Good afternoon, everyone. Thank you so much for joining us. It's my pleasure to introduce Moderna, and with us we have Jamey Mock, CFO. Jamey, thanks for joining us.
Thanks for having me.
To start here, maybe frame for us how you see the company positioned today. There's been an evolution, I think, with regard to the growth outlook for the commercial business with COVID and combination flu plus COVID vaccines, where you've gone to the point, I think, here of kind of returning to this positive revenue growth cycle. You have an opportunity set with your late-stage pipeline. What are you most focused on when you look at this from a strategy and execution standpoint as we head into second half and beyond?
Yeah. Great. Well, again, thanks for having me. Good to see you, Salveen. Yeah, we're super excited. The last three years have been hard, but we've been hard at work really trying to build the next chapter of Moderna. That chapter, I think, is defined by growth, diversification, and really an improving financial profile as well. From the growth and diversity perspective, if you look at we're going to have market expansion across the globe with our commercial products, as you just mentioned. We will grow from a product diversity perspective, and I'll kind of walk through some of these. I think we're really set up, and we think we started that at the beginning of this year, and I'm sure we'll get into some of the financials and that kind of thing.
We laid out 10 growth drivers a handful of months ago, and over the course of 2026 through 2028, we think can be pretty substantial. In 2026, we think that's mNEXSPIKE, which has better relative vaccine efficacy versus SPIKEVAX. Had tremendous share last year for its first year, was approved in June, had 24% share in retail, so we were excited by that. We hope to grow on that. Our international partnerships in the U.K., Canada, Australia. In 2027, we can talk about it more, Europe opens up for us. We have a flu PDUFA date this year that we hope to sell in 2027. We've announced some other market expansion opportunities, particularly in Latin America, we're working across the globe as well.
In 2028, additional product expansion, hopefully with norovirus, which I'm sure we'll get into, as well as the combination vaccine in the U.S. That's just infectious disease. We have INT, which I'm sure we'll talk about, 4359, as well as rare disease. We're really set up for growth. I think underpinning that really, though, is disciplined execution, that's commercial, that's R&D, that's CMC. I think that's really starting to show up in the financial profile. I'll just mention a couple things. First, over the last two years, we took out nearly $5 billion in cost and investment. In 2023, we were at $8.9 billion. Last year, we were $4.3 billion, so over 50%. We've been trying to really make sure we navigate this so that we can grow in this next chapter, that we still are investing.
That's the tricky balance. Of course, you can find efficiencies, we also wanted to make sure we were making the right investments for this next chapter, which is here, which is what we're so excited about. We ended the year with $9 billion in cash and liquidity, which was ahead of our profile. I think the execution has been terrific. We've set up this next chapter. We're in the midst of it right now. I think big picture strategy, what we're trying to do is build an infectious disease business that is leading in its place with various vaccines that is a cash cow, generates a lot of cash and has a lot of growth over the next few years, then invest that into oncology.
We hope to diversify and have additional therapeutic areas in the next couple of years, and really a vastly improving financial profile. That is what we are focused on. That's what we've been focused on for the last three years, and we're in the midst of it.
Great. On the 1Q earnings report, you reiterated expectations for up to 10% year-over-year revenue growth with guidance accounting for potential decline in U.S. COVID vaccinations. Now that the winter respiratory virus season has ended, do you have any more granularity on expectations around next season, what are the puts and takes on the revenue guidance and where there could be upside?
Yeah. I think it's important to start with 2025. In 2025, we had $1.2 billion of revenue in the U.S. and $700 million of revenue OUS. We said we will grow up to 10%. We hope to beat that's what our guidance is. That's $2 billion-$2.1 billion. We said we are going to be 50/50 geographically split U.S. versus OUS, roughly a billion dollars each. I thinking in the U.S., what are we thinking outside the United States. In the United we're a billion dollars this year at some kind of midpoint here. That really takes into account a couple things. One is vaccination rate decline, you were just mentioning what happened in the winter season. If you look at fall last year, it was down 27%, fall was a wild time.
