Hey, everyone. Thank you. Good morning, and thank you for joining us on our next discussion here at the Jefferies Healthcare Conference. I have the pleasure of having the President of Moderna, Stephen Hoge, up here with us. Obviously, quite timely. A lot's going on in the world, both from a regulatory, administrative standpoint. We had Marty Makary here yesterday. Obviously, a lot going on with your commercial business, the pipeline, all of that. I look forward to getting into some of that. Maybe it would just be a great place for Stephen to start about the outlook for 2025. At the beginning of this year, there was some guidance. I think a lot of people are trying to think about the outlook for 2025 and thinking about the changes that are going on with the administration, how that's going to change.
Maybe just make some opening statements about how you feel about this year and the guidance, and obviously what's weighing on people's minds, which is what's going on with the administration and is that going to impact, you know, your business, starting with this year, like hitting numbers.
Yeah, for sure. So first, Mike, thanks for having us. It's always a pleasure and a privilege. Yeah, in terms of 2025, you know, it's pretty important to separate where we are from maybe how we got there. In some ways, I think where we are, you know, in our last quarterly call just a few weeks ago, we reaffirmed our revenue range and our cost range for this year, for what we're trying to achieve. We did indicate that there are, you know, we thought we were making progress with our next generation COVID vaccine approval, and we're on a 1283. We also.
You got it.
We got it. We also indicated that the FDA had let us know we would probably need to file efficacy on the flu for the flu-COVID combo. I think the discussion at the time would be whether we withdraw or try to do a major amendment to that file. I think that ended about where we expected, which is, as you know, we withdrew that BLA.
Actually pulled that BLA. Okay.
Waiting for the efficacy data now this summer, so very soon. We will resubmit hopefully later this year. In terms of overall sort of business and financial performance, you know, I think the thing that we went into the year with the most anxiety about, probably most investors, was just the uncertainty of what would the change in administration mean for, you know, our products, for getting them approved, recommendations around COVID vaccines. You know, I feel like in the last month, a lot of that uncertainty has clarified. Now we have a clear path forward for strain selection, clear indication of what populations are going to be recommended for COVID vaccines this year and hopefully going forward, and a clear set of expectations around what data we're expected to generate if we want to expand that population.
I know you mentioned Commissioner Makary was here in the New England Journal article that he authored with the head of Seabird, Vinay Prasad. You know, they indicated that there's 100-200 million Americans that should be getting a COVID booster in that New England Journal piece. And we only had 40 million last year. And we see this as an opportunity for us to do a better job making sure we communicate around the value of COVID vaccination because there's a large untapped market there. You put it all together, and, you know, I think what we feel like is a lot of the uncertainty that we had maybe in the first half of the year has started to crystallize and clarify. Honestly, from a company perspective, what we need is predictability.
What we need is that clarity because whatever is necessary, we'll go off and then do.
You'll be able to adjust and plan based on that. Just starting for this year, the latest development was that they approved the new COVID vaccine for a specific label. I mean, I can maybe get some of the exact thing, but 65 and over, and then people under 12 to 64, but with a comorbidity. Yeah. That's the label. We understand that without following every detail, the ACIP and the CDC, they had some recommendations, but you can still sort of get it if you talk to your doctor. Can you just try to triangulate what happened in the last couple of weeks, and does that impact the guidance and the utilization of COVID vaccines for 2025?
Yeah. So, you know, we did not update our guidance a couple of weeks ago. I will not do that here, except to say that the news of the last few weeks is broadly consistent with what we expected to have happen. And so, you know, what we see is a narrowing of the recommended population for COVID vaccines, whether that was done through the ACIP or through the FDA label, you know, again, was a bit of a dealer's choice, I guess, for the administration how they wanted to do that. But we did not.
Because like a label is a label. It's like cancer label, whatever. It's a label. Recommendation is a recommendation, and whether payers pay for it or whatnot, all of that is, you know, people are sophisticated enough. A label is a label, and then recommendation is a recommendation.
That's correct.
Most people who are getting the vaccine anyway, generally speaking, fit within the.
Are in the label. Yeah.
Fit within that.
If you look at the majority of doses given last year, even before any of this change, that was in the 65-plus population. That's clearly on label. If you look at the balance of what's left, the majority of that, overwhelming majority of the overall number of doses are to people 12-plus with some risk factor or 65. Bear in mind that the risk factors that were listed in that framework and that the ACIP has presented on cover 74% of Americans. That's why when you look at the total, you're talking about.
How 74% is what? 65 and up?
