can you speak to the source of the rest of world revenue generated in the third quarter?
Lavina Talukdar: and expected in fourth quarter with regard to which countries are contributing here and
Lavina Talukdar: and these contracts that, you know, should you expect them to recur in 2025?
And then separately on CMV, you talked about the DSMB
Lavina Talukdar: You'll share the results of the DSMB recommends on blinding. Can you speak more to that as to whether we will actually get interim data provided to us or we're going to have to wait for the full analysis here? Thank you.
Lavina Talukdar: Sure, thanks for the question Salveen. I'll take the first one in terms of rest of world revenue. So
Lavina Talukdar: Without getting into too much specifics I think you know we're establishing a presence in the United Kingdom, in Canada, in Australia, we announced an order in Brazil and so that's been the balance will be shipped either in the third quarter in the fourth quarter and when we look at the fourth quarter of the 600 million on the low end the large majority that is contracted with those countries and others but I just wanted to name a few.
Lavina Talukdar: As we look at 2025, I think we mentioned at R&D Day, that there will be a decline in some of those countries. And then it will then uptick, our anticipation is that it will uptick in 2026 based upon the contracts that we have in certain countries.
Lavina Talukdar: So that's a little bit on the rest of the world, but...
Lavina Talukdar: There is a chance that the DSMB will not recommend unblinding, which would mean perhaps that we did not make
Lavina Talukdar: statistical significance in that first year of analysis and be going then to the final analysis.
Lavina Talukdar: which could happen quite quickly and depending upon the conditions of that communication and the timing of that final analysis we may or may not be communicating right then about the fact that we're waiting for that final analysis but we would in any event if the DSM be recommended I'm blinding share those results
Thank you. Thank you. Thank you.
Thank you. Thank you.
Lavina Talukdar: Thank you. Our next question comes from Ellie Merle with UBS. Your line is open.
Ellie Merle: Thanks for taking the question. Just another one on how to think about the XCS COVID revenues. In the past, you've talked about some contracts with some countries for guaranteed purchases, like some even throughout the end of the decade. Maybe can you just, in broad strokes, characterize the size of some of these?
Ellie Merle: Contracts that you have outstanding XUS and I guess what's essentially guaranteed from a revenue perspective here in terms of some of these XUS contracts sort of if you have a sense of maybe like what the minimum sales XUS could be and certain years going forward based on that and then just a second follow-up on CMV I think you alluded to this in the last answer but maybe just in terms of the like rate of accruals I guess what's your latest expectation in terms of the time frame between when you will accrue the number of events to trigger the interim versus the number of events to trigger the final analysis just the the timing between those two things
Thank you. Thank you.
Good.
Speaker Change: Yeah, sure. So I'll take the first part, Ellie. So in terms of the contract that we have with some of these countries, we're not going to disclose the specifics. But what I will say is that as we add products over time, you can imagine that the amount of the minimum purchase commitment will grow over time. So that's why, as I just mentioned in my prior response, that it will drop in 2025 and then start to grow in 2026.
Ellie Merle: But I don't think we're going to disclose anything more than that.
Ellie Merle: on the question on CMV and the timing of case accrual it is it is coming quite steadily right now and in fact
Ellie Merle: We do have a bit of a backlog of case confirmation that we are working through. There's multiple steps that have to go and multiple testing to validate a case.
Ellie Merle: And so we actually, obviously we don't control the rate of case accrual, but we do expect that if we are going to that final analysis, that it won't be a very long period of time between, and it actually could happen quite quickly.
Great, thanks.
Ellie Merle: Our next question comes from Gena Wang with Barclays, your line is open.
Gena Wang: Thank you. I have two questions. One is regarding the commercial questions. If we calculate 1.2 billion U.S. revenue and accumulate 19 million U.S. doses, is the calculation like $63 per dose as a net price is the right way to think about it? And then regarding the reserve return, could you provide a final reserve return from last season? And what is your reserve return so far for this winter season? And quickly regarding the flu combo, a flu COVID combo, not using priority voucher, maybe give us a little bit more rationale for this. And then all three that you submit this year, how many
Any of these will make it for 2025 winter season.