There was many different reasons, I'm sure we can get into them if we want to. If you look at the spring booster, it's actually improved quite a bit. It's encouraging, the trend, it's a small sample size. Nonetheless, we've provided for vaccination rate declines again in the fall of 2026 and winter of 2027. We've kind of sized that in to be prudent. What could offset that, though, is everything I talked about in terms of mNEXSPIKE. If we can grow share, particularly in retail, we were 24% share overall last year. If we can grow that's great, number one. Number two, it comes at a higher value. That's the U.S. dynamics. If it really comes down to the upside question, what happens to vaccination rates? We plan for a sizable decline, relatively speaking.
What happens to mNEXSPIKE share and how much penetration can we have? Outside the United States, we were $700 million last year, I talked about these international strategic partnerships, you saw that in the first half already this year. In the first quarter, we had $400 million in revenue. We said there was $200 million in the U.K. That's just for the spring booster. We're going to have another fall campaign as well that we'll supply for. That's substantial growth. Last year, we had next to no revenue in the U.K., now all of a sudden, we have $200 million in the first half alone. When you step back, I just want to really simplify the math for people. We guided to $450 million-$500 million in the first half.
Last year we did $250, that's up $200 million-$250 million. On $1.9 billion, that's 10%+ by itself if we're just flat in the second half. If you're just flat in the second half, and how do you get to flat? That's if the U.S. comes down $200 million and U.K. backfills. Really simplify it, that's why we're so confident in growth this year of up to 10%, and we hope to do better.
Great. You're also still guiding to cash flow breakeven in 2028. Can you walk through what's needed from an OpEx and revenue standpoint to achieve it, Moderna's ability to be flexible on the spend side, and your confidence in meeting this goal?
Yeah. I've always said that this is both a revenue increase story and a cost decline story. I'll start with revenue. I already kind of laid out all the variables, but just to maybe emphasize just how big these are, because I said substantial. I mean, there's 10 variables for several hundred million dollars each. If we have a 50% hit rate, that's $200 million each. That's a $3 billion+ business. That's kind of the revenue side. You have to assume, what do you think these 10 things are going to do? If you got a 50% hit rate, you can be at least a $3 billion business. If you hit on all of them, it could be much more than that, and that's kind of the revenue side. We've kind of obviously got to grow over the next two years.
On the cost side, we've already guided to 2027 because we have such clarity of what we want to do, and we guided to $3.5 billion-$3.9 billion of cash cost, that's down another $400 million-$800 million from last year ending point. We're trying to manage what is that growth line, what is that cost line? Let me say one more thing about 2027. We know what we're going to take out. There's efficiencies that we were going to go have. There's phase III trials that are going to run off, that's obvious to us. It comes down to this choice of, okay, how are we growing? How much are we going to invest? We're building the next chapter. How are the readouts happening? What investment level do you want to make? Of course, you can always drive efficiency to some degree.
That becomes more of a choice come 2028, that's why we haven't guided 2028, which is let's see where the revenue line is, let's do the things that we know will happen on the cost side, then let's make a choice based upon the data that we're seeing on readouts, the execution on commercial sales. That kind of paints the picture of what has to happen on both sides.
Perfect. Perhaps we can pivot over to your pipeline.
Yeah.
In intismeran data, you recently presented five-year follow-up data in adjuvant melanoma at ASCO. Just to level set, remind us the high-level takeaways here and the importance of the translational data that was presented.
Yeah, I'm glad. It's quite an exciting year for both Merck and Moderna this year. I think there's two punchlines, but the headline I would say is that intismeran continues to be a strong benefit, a meaningful benefit, a durable benefit. We now have five years data that we're seeing the same recurrence-free survival rate at 49% improvement. We saw it at three years, we saw it at five years. We're really encouraged by the consistency of that, point one. You mentioned translational data, point two. Now this is the first time we actually tried to show what is the underlying biology and how is it affecting the clinical outcome here that we're seeing.