74% of the population under 65 has a risk factor for severe COVID-19 because everything from obesity to, you know, physical activity, blood pressure issues, a whole range of medications.
The definition of comorbidity is fairly broad.
Very broad. Very broad. If you actually look at the indicated population, I'll come back to it, the indicated population, even for our new product or the Novavax product or where these recommendations are headed, it is still four to five times larger than the number of doses that happened last year. We think this is an opportunity for us to focus on, you know, growing the market or at least stabilizing it through this cycle. What's great is a lot of the uncertainty that maybe existed before this news has now kind of fallen away.
They are making a clear statement about how they want to either through the label or their own commentary that they just don't want a super broad indication and tell everyone, you know, young kids, all this other stuff going on that they can.
You can still get it if you want if you talk to them.
For sure. If you look at the recent CDC publication on children, that said shared clinical decision making, which really means talk to your physician, talk to your healthcare provider.
How about going forward, two things have come up. One is in order to get COVID vaccines approved, you have to have placebo-controlled studies. How does that impact the COVID vaccine? And then other vaccines like the flu vaccine or other things, how did that commentary coming out, we got a lot of questions about that, how that's going to change the ability for Moderna to get either the COVID vaccine, new ones, or other non-COVID vaccines?
Yeah. I would start by saying our COVID vaccine, the 1283, now NextGen, was approved just a week ago. That is somewhat settled as a question. We did, as a part of that, agree to a post-marketing commitment to run a placebo-controlled study, not in the indicated population, but in a population that would expand the label to healthy people under the age of 64, 50 to 64. That is consistent with.
50 to 64.
Correct. That is consistent with, frankly, with a framework that was published by the Commissioner and with the Novavax label. We understand now to be the rules of the game. You know, from our perspective, we are not public health officials. We are a company. Our responsibility is to generate data to allow them to make the decisions they want. At the end of the day, if the FDA feels they need data to know whether they can expand our labels into healthy people, then it is our obligation to go get that. That is what we will do.
That's the COVID situation. Let's take some of the other upcoming COVID flu. COVID flu is one you said you think you can get approved because the flu infection data is coming later this summer. Help set our expectations about that should be positive, and then you're going to file that. Now, that would be a vaccine that's a combination, but you're kind of using flu data and COVID data. That vaccine study was not the two together. I mean, I could come up with a million scenarios. You know, what are the.
Combination products generally get approved through a different mechanism. You want to show that you can put the two products together and they do not interfere with each other. If they are separately licensed products, not just with, you know, vaccines, but with medicines, generally that path is a little bit different. We have an approved COVID component now because it is the same component in NextGen. The flu study that you just referenced, we have run a 40,000-person randomized controlled trial, phase 3 study. Generally, flu guidance has not changed to our knowledge. We will expect if that data is positive, that we will be able to get the flu product approved. Once you have the flu product and the COVID product approved and you have run a phase phase lll showing you combine them, I think we believe we have a pretty straightforward.
Flu, if it's positive, you want to file that one as a monotherapy or it is filed, or you want to get it approved, that one?
Correct. We would intend to do both.
Because you went through the combo. Yeah. Clarify that.
We would still think there's going to be a market for mono COVID. We still think there's going to be a market for mono flu. We think the bigger market's going to be for the combo. We will intend to register all three products. If the flu is positive, we've already got the COVID approved. If the flu is positive, we would then expect towards the end of this year or the second half of this year to file flu for approval and flu COVID combo for approval because we'd want both options available. There may be some people who still want to do them separately or they've never received.
What you would expect, that the labels and all these types of things are probably going to be something similar to the COVID label? That's a reasonable expectation.
Yeah. For the COVID component, I think the FDA has been very clear about that.
Yeah. The label, this combination is probably going to reflect the COVID label.
Yeah. Yeah. I think the FDA has been very clear on that.
Okay. What else? With this administration and, you know, more clarity over the last few months, how does that change the development plans? Is Moderna, yeah, we go forward. We got it. We got it. Norovirus, CMV, others. We just keep going because don't worry, nothing has changed. It's administration focused on it, but they're still going to be able to approve all these things. Don't worry.
Yeah. I think it's important to note that for all the rest of our products, including, by the way, our COVID product, we've run placebo-controlled efficacy studies, right? Norovirus right now is 25,000-30,000 people as a placebo-controlled efficacy study. There's over.
By the way, restarted, right? It's back up? It was a pause and then started.