Speaker Change: Yeah, Gena, maybe I'll take the first question. So on the U.S. pricing.
Gena Wang: The $19 million, I think, is the total market you might be referring to for COVID vaccinations, not specific to Moderna. That said, the pricing that you're talking about, we won't specifically disclose, but it's not that far off.
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Gena Wang: On the pipeline questions, thank you for both. So first on the priority review voucher for the flu-COVID combo, given where we are in terms of timing of this year and relative timing of the contracting season for flu vaccines,
Gena Wang: We no longer think it makes sense to use a priority review voucher to try and accelerate that process because ultimately we believe we would miss the contracting season. For that reason we'll hold back that PRV and use it for a different product in the future.
Gena Wang: It is possible and can happen prior to the season, however, we do not include any revenue from either the 18-59 RSV, SBLA, or 1283 in our 2025 guidance or expectations.
Gena Wang: and so if we were able to deliver those with those priority view jobs and approvals we still wouldn't include any revenue that would be an upside.
Reserve Retains.
Speaker Change: Sorry, could you repeat the question, Gena? I missed the sales return part.
Gena Wang: Yeah, sure. Reserve return is, you know, could you provide a final reserve return from last winter season? Because I know you initially booked over $500 million, and they need to adjust it to see the final numbers. So if you could provide the final numbers, and what is your reserve return assumption so far for this winter season?
Speaker Change: Yeah, so as I mentioned in my prepared remarks, that we released in the quarter about $140 million, primarily driven from returns reserved being lower than our prior estimate. So that $500 plus went down to, let's say, $400 million for the prior season.
Gena Wang: So we learned from that and continue to forecast what an anticipated products returns reserve is for this season and we will continue to monitor it as we look at vaccination rates throughout the entire quarter and what we project into the first quarter of next year.
Thank you.
Speaker Change: Our next question comes from Michael Yee with Jeffries. Your line is open.
Michael Yee: Thank you. Two questions, not ten, but on the combo, I know that you say you're in discussions with the FDA. Can you just clarify
Michael Yee: What are the different factors that are contributing to why you have maybe lack of confidence on filing or I guess not certainty on filing?
Speaker Change: The combo, for example, would there be an infection study that has to be run? I think it's a little unclear to us on the combo.
and then on RSV.
Speaker Change: I think the market anticipated this was going to be a big market, however obviously there is a lot of dynamics going on there. Can you maybe comment on whether you think there will be a change to this market and what would give you confidence that you're going to actually be a player here?
Speaker Change: Given you've already given your current position now and where your guidance is for 2025. Thank you.
Thank you for both questions.
Speaker Change: So first on the, I'll take the combo, and I think Stphane will take the question on RC. Um, I, uh, so first, we, we are in discussions with the FDA, the data for 1083, as you'll remember, came sort of middle of this year, and so we've
Speaker Change: The BLA for accelerated approval of Kennedy 3 based on immunogenicity results.
I would not comment on those discussions back and forth.
Speaker Change: We continue to work closely with the agency to understand what they would like to see in that.
Speaker Change: We continue to believe, as we said today, that we will be submitting for approval this year.
Speaker Change: Although those conversations are ongoing and we'll update as they proceed forward.
Speaker Change: The decision not to use the Priority Review Voucher became one about the timing of that approval and ultimately our view that...
Speaker Change: We would miss the contracting season for Influenza, and therefore it didn't make sense to do that. But by withdrawing the priority review voucher, we also allow for a more fulsome time for review, which is also obviously the benefit of ourselves and the agency.
Speaker Change: And on the RSV, Mike, I think there's a few things, as you know, the market has been much slower than last year, and much slower than people anticipated.
Speaker Change: Obviously, the new CDC guidelines that came out in the June time frame impacted that. The other piece we're hearing from customers is that they're really focused on making sure people get COVID-19 through a vaccination right now.
Thank you very much.
Speaker Change: And there is a lot of inventory in the customers' hands, both wholesalers and retail pharmacies. As you can imagine, it's taking quite some time to go through that inventory.
