With COVID vaccine sales in the doldrums and a respiratory syncytial virus (RSV) vaccine market in “contraction”, Moderna CEO Stéphane Bancel had the unenviable task of trying to put a positive spin on a sharp stock decline in his annual shareholder letter.
After an unexpectedly limited RSV vaccination recommendation from the CDC resulted in a “contraction” in the U.S. market, Moderna will adjust its financial reporting traditions to exclude products in their launch year, Bancel said Monday in his annual letter to shareholders.
The company was “too optimistic about our ability to break into the market given the headwinds from a midyear approval and launch,” the Moderna CEO wrote about the RSV launch. “We are taking those learnings to heart and going forward, we will not include revenue from products in their launch year in our financial framework,“ he added.
Approved by the FDA in May 2024, Moderna’s mRNA shot, mRESVIA, only generated $10 million in sales during the third quarter, its RSV season debut. Besides the impact of a narrowed CDC policy, RSV incumbents GSK and Pfizer apparently proved to be difficult to challenge, especially since mRESVIA is widely viewed as the weakest option among the offerings from an efficacy perspective.
The commercialization challenge also showed up for Moderna’s COVID business. In its second full year of commercialization in the private market, Moderna’s share of the COVID vaccine market declined while the entire market volume remained largely the same, Bancel acknowledged.
“Both were disappointing outcomes, and we are adapting our strategy for 2025,” Bancel said, without going into details.
During the third quarter, Moderna’s Spikevax sales reached $1.8 billion, outperforming consensus expectations of $1.15 billion. But analysts were reluctant to call the showing a beat because Moderna didn’t raise its full-year guidance. Sales appeared to have been pulled forward thanks to an earlier FDA approval of the updated strain for the ongoing COVID season, analysts at Leerink Partners and William Blair separately pointed out in November.
The COVID and RSV challenges “underscored the complexities of operating in a post-pandemic world and highlighted the need to remain agile within a rapidly evolving healthcare ecosystem,” Bancel said in his letter to shareholders.
What’s more, “the impending transition within the U.S. government has introduced uncertainty regarding policies and priorities shaping our industry,” he said.
President-elect Donald Trump’s selection of vaccine skeptic Robert F. Kennedy Jr. to be the next U.S. health secretary has weighed on all vaccines makers, including Moderna.
Moderna’s stock price has dropped about 60% in the past 12 months. Facing this set of challenges, Moderna in September laid out a plan to cut annual R&D spending by more than 20%, or $1.1 billion, by 2027 compared with 2024.
Through a “more selective and paced approach,” Moderna looks to potentially gain 10 product approvals over the next three years while shelving advancement of other programs “until we have shown we are better prepared to effectively launch these products into global markets either directly or through strategic partners,” Bancel noted in the letter.
One of the closest-to-market among the 10 is mRNA-1283, a next-generation COVID vaccine. In his Monday letter, Bancel said the FDA has accepted Moderna’s application for the shot. Assisted by a priority review voucher, a decision is expected by May 31, 2025.
The CEO didn’t offer an update on the company’s flu/COVID combination vaccine mRNA-1083, which the company had aimed to submit to the FDA by the end of 2024. Moderna disappointed investors in September when it said it didn’t plan to use a priority review voucher for the combo because it would still not be able to make the 2025 winter season.
Another asset that industry watchers have been paying close attention to is mRNA-4157, an individualized cancer vaccine under collaboration with Merck & Co. The partners have pushed the immunotherapy into multiple phase 3 trials in what some analysts view as a high-risk, high-reward strategy.
Overall, Bancel said Moderna's three priorities for 2025 are driving sales of Spikevax and mRESVIA, working toward those 10 new approvals and improving operational efficiency.