Yes. FDA removed the clinical hold from a couple of months ago. That has been resolved. It is enrolling in the southern hemisphere, you know, Panama and Australia and a few other countries because, you know, like flu, it bounces northern, southern hemisphere different seasons. Norovirus, we, you know, we think we're riding the line with expectations in that regard. I would say CMV, same thing. It is a placebo-controlled 7,000-person, very large phase 3 study. Should answer all the questions both about safety and efficacy. Our follow-on vaccines after that, whether you want to talk about Epstein-Barr virus or Lyme or any of them, we would expect to be placebo-controlled. From that perspective, because there's not an approved therapy you'd compare it to, it doesn't feel like this framework change in COVID impacts our path in the other programs.
Because you're going to be running placebo-controlled studies.
Correct. We already are.
With CMV, can I just ask, you know, we care about things coming up and news flow and things that are going to say, hey, see, there's new products coming. We're going to get to P&L and revenue and cash flow. That's important. That for CMV, that it had hit at least one or two of the first interim analyses, and then now it's been many months. I can assure you, and you probably look at read investor reports, I don't know if you do, that Wall Street is like, well, where's the final analysis? People hang on every word because it was like it's coming, but then it's just this year. It doesn't make any sense to me because it's not really a seasonal infection. How could you have a bunch of interim analyses that didn't stop or didn't hit? You said that.
That's public. Yeah. Again, the final one, here we are in June.
Yeah. To be clear, one sort of point, we only have had one interim analysis.
One.
It was conducted at the very end of last year. The reason is you want to preserve as much alpha, as much statistical power for the final analysis. There was only ever one. At that point, we did not have all the number of cases. You're right, it's not seasonal, but it's event-driven. You accrue cases. At that point, we did not meet the threshold for declaring early success, early efficacy. The study was powered. Our label expectations really are based on that final analysis. At this point, I can tell you we are still blinded. We do not have, there have not been other data. We have not slow-walked anything. We are literally just waiting for cases to accrue, events to happen so that we can trigger the process of conducting that analysis.
You can see that, just to be clear, that a certain number of events happened. People have tracked that. That was by the end of 2024. Here we are into June. If you look at the accrual of the events, and you know, I remember it's like 58%, and then final analysis around 50 or so. That we've gone six months and we haven't gotten to those number of events.
Yeah. I mean, it was in the previous 18 months, we got there. No, I appreciate it. You know, in the preceding 18 months or two years, we'd accrued about two-thirds of it. And, you know, we expect it this year is all I can say at this point.
All right. We have working very well. No one's getting, no one's triggering the events.
That would be a possible.
The other thing I just to point to on that, Mike, which is fair, is that there are a lot of other endpoints in that final analysis. I do not want to lose this. The first interim analysis only looked at immunogenicity as a surrogate for infection. If you look to the final analysis, there are many things that matter in a latent virus vaccine. One of them, things like virologic shedding, the presence of in the urine or the blood of the virus, because that is ultimately what will lead to transmission, in this case, from a mother to a baby. A whole other host of things that we will want to look at and capture. The final analysis is not just an unblinding or a repeat of that same interim. It actually is this much more robust set of information about whether the vaccine was effective.
It's possible the vaccine didn't prevent, let's say, you from generating little antibodies, but it prevented you from becoming latently infected and shedding the virus. Those sorts of endpoints, we've got more data to collect, more data to pull together. Once you unblind in the final analysis, you unblind for all of them. You can imagine it's a much more labor-intensive and robust process to conduct that final analysis.
I mean, I'm good at interpreting words, but if you basically have an analysis which is just looking at seroconversion, that seems pretty straightforward. You're telling me in the final analysis, there's all sorts of other endpoints that would require more, I don't know, blood work or urine work. That's what you're saying. Those things, but you would say if the events have been hit, wouldn't you?
If events have been hit, I would explain, okay, it's been hit. We still have many months of work to go look at all the urine analysis and all these other things.
Generally, we will complete the work before we trigger the DSMB process. We have an obligation. It's not a, we have an update on our event count, but we want to make sure we deliver a robust final analysis, all of the endpoints, including the key other endpoints like shedding. As you just said, that's a lot more testing, a lot more work. You got to get it done right. We are completing that. We're going to get it in the hands of the DSMB. Once the DSMB has rendered their verdict, of course, we will share it.
One of the big things that continues to be a point for investors is that the company's revenues are guidance of $1.5. Give me the exact revenue.
$1.5- $2.5.
$1.5-$2.5. The OPEX guidance or formal guidance, but you have cash burn guidance for this year.
Correct.