Speaker Change: And so we think that there's an interesting question about the market dynamics in terms of timing.
Speaker Change: Again, we won't be more important than timing for how it will be moving forward.
Speaker Change: It's a question to be seen. Of course, we expect that as more data accumulates, CDC will continue to review and look at what is the right guideline. So that's for the public health leaders to decide. And being able to totally contract
Speaker Change: COVID and RISD at the same time for a full season, we believe it's going to have an impact in the U.S. And the other piece I mentioned also in my remarks is outside the U.S.
Speaker Change: which is, as you know, we have no sales outside the U.S. We are getting approvals and they're going to continue to happen in the months to come. So we believe 25 and beyond should also help outside the U.S.
Thank you.
Thank you. Bye.
Lavina Talukdar: Our next question comes from Tyler Van Buren with TD Cowen. Your line is open.
Speaker Change: Hey guys, good morning. Thanks very much for taking the question.
Speaker Change: I wanted to ask about U.S. COVID vaccine sales. So they were roughly flat quarter over quarter between Q3 and Q4 last year.
Speaker Change: But the vaccine sales guidance for Q4 this year assumes a decline as much as 60-80% quarter over quarter.
Speaker Change: RSV sales remain low and my math is correct. So is there a significant shift occurring this year due to the vaccines being available earlier and patients getting vaccinated earlier that you expect to be the dynamic moving forward or could this guidance be conservative? I just ask because it's a pretty dramatic change in the cadence of U.S. sales, so any additional color would be appreciated.
Speaker Change: Thank you. So it was the U.S. market. I think what is important first is to look at the different shadows because they are very different.
Speaker Change: As we share the data that we have is the accurate data for retail and long-term care facilities.
Speaker Change: As you see, earlier start, Season 2 date a little bit ahead, but if you look at the weekly scripts, they are coming down the peak. We hear from retailers that they are working really hard in terms of...
Vaccination campaign.
Speaker Change: Aaron Wright, Okayka White Space Networks, Moritz Zewitt, Jonathan Bezow, Peter Perez, Edwin Mierckx, Tyler bass.
Speaker Change: As I said in my remarks, we have been working with idea networks
Speaker Change: to increase the COVID-19 flu vaccination rates just last year. We don't have a lot of visibility because those campaigns started later, most of them early October. We assess the retailers starting in August.
Speaker Change: with some of them starting pretty strong in August and early September. And then the global mass data for which we have no visibility, we only get orders when there are orders coming. So it's still early in the season.
The shape is clearly different from last year in retail.
Speaker Change: We are hoping that we will work with retailers and our work.
Speaker Change: You know, he might tell off with different shape than last year. And then at the end, so we have to see, and we're going to continue to learn about this market, but we believe it still remains sizable and terribly durable. We see that, you know, many millions of people who want the COVID vaccination.
Speaker Change: Yeah, maybe I would just add that, remember, when we sell product, that is not tied to vaccinations. So when you look at the decline from the third quarter to the fourth quarter...
Speaker Change: We had an early approval to Stphane's point, and we were better ready to ship more within the third quarter, so that's what I think you see on a year-over-year basis what's happening here.
Thank you. Thank you.
Thank you.
Speaker Change: Our next question comes from Terence Flynn with Borgersdale. Your line is open.
Terence Flynn: Hi, thanks for taking the question. I was just wondering on the INT program, obviously you're continuing to accelerate the clinical program here with the new phase 3 and lung, but can you just give us an update on the manufacturing facility in Massachusetts, and if that's still on track for completion by year-end, and then if there's going to be any bridging work required by the FDA for approval or validation. Thank you.
Speaker Change: Good morning, Terence. Yes, so the team continues to do a great job in the plant.
Speaker Change: With all the progress totally on schedule, and so given what we shall allow any day in terms of timing with FDA, the plan will no longer be critical path to approval, but we're keeping the team working really hard and they're making great progress. We're very pleased with that.
Terence Flynn: And on the question of bridging, once the plant is operational, we'll transition our clinical work to that plant as well, and so effectively all the programs will include, or many of the programs may include, I should say, that data, so the bridging will be done in-stream.
