Moderna Third Quarter 2026 Conference Call - MODERNA INC

Explicit Guidance:

• FY2026 Revenue: Full-year revenue growth increased to a range of 15%–25%, exceeding the prior guidance of up to 10%; geographic split expected to remain approximately 50/50 U.S./International.
• FY2026 Cost of Sales: Unchanged at $1.7 billion, inclusive of a $900 million non-cash litigation settlement charge.
• FY2026 R&D Expenses: Reduced by $200 million to $2.7 billion due to wind-down of infectious disease studies and efficiency gains.
• FY2026 SG&A Expenses: Expected to remain flat at approximately $1 billion year-over-year; anticipated to be higher in Q4 due to commercial activity.
• FY2026 Operating Expenses: Excluding the litigation charge, total operating expenses projected at $4.5 billion; cash operating expenses (excluding stock-based comp, D&A) reduced to $3.8 billion, representing a $200 million improvement vs. prior framework.
• FY2026 Capital Expenditures: Lowered to $200 million from a prior range of $200–300 million.
• FY2026 Cash Position: Ending cash and investments projected between $8.1 billion and $8.3 billion (excluding convertible note proceeds, base projection is $5.5–5.7 billion).
• FY2026 Tax Rate: Expected to be negligible.
• Dividends/Buybacks: No guidance or announcements regarding dividends or share buybacks.

Business-Segment Outlook:

• Infectious Disease (Respiratory):
  • mFluciva (Influenza): FDA approved for ages 50–64; accelerated approval for 65+; awaiting EU, Australia, and Taiwan reviews. Strong uptake in U.S. and Canada.
  • mNEX Spike (COVID-19): Approved for 2026–2027 season in U.S., Canada, Japan, and Taiwan; deliveries underway.
  • mResvia (RSV): Approved in 44 countries; positive Phase III data supports use in revaccination for adults 60+; U.S. and international expansion ongoing.
  • mCombriax (Flu/COVID Combo): Approved in Europe and Canada; under review in Japan, UK, Australia, and Switzerland; U.S. filing decision pending further FDA discussions.
• Oncology:
  • Intismoran (mRNA-4452): Positive Phase III data in adjuvant melanoma; BLA submission targeted for completion in 2026 with goal of approval in 2027 in collaboration with Merck.
  • Pipeline Milestones (2027+): Event-driven Phase II renal cell carcinoma (RCC) readout expected end of 2026/early 2027; Phase II bladder cancer data; mRNA-2808 (T-cell engager) data presentation at ASH (Dec 2026); Propionic acidemia registrational readout later this year.
• Rare Diseases:
  • Propionic Acidemia (PA): Registrational trial on track for data later this year.
  • Methylmalonic Acidemia (MMA): Pivotal trial initiation decision deferred until after PA readout.
• Pipeline Cuts: mRNA-1403 (Norovirus): No additional cohort enrollment planned for upcoming winter season; engaging with health authorities to determine next steps after failing to meet early success statistical criteria.

Market and Competitive Outlook:

• Demand Trends: U.S. respiratory demand remains strong; flu vaccinations trending slightly ahead of prior year, COVID-19 slightly behind, but momentum suggests flat year-over-year channel sales.
• Pricing: Pricing for Intismoran is considered premature; strategy is to price to reflect healthcare system value in close collaboration with Merck.
• Competitive Positioning: Intismoran represents the first positive Phase III trial for an individualized cancer vaccine and the first to demonstrate benefit over anti-PD-1 monotherapy in adjuvant melanoma; claims a "protective moat" through proprietary algorithm and extensive real-world neoantigen data generated from >100 participants.
• Share/Adoption: Strategic partnerships in UK, Canada, and Australia performing well; U.S. mNEX Spike adoption increasing; international markets (Latin America, Europe) targeted for share growth in 2027.

Macro / Industry Outlook:

• Supply Chain: Secured a 5-year supply agreement with a local manufacturer in Mexico to support global COVID-19 vaccine supply.
• Regulatory: Actively engaging with global health authorities (WHO, FDA, EMA) regarding mRNA-1403 (Norovirus) and mRNA-1469 (Ebola) next steps.
• Financial Structure: Successfully raised $3 billion via 0% convertible notes (approx. $2.6 billion net proceeds after fees/cap calls) to fund oncology growth; maintaining financial discipline with no drawdown on the $900 million undrawn credit facility anticipated.

Strategic Initiatives:

• M&A/Partnerships: Intensive collaboration with Merck for Intismoran BLA submission (2026) and commercialization; partnership with Ematics for mRNA-4203 (cell therapy enhancer) in Phase I.
• Manufacturing Expansion: Welcome of Juan Andres (returning executive) to lead global manufacturing network and scale individualized manufacturing for Intismoran.
• Product Launches: Accelerated U.S. launch of mFluciva; approvals for mFluciva and mCoflu in Canada.
• Investor Relations: Upcoming Analyst Day scheduled for November 12 at the Marlborough, MA manufacturing site.

Risks and Headwinds to Outlook:

• Pipeline Uncertainty: Norovirus program status is "premature to guide" pending regulatory discussions; Phase II renal cancer and bladder cancer readouts are event-driven and not guaranteed; pancreatic cancer data is early-stage (Phase I) requiring further analysis before next steps.
• Regulatory Risk: U.S. approval timeline for Intismoran depends on FDA review speed and pre-approval inspections; U.S. filing for Flu/COVID combo vaccine timing depends on future FDA expectations.
• Commercial Execution: Revenue growth depends on continued strong international execution and U.S. vaccination uptake; Q4 seasonal working capital impacts cash flow.
• Litigation: $900 million litigation charge included in cost of sales; settlement payments ($950 million total) impacted Q3 cash position.
• Dilution: Convertible notes and future equity-based compensation pose potential dilution risks, partially mitigated by the existing cap call transaction.

Management Tone on the Future:

• Confidence: High confidence in the 15–25% revenue growth trajectory due to broad-based U.S. and international performance and visibility into Q4.
• Strategic Shift: Describes 2026 as a "landmark year" for oncology with positive Phase III data; views the company as moving from a single-product dependency to a diversified portfolio (5 approved products).
• Discipline: Emphasizes strong financial discipline, citing 10% reduction in cash costs and a $200 million reduction in R&D targets without stalling pipeline progress.
• Hedges: Avoids specific pricing guidance for Intismoran; cautious on Norovirus next steps pending regulator input; does not commit to specific readout dates for event-driven trials (RCC, lung cancer) beyond "end of year/early next year."

Miscellaneous:

• Leadership: Juan Andres returned to the Executive Committee to oversee manufacturing scaling.
• Clinical Data Specifics: Intismoran demonstrated a 42% reduction in recurrence/death risk (ITT) and 49% reduction (MITT) in melanoma patients.
• Investment Day: Confirmed November 12 event in Marlborough, MA.