Yes. Guidance year-end of $6 billion.
Year-end cash of about $6 billion.
Year-end cash of $6 billion.
We expect cash use this year, cash investment in the business, that's OPEX plus cost of goods. Our cash use of about $5.5 billion, that's the guidance. It's net use of about $3 billion.
Okay. And so it's basically nine at the end of 2024 going around six for 2025. Analysts have various estimates for 2027. And people basically believe that the revenues could grow, but you know, there's some guesses as to what that is. And then expenses are people can guess what that is. And when you do that math, that's still another negative X billions of dollars. So six is going down. The question is, Wall Street doesn't believe that the revenue streams are going to pick up significantly. And the cost basis is the cost basis, so the cash burn is going down. How do you respond to that math? And do you believe that Wall Street doesn't understand that it's going to be okay because it's, you know, the cash burn is going down and people see this as a problem?
Yeah. Look, I.
Respond to that.
Yeah. No, it's a fair question. It's a very fair question. Look, our goal should be, and I think our track record is that we want to make or beat our cost guidance. And then we hope over the course of this year to show where we've stabilized COVID as a business and we'll grow from there. But we want to make or beat our revenue guidance. If you look at the cost numbers, you know, we have decreased this year. We've got it to, you know, $5.5 billion. If you look at the first quarter, that is a year-over-year decrease, actual cost reductions of 20%. And that is the second or third year in a row that we've done that. So we've been eliminating 20% or 30% of costs per year.
In fact, if you look at where we were through the first quarter, we're actually ahead of what you'd predict for current year. You know, so we are trending favorable to our $5.5 billion cost guidance. We've indicated that the midpoint of our range is, you know, $4.7 billion for next year and $4.2 billion for the year after. That means we're settling into about a $4 billion cash cost base, inclusive of cost of goods in that. I hope what we've shown is our ability to regularly meet or exceed our cost targets, take that 20% cost out if necessary year over year is there. We have to pick a number to aim at in 2028, and we do think $4 billion is the right number. If the number has to be $3 billion, then it will be $3 billion.
How do you get there?
This is the same way.
Very helpful. Yeah, we agree. Four is where you're kind of aiming at. If the based on revenues minus expenses is cash burn, if you need to get to three because revenues are only one or whatever it's going to be, you think you can get there.
Again, we've reduced about $1 billion a year for the last couple of years. We're looking forward to reducing another $700-$800 million for next year. It is the same path, the same types of discipline that we've been executing. For the most part, what you see happening is, as you'll remember, a couple of years ago, we said, or about a year and a half ago, we said, we're not going to start any new phase threes. What you will see is a rundown of our R&D investment for these 10 products that we intend to launch and grow our revenue. If we don't start new phase threes, that R&D line is just going to every year come down by a sizable chunk. That's essentially what's been happening.
That is what's driving, you know, over the next 18 months, us going from whatever is $5.5 billion in 2025 to $4 billion-$4.2 billion in 2027. If we need to continue that trajectory, you know, just straight line it. We will keep.
The three that you could get to, that's COGS, SG&A, and R&D?
All cash costs.
You could get that.
All cash costs. So when we say, you know, $4 billion, $4.2 billion for 2027, that is all of it. That is all cash use in the business, inclusive of cost of goods. Sometimes people think it's OPEX. I actually think people get twisted on that one because actually the OPEX number, if you back into it, is probably more like $3 billion, $2.5 billion to $3 billion, because the rest is in the cost of sales. Sales, look, if sales is down, cost of sales comes down with it. We will continue to hold on starting any new phase III, which does not lead to any growth in R&D in 2027 and beyond. It actually leads to this decline. We will hold until we have confidence on that revenue trajectory that we're all.
Let's take it one step further. Let's say you could get down to three. Revenues have to be above three in order to be profitable. People are not seeing anywhere in the next couple of years that this is going to happen. Therefore, the cash is going from six. You can do your own math. How does that work?
Yeah. I think we would, I would disagree, I guess, that there's not opportunities to grow revenue. So midpoint of our range is $2 billion this year.
We have new vaccines coming.
Midpoint of our range is two this year. We have very little RSV in it. A lot of that is because it's still the first contract year. We're not into the second year of contracting in RSV. That starts in July of this year. We do think we will grow over time to a share of RSV. Our flu and flu COVID product launches are both, we hope to file them later this year. That would mean that there would be approvals and contributing by 2027 for sure, 2027, 2028. You have norovirus, which we spoke about, and CMV.