Speaker Change: Thank you. Our next question comes from Evan Wang with Guggenheim Securities. Your line is open.
Hey guys, thanks. Two from me. First, on, you know...
Speaker Change: The election results, just wondering, given the pending change in administration, what barriers are in place from a policy or legislative standpoint that would meaningfully limit threats to current use of vaccines in the U.S.? What steps are you doing to reassure confidence there and protect against, you know, potential increase in legal liabilities?
Speaker Change: and one on RTV. Some competitors are describing how data are now sufficient for expansion and international revenues. Do you agree there? And what gives you confidence in competitiveness at XUS specifically? Thanks.
Speaker Change: Good morning. Thank you for the questions. So, on your first question, as you know, our mission at the company is to bring innovative medicine to help people, help prevent disease.
Speaker Change: of TweetVisit. Since the company founding, we've always worked very closely with government leaders and public health leaders around the world, including, of course, the U.S.
Speaker Change: And as you know, we work very collaboratively with President Trump during his first term.
Speaker Change: And so we're going to continue to do that. Our mission is to really ensure we help people and we increase people's health.
which in some markets happen at different times.
Speaker Change: Sometimes you might miss the whole season because of the timing of those different elements.
Speaker Change: As you know, in the U.S. there is no pricing negotiation where you can lose some time months or quarters. So I think the thorough ramp outside the U.S. is reflecting both the recommendations that sometimes tend to be for older population, like 70 and above, or in some countries, 75 and above.
Speaker Change: And just the timing of all the mechanics to come together, and then you could miss a season by a few weeks, and you just miss a season. So those are the dynamics happening outside the U.S. We continue to believe.
Speaker Change: that R.I.V. causes hospitalization and hurts people and R.I.V. vaccines are going to be important.
Speaker Change: to prevent people getting hospitalized, especially if you think in terms of a tailwind, we have an aging population in Europe, we have an aging population in Asia, and so I continue to believe that over time, the U.S. market outside the U.S. would be an important market. There's also a lot of educations to do.
Speaker Change: Both of the consumers, a lot of consumers didn't even know what ARSI was.
Speaker Change: Until recently, some don't know as of today, same with some doctors, so it's just a lot of work to do, but the virus is hurting people, so there is a need there, and we, collectively, need to work with public health leaders
Speaker Change: to prevent hospitalization. Everybody knows, especially in governments that are single payers, that vaccines are most probably the best power that you get in terms of healthcare go out and the best way to not have hospitals with too many people is to get prevention.
Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from Edward Tenthoff with Piper Sandler. Your line is open.
Edward Tenthoff: Great, thank you very much. I appreciate all the time and all the detail. Just looking at the orphan disease pipeline with respect to kind of
Pivotal Proud Starts
Speaker Change: for MMA in the first half and I think also maybe generating some registrational data this year. What do you see as sort of the path forward here in terms of
Speaker Change: You know, trial design, patient numbers, follow-up, when do you think we could actually see these two data that could lead to the filing here? Thank you.
Richter, Hammond
Speaker Change: So, you know, in both cases, we'll be moving forward, as we said, either presently or very quickly in 2025 in the case of MMA into this pivotal study design. The answer is a little bit different for both. In the case of MMA, as we've discussed previously, we do believe there is a biomarker that can serve as the basis for approval. That's the subject of our discussions with the FDA.
Speaker Change: And that biomarker result, as you can imagine, can be achieved somewhat more quickly than in the case of PA where we'd be looking, because there's not as clear a biomarker, we'll be looking at event rates, which can take some more time.
Speaker Change: And in any event, it will depend upon the rate of enrollment in those studies and then how quickly we can get to the, you know, ultimately we hope is a significant benefit either with the biomarker or with the event rates for PA.
Speaker Change: As we previously described at R&D Day, we do expect that can happen within the next couple of years. And our goal is to be launching that product in that sort of third window, 2026 plus.
Edward Tenthoff: But both of those products, I should say, in a three to six plus time horizon. If we approve patients more quickly into those studies, it could be sooner, if it takes longer, it could be a little bit longer. We'll obviously update as we go forward in how we're doing in enrollment in those studies.
