Moderna shares plunge as sales view disappoints
Questions remain about whether Moderna has enough cash to fund its plans to break even without raising additional equity, Jefferies analyst Michael Yee said in a note.
Moderna said it aimed to reduce its research and development budget by about 20% over the next three years as it tries to find a path to profitability following disappointing vaccine sales.
The biotech is discontinuing five programmes in its pipeline and slowing some late-stage studies of treatments for latent and rare diseases to achieve the $1.1bn (€996m) cut from its annual research and development (R&D) budget by 2027, according to a statement.
The shares fell as much as 19% at the New York market opening. It had lost 20% this year through Wednesday’s close.
The company’s revenue projection for next year was below what analysts expected and it announced it was pushing back its target to break even from 2026 to 2028.
Questions remain about whether Moderna has enough cash to fund its plans to break even without raising additional equity, Jefferies analyst Michael Yee said in a note.
“We are still dealing with a market of uncertainty,” Moderna chief financial officer Jamey Mock said. “We hope that will settle out this year but we have to brace ourselves just in case vaccination rates continue to go down.”
Mr Mock said the R&D cuts were a sign the company “is exercising financial discipline”. Moderna needed to reduce its R&D budget in part because its clinical trials have succeeded and later-stage studies require more funding, he said.
Moderna expects 10 products to get approved over the next three years.
“We do recognize the need to pace ourselves because there is now this huge bolus of important medicines to get approved,” Moderna president Stephen Hoge said.
The company is known for spending heavily on R&D, often more than its peers as a percentage of sales.
The spending has been fuelled by the belief its mRNA technology could effectively treat and prevent a range of illnesses, from flu to cancer. But the sharp decline of its covid vaccine business is forcing the company to rein in some of its ambitions.
One of its biggest hopes is its cancer programme. Late last year, Moderna and its partner, Merck, said its melanoma vaccine helped prevent the recurrence of severe skin cancer for three years.
Moderna executives have hoped to file for faster approval based on data from that mid-stage study. Moderna said initial feedback from US regulators “has not been supportive” of that, and the company and Merck are focused on its late-stage trial.
The company said it planned to increase its research and development investments in oncology.
It is also no longer pursuing an accelerated approval for its standalone flu vaccine. Instead, it will focus on filing for approval this year for its vaccine that combines flu and covid protection.
“We just think that has the chance to be a bigger product and have a larger impact,” Mr Mock said.
Elsewhere, GSK experimental mRNA flu vaccine showed a positive immune response against two key types of flu viruses in a mid-stage trial, keeping the drugmaker in the race to bring the technology to seasonal influenza shots.
The vaccine shot being tested in older and younger people improved immune responses against both influenza A and B strains, the company said in a statement on Thursday.
They were “really good results,” said chief commercial officer Luke Miels in an interview. GSK had been developing mRNA flu and covid-19 shots with its partner CureVac, but earlier this year announced it had gained full control of those assets.
Shares of GSK rose as much as 0.8% in early London trading, bringing the gain this year to about 15%.
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