Pfizer is not anywhere in the COVID flu game. Are they still there? Because if that does happen, that's a material change that could.
What I'm aware.
People do believe that would be a value proposition to take to.
Yeah. You know, I think we believe strongly in flu COVID. It is clear from the FDA guidance that the market really is in that older adult and high-risk populations. I don't believe Pfizer's currently in a pivotal study in any of those areas. I think they focus more on younger and healthier populations, which obviously is not consistent with the FDA guidance now. I just listed RSV moving forward, but then flu and flu COVID, norovirus, and CMV. That's five products. We additionally expect to launch two rare diseases and have, we would hope, our first launch of our INT and Tismarin cancer program with Merck, which would be three more products.
If at the end of the day, if we're heading towards $2 billion this year, midpoint of the $1.5 billion-$2.5 billion, and we launch five to seven products, depending on your handicapping of that, by 2027, 2028, we would hope that that has grown to a number bigger than three. That four seems quite reasonable. That is where we're planning to. Again, we're going to match cost and revenue in the future. We have, I think, shown, I do think that we haven't gotten maybe all the credit about how we've been able to control consistently those costs and bring them down on a glide path.
You definitely have. I think we have to definitely congratulate and give credit to the fact that the company has been doing that. I think Wall Street is, you know, struggling with, can they do it fast enough, do it more. One thing is, where's the revenue growth? The other thing is managing expenses. Those things have to happen.
I think the reality is.
You know, we're trying to get that in place.
I think the reality of those seven products is seeing them through to their approvals is actually the biggest driver of that cost now.
Let's tie that together then because you mentioned INT, which is individualized neoantigen therapy, otherwise to some people known as cancer vaccine. First, is that a data readout that could happen next year? Talk about the probability of that happening because I feel like you're saying, I think that was my question last earnings call, about the timing of that. Secondly, one of the differences or one of the options between you and another peer, BioNTech, is that they have very much pivoted or spent a lot of time focusing on cancer programs, which seems to be hotter these days. There is a question as to whether Moderna, given the administration, given the environment we're in, would make more portfolio strategic decisions. Appreciate it. We also want to keep costs down, but more pivoting towards areas where they might not be so much about respiratory vaccines.
Yes. Great question. First of all.
Cancer vaccine.
On the cancer vaccine timing question.
Cancer overall.
We still expect that in our analysis, that readout on efficacy next year in 2026. It is an event-driven analysis. My ability to predict when people's cancers relapse is imperfect. Yet, we still feel like 2026 is the year we'll see.
You know the event track rate. I mean, we're in the middle of '25, so it's early.
We do.
You know, you're tracking along.
Again, we're standing behind. We think '26 is the year that that happens. If you look to the portfolio question, you know, I'll point to the fact that in the second quarter, we did update as a part of our annual portfolio review. We actually removed the 10th product on our 10 product launches was a younger adult combination flu COVID vaccine. We removed it and said, we're going to take that money and invest it in a new cancer therapeutic, something called 4359, that we're quite enthusiastic about the early clinical data we're seeing there.
What is 4359?
It is a combination. It used to be called Checkpoint as a therapy approach. We'll say more about it in the future, but it is a combination immunotherapy that expands T cell responses against your immunosuppressive tumor microenvironment. We've been testing it in a phase one study in multiple histologies. We've seen some early, we're quite encouraged. They're early. I don't want to overstate it.
Is it a novel target?
It is a novel approach to generating T-cell immunity against immunosuppressive signals.
Right. It's an mRNA that creates an antigen, creates antibodies against some target that you think is very important.
We're looking forward to sharing that data in an upcoming medical meeting. It was sufficient for us as a strategic decision to say, we're going to take one of these respiratory vaccines away, take that money, and allocate it to another cancer therapy. To your question, I think we've already started making those moves. In fact, at the end of these next couple of vaccines, respiratory vaccines, there are no more coming in our pipeline. We're completing the work. We do expect we'll have a really strong portfolio commercially at that point, but we don't expect to continue investing in respiratory beyond that.
We've got a lot of great FDA and regulatory clarity recently. You got the COVID vaccine approved a week or so ago. You can see that the agency is pushing forward and reasonably rational. You heard about that from Marty yesterday. The recommendations and things, these are not surprising. In fact, the stock went up anyways after that. You're working on the cost structure and you've got some more things coming. We continue to look forward to the progress this year. People are watching this and trying to obviously figure it out. We appreciate your time and giving us the outlook. Thank you very much, Steve.
Thank you, Mike.
Okay. Thank you.