Thank you.
Speaker Change: Our next question comes from Luca Issi with RBC Capital. Your line is open.
Oh great, thanks so much for taking my question.
Speaker Change: Maybe on RSD, you know, obviously this year has been a little challenging given the late approval versus the timing of its contracting season, but how should we think about next year? Do you think it is fair for us to assume that you can get a third of the market share given peripheral syringes and, you know, obviously no GBS, or do you think that that would be optimistic?
Speaker Change: And then maybe second on COVID in the U.S., how should we think about, again, about market share here? It looks to me the last year you were gaining some shares versus Pfizer.
Edward Tenthoff: versus this year looks like you're maybe losing some shares versus them. So wondering if you can offer any additional color on that. Thanks so much.
Sure. So, on RSV, I mean,
Speaker Change: Across products, we don't guide our own share, so we're not going to start guiding our own share, as I said.
Edward Tenthoff: We believe very much that being able to contract in full season
It will be quite different from last year.
So we'll play this out in the 2025 season.
Edward Tenthoff: You are correct in terms of the retail market. We have lost some market shares, as we indicated earlier in the year. This has been quite an intense competitive environment in the U.S.
Edward Tenthoff: What we don't know yet is the share in IDN and Goldman. So we'll get a good sense about the share holistically at the end of the season. So that's a bit where we are at this stage.
Thank you. Thank you.
Thank you. Thanks so much.
Speaker Change: Our next question comes from Courtney Breen with Bernstein. Your line is open.
Courtney Breen: Fantastic. Thanks so much for the time today. I appreciate getting a question in.
Courtney Breen: The first one that I wanted to ask was just around the INC.
Courtney Breen: Obviously, you have just initiated this new 009 trial in multiple cell lung cancer.
that has the chemo combo.
preceding.
Courtney Breen: There's a few different reasons as to why you might be doing it, running the trial that way. It could be that you're seeing kind of...
Edward Tenthoff: The current paradigm is falling in the direction of chemocombination. There's a scientific belief that INT works well in the post-chemo space, or kind of just about practical timing for INT preparation.
Speaker Change: Can you give some context to that particular trial design, and then as we think about expansion of this program more broadly to other tumor areas, kind of what's primarily gating that? Is that the scientific signals, or is that manufacturing capacity for the Phase III Development Plan?
Speaker Change: All right, thank you for both questions. So first, in the non-small cell lung cancer context, there has been a move. It's really.
Speaker Change: standard of care. So there obviously has been a move from
just adjuvant
Speaker Change: Towards neoadjuvant use of checkpoints and Keytruda specifically and there are a number of patients
Speaker Change: that have a pathologic complete response, a clearance of their tumor and evidence of that as a result of that neoadjuvant.
Speaker Change: , and Michael T. . . . . . . . . . . . . .
Speaker Change: Expecting a substantial benefit on those that have had a pathologically response because fortunately they do have very good clearance of their tumor.
Speaker Change: And so the structure of the study is to obviously enroll patients, allow them to get that treatment, and approximately half, you can see about 680, we would expect to not have had that pathologic complete response.
Speaker Change: And that's the group that we then randomize and go see whether INT can add.
Speaker Change: on top of adjuvant at that point, Keytruda, treatment with further Keytruda. And I really think the driver there is a view of where we see potential standard of care moving in the lung cancer space towards neoadjuvant use of Keytruda.
Speaker Change: There may be other applications, thinking more broadly, where neoadjuvant treatments start to emerge, and we choose to go study the benefit of INT in the neoadjuvant setting, not just in the adjuvant setting.
Speaker Change: As far as other indications, the short version is we continue with our partner Merck to systematically look at all the places that we think that IIT can offer a benefit. We aren't done yet. There are more studies coming. We are pacing ourselves as we stand up those investments.
Speaker Change: Our pacing ourselves as we stand up those investments, but manufacturing capacity.
Speaker Change: It's only one of the considerations, it's not the primary consideration to some extent. This is about also just pacing the start of these studies.
But manufacturing capacity...