What we saw is that tumor-targeted immune responses are better with intismeran versus KEYTRUDA alone, and that's largely due to T-cell clonal expansion, as well as the number of T-cell clonal types that you have. We saw like a 2X fold improvement on those patients that survived till 5 years or were recurrence free till survive year for five years versus just KEYTRUDA alone. That gives us a lot of confidence in the underlying mechanism of action behind this overall program, and that's why Merck and ourselves have invested so much behind this program in various indications, and we're pretty excited about it.
Great. What is your confidence level for success on the phase III interim study that's reading out in the second half? Maybe in the context of the phase II results translating to phase III, but being able to get it on an interim versus a final analysis.
Yeah. I won't assign a probability to it. I'll just say a few things. One is, obviously, we're super encouraged by the phase II results. We're super encouraged by seeing some amount of translational data that supports the program. I think this isn't a transient response now. This is now five years that we're seeing this kind of impact. That's a very long time. It's a phase II. It's 107 patients on INT versus just KEYTRUDA alone. That gives us a lot of confidence in what's going on, and again, we've continued to invest. Both Merck and ourselves have continued to invest. I want to assign a probability to it, but we are quite encouraged. On the interim point, I mean, we've set up the phase III to have numerous readouts, so I don't want to dwell on just the first interim analysis.
Of course, we are hopeful and optimistic that it'll be just as successful as what we've seen on the phase II. There will be other data points, and we will look at the totality of the data in terms of DMFS and RFS and how long from a durability standpoint. There's other things to look at, but hopefully, the first interim analysis will be strong as well.
If you had to speculate, what are the key risks here to the first interim, that phase III not working?
Oh, geez. I'm probably not the best person to speculate on the risks of why it wouldn't read out well. I mean, we always talk about it, that you never know in clinical development until you actually get the data. What we've seen is very strong, very durable, and very consistent, that gives us a lot of confidence, but you never know. Clinical development being one, and then it's the first interim, like I just said.
Yeah.
If I step back, this trial was enrolled in very quickly. I think that speaks to investigators and patients and just how encouraged they are and optimistic they are by this therapy. We'll see when it comes out.
Yeah. Can you frame for us the commercial opportunity here for this drug in adjuvant melanoma, also lung and RCC, Where we have the best sight, I guess, of line of sight to data.
Sure
so far?
Sure. All three of those are going to be multi-billion dollar opportunities. Merck and ourselves have not yet released what we think the addressable size will be, but they're quite sizable, and we're really excited. We think overall, if this works across a lot of indications, it can be a very large product and a platform that is very meaningful from a revenue standpoint, but we haven't given specific estimates yet.
How are you accounting for this asset with Merck? Will you recognize it as top-line revenue? How will commercialization expenses be split?
Yeah, that's a great question. First, yes, it will be top-line revenue for us. I'll come back to that because that's a little bit more complicated. Broadly, it is an overall we share the economics 50/50, split down the middle. At the end of the day, the cash is reconciled to make sure that both partners are in on it or benefiting from it from a 50/50 standpoint. The commercialization expenses are actually much easier. It'll be 50% on Merck's P&L, 50% on our P&L. The reason why revenue and gross profit is a little bit more complicated is because we're manufacturing the products, we are selling it to Merck because they are the market authorization holder, and they will sell it on to the end customer.
We'll recognize whatever our COGS are with revenue because Merck will pay us for the COGS, and then that gross profit split 50/50, will be added on top of our COGS and revenue for extra revenue. It won't be 100% of the revenue on behalf of Moderna. Merck will recognize 100% of the revenue. We will not recognize 100% of the revenue. We'll have something in between, and we will recognize the full COGS as well.
Is there any commercialization effort from your side, or is the sales force fully on the Merck side here?
There's an agreement to jointly commercialize in some areas to a small degree, but I would say the lion's share is certainly on Merck's side.
Got it. At your Analyst Day, you discussed a line-by-line expansion strategy for manufacturing. Can you touch on what this means and how it leads to efficiencies over time?
Yeah. We're super excited and the team did an amazing job. We have a facility just outside of Boston in Marlborough, Massachusetts, that is a standalone facility only for INT, and it was purchased and built in a matter of two years. It's just incredible. To your point, we said it's a line-by-line strategy. The facility has the ability to have seven lines. We've only built one of those lines, and that was very intentional for two reasons. The first reason is why invest if you don't have the demand for the second, third, fourth, fifth, sixth line? Don't spend the money yet. That makes sense. It just keeps our overall cost down and a better return. More importantly is the ability to drive additional productivity.
We are continuously We already have three phases of how we are going to manufacture this product, from inception that we've been doing for our clinical trials. We have a second phase that is already in Marlborough right now, we already have vision for a third phase. What do I mean by that? What I mean by that is think the footprint of the boxes to manufacture these are much more automated, therefore less labor, much smaller footprint. You can get a lot more throughput through the lines, therefore your cost comes down as well. As we have the demand, hopefully, for a second, third, fourth line, we'll be able to put in the latest technology, therefore the overall cost of goods sold will come down because it'll be the latest technology on the second line.
We have already started to envision a fourth line, frankly. That's the key to making this as efficient as possible, most importantly, to give it as much market access as possible across the globe to drive our COGS down.
Could you discuss the cost component here of manufacturing, noting it's a personalized product? How should we think about margins initially and longer term?
Yeah. We're very confident that the initial margins will be solid and the long-term margins we have, based upon what I just said, we have a lot of productivity roadway here, and I think that's natural in a product like this, and I've seen it in other industries as well, that you will continuously automate, take labor out, make it simpler, make it smaller, and therefore the cost of goods sold should go down. To step back and just think on behalf of Moderna, in terms of margins, they will start on from a rate perspective, smaller, but a revenue perspective, higher, because you're selling at a cost of goods sold that's higher. If you have to do that and then you split the gross profit on top of that, you actually have more revenue but less margins.
As costs come down, you don't sell as much from that initial transaction with Merck, you get a greater portion of the gross profit split, your margin rate goes up, but the revenue per patient comes down a little bit over time. That's the way to think about it. As the patient ramp goes up, that will more than offset the small decline on a revenue per patient basis, and the margins will improve over time.
What is the view from Moderna at this point on the read-through from INT and adjuvant melanoma to other distal tumors-
Yeah
like lung, among others, and the confidence that this is going to translate beyond that?
Yeah, we get that question a lot, rightfully so. INT wasn't really made just for melanoma. That's how we think about it, is it wasn't designed for melanoma, it was designed for cancer, and it was designed to target specific neoantigens on a tumor cell and train the immune system to attack it. We're hopefully seeing that already in our phase II with melanoma. Should that work, and if the biology's different to some degree, but the same premise should be there for other indications, albeit that biology can change and maybe you have different neoantigens and that kind of thing. We are optimistic that that mechanism of action and what we just showed in terms of translational data at ASCO can apply to numerous indications. Again, that's why I think we have 10 trials going on right now.
These and maybe five phase IIs and us are confident that this could work and starting to invest aggressively behind it.
Yeah. We're on track to see phase II data in renal cell carcinoma and non-muscle invasive bladder cancer this year, too?
I don't think we've given an exact date. There's a chance, if you look at events and that kind of thing, but we have not said that specifically, that we would have renal cell data in 2026.
Got it. Perfect. Norovirus here. Can you discuss the commercial opportunity for the phase III asset here and where you'll likely have data this year and your confidence here that this could be successful?
Yeah. This is a important product for us. As I said earlier in my initial remarks, we want to build a leading vaccine franchise in infectious disease, and we want to have various products to bring to patients and customers. Having two COVID products, one RSV, flu, hopefully later this year, our combination vaccine was approved in Europe, adding norovirus to it where there is no other vaccine is really a competitive advantage, and we're quite encouraged by that. Maybe to speak to the commercial opportunity, the burden is pretty severe with norovirus, and I think there's 20 million cases a year. There's nearly 1,000 deaths. There's maybe 100,000 hospitalizations, so it's severe, and anybody that's had it, I think, knows that. The burden's obviously substantial.
