Moderna Third Quarter 2026 Conference Call - MODERNA INC

Financial Performance:

• Third quarter 2026 revenue reached $1.3 billion, a 29% year-over-year increase, bringing year-to-date revenue to $1.8 billion.
• Net income for the quarter was $162 million, a significant improvement from a $51 million loss per share in the prior year period; diluted EPS was $0.38.
• Gross margin stood at 76% ($318 million cost of sales, 24% of revenue), with management projecting further margin expansion in 2026 excluding the $900 million litigation charge.
• Operating expenses were tightly managed: R&D decreased 27% to $583 million due to study wind-downs, while SG&A rose 5% to $282 million.
• Cash and investments increased to $8.0 billion, driven by $2.6 billion in net proceeds from a 0% convertible note issuance (offset by fees and $950 million litigation settlement).

Guidance and Future Outlook:

• Full-year 2026 revenue growth guidance raised to 15-25%, exceeding the previous forecast of up to 10%, driven by strong U.S. and international demand.
• 2026 R&D expense outlook lowered by $200 million to $2.7 billion due to operational efficiencies and portfolio wind-downs.
• Adjusted cash cost guidance improved by $200 million to $3.8 billion, excluding stock-based compensation and depreciation.
• Capital expenditures for 2026 reduced to $200 million from a previous range of $200-$300 million.
• Year-end 2026 cash and investment projection raised to $8.1-$8.3 billion (up from previous $7.6-$7.8 billion implied context), or $5.5-$5.7 billion excluding financing proceeds.

Business Segments and Product Lines:

• Infectious Disease: USFDA approved mFluciva (mRNA influenza vaccine) for adults 50+ and accelerated approval for 65+, marking the first mRNA flu vaccine on the market; Canada approved mFluciva and mCombrax. mNeXt Spike approved for 2026-2027 season in US, Canada, Japan, and Taiwan.
• Oncology: Presented positive Phase 3 intrapath-001 data for intismoran autogene (individualized melanoma vaccine) with Merck, showing a 42% reduction in risk of recurrence/death versus pembrolizumab alone; first positive Phase 3 for an individualized cancer vaccine and first showing benefit over anti-PD-1 in adjuvant setting.
• Rare Diseases: mRNA-1469 (Ebola) advanced to Phase II-III; PA registrational trial on track for late-year readout; MMA pivotal decision deferred pending PA results.
• Manufacturing: Juan Andres returned to the Executive Committee to lead global manufacturing scaling and individualized therapy operations.

Market and Competitive Landscape:

• US respiratory vaccination trends showed a 3% year-over-year increase in administered doses through late October, with flu vaccinations trending ahead and COVID-19 slightly behind but momentum improving.
• International strategy focuses on geographic expansion, with year-to-date international revenue of $900 million, $200 million ahead of the full year 2025 total.
• Strategic partnerships in the UK, Canada, and Australia continue to be primary growth drivers alongside US mNeXt Spike adoption.
• Norovirus program (mRNA-1403) paused further enrollment due to failure to meet statistical criteria for early success at interim analysis; engaging with regulators on next steps.

Risks and Challenges:

• Pending $900 million litigation settlement charge included in 2026 cost of sales forecast.
• Norovirus program faces regulatory uncertainty regarding future development path after interim failure.
• Potential competitive landscape in melanoma and RCC where competitors may attempt to replicate mRNA platform capabilities, though Moderna cites proprietary algorithm data as a moat.
• Dependency on regulatory approvals for combination vaccines (Flu/COVID) in the US remains a timeline variable.

Management Commentary and Tone:

• Tone was highly confident and celebratory, emphasizing "financial discipline" alongside "strong commercial execution."
• Leadership highlighted the "landmark year" status for oncology, citing the intismoran data as a proof-of-concept for the mRNA platform's versatility beyond respiratory vaccines.
• Management expressed optimism about the reproducibility of melanoma success in other tumor types (e.g., RCC, pancreatic) based on biological plausibility and early translational data.
• Strong emphasis on the "proprietary data goldmine" generated from 1,000+ patients in Phase 2/3 trials as a long-term competitive advantage against competitors.

Analyst Questions and Answers:

• Renal Cell Carcinoma (RCC) Outlook: Management expressed confidence in the Phase 2 RCC data being positive, citing RCC's sensitivity to T-cell reactivation and the consistency of the melanoma effect across TMB spectrums; readout expected late 2026 or early 2027.
• Pricing Strategy: No specific pricing guidance provided for intismoran, noting it is premature; pricing will reflect value creation and is being coordinated with Merck during the BLA preparation.
• LNP Immunogenicity: Rejected the hypothesis that LNP contributes significantly to the immunotherapy benefit, noting inconsistent data from major centers (MD Anderson vs. Memorial Sloan Kettering) and the magnitude of the observed hazard ratio being unlikely due to LNP alone.
• Algorithm Moat: Management emphasized that the neoantigen selection algorithm is part of the approved drug and software, citing proprietary real-world data from thousands of patients as a barrier to entry for competitors.
• Revenue Composition: Clarified that international growth is durable, driven by strategic partnerships and expanding market share, rather than purely timing shifts from 2027.

Other Key Points:

• BLA Submission: Targeting submission of the Biologics License Application for intismoran in melanoma by the end of 2026, with a goal of approval in 2027.
• T-Cell Engagers: mRNA-2808 (triple T-cell engager) data to be presented at ASH in December, demonstrating proof-of-concept for multiplexing.
• Analyst Day: Upcoming event scheduled for November 12 in Marlborough, MA, featuring a tour of the intismoran manufacturing site.
• Merck Partnership: Collaboration on intismoran is described as "intense," with both parties working around the clock on the BLA preparation and regulatory engagement.