Speaker Change: Yeah, it's only one of the considerations. It's not the primary consideration. To some extent, this is about also just pacing the start of these studies.
Speaker Change: As you can see we are starting to go quite a large phase II and phase III program and we just wanted to be disciplined about not having too many at the same time.
Speaker Change: As you can see, we're starting to build quite a large...
Edward Tenthoff: We will continue to discuss with our partner, Merck, additional Phase III programs. We will start new ones in the coming year that we haven't yet announced.
Edward Tenthoff: So.
Edward Tenthoff: We will continue we do continue to discuss with our partner Merck additional phase III programs, we will start new ones in the coming year that we haven't yet announced.
Edward Tenthoff: But but we will pace ourselves both for manufacturing and just simply the ability to execute and the overall scale of that of that program.
Edward Tenthoff: But we will pace ourselves both for manufacturing and just simply the ability to execute and the overall scale of that program.
Edward Tenthoff: Yeah.
Edward Tenthoff: Okay.
Speaker Change: Thank you our last question comes from Menno <unk> with Deutsche Bank. Your line is open.
Thank you for joining us. Thank you.
Speaker Change: Thank you. Our last question comes from Mandos Mastariuskas with Deutsche Bank. Your line is open.
Speaker Change: Thank you.
Edward Tenthoff: Question.
Speaker Change: Thank you. Good question. My name is Marcus from Birchbank on behalf of Emmanuel.
Speaker Change: From Deutsche Bank on behalf of the Montreal. So if approved how quickly do you expect.
Speaker Change: Market transition to combination.
Speaker Change: So, if approved, how quickly do you expect the flu market to transition to combination flu COVID, and would that be expected to happen in 2025 already, or more of a midterm?
Edward Tenthoff: Great.
Speaker Change: And would that be expected to happen in 2025 already or more of a niche.
Edward Tenthoff: Sure.
Edward Tenthoff: And secondly, what's the latest update in perspective, you have one.
Edward Tenthoff: and secondly what latest update and perspectives you have on the COVID litigation in particular GSK's recent lawsuit. Thank you.
Edward Tenthoff: The COVID-19 mitigation in particular.
Edward Tenthoff: Gsk's recent lawsuit thank you.
Edward Tenthoff: Yes.
Edward Tenthoff: I'll take the first question on timing.
Jessica Talukdar, Michael Elyl.
Thank you. Thank you.
Speaker Change: I'll take the first question on timing. So on flu COVID, you know, obviously it depends upon approval and it's also dependent upon public health, you know, sort of recommendation from a purely commercial, you know, launch timing perspective and contracting perspective.
Edward Tenthoff: Politico bid.
Edward Tenthoff: Obviously it depends upon approval and it is also dependent upon.
Edward Tenthoff: Look health sort of recommendation.
Edward Tenthoff: From a purely commercial launch timing perspective, and contracting perspective.
Edward Tenthoff: We do not believe that 2025.
Edward Tenthoff: We do not believe that 2025 is a time when that will happen. That's because in the United States, the majority of the food contracting is happening really early in the year, in the first quarter or the first half.
Edward Tenthoff: When that will happen thats because majority in the United States. The majority of the flu contracting is happening really early in the year in the first quarter or the first half.
Edward Tenthoff: And for that reason given the timing of our current submission.
Edward Tenthoff: And for that reason, given the timing of our current submission and approval, we wouldn't expect that to be a 2025 event. We would hope that it would happen in 2026, and ultimately we are working towards that because we see a huge potential public health benefit in terms of prevention of COVID-19.
Edward Tenthoff: of course, of hundreds of thousands of hospitalizations in the United States, if we can improve compliance with COVID vaccines, as well as deliver a highly effective flu vaccine.
Edward Tenthoff: But again, the timing of that will be contingent upon the regulatory review process and then ultimate recommendation processes in different markets. Over the long term.
We are believers that a combination flu COVID product...
Edward Tenthoff: It is the right way for us to be protecting those at high risk of respiratory viruses seasonally in all the markets in which we play, and so from a very long-term view, we are quite bullish on the opportunity of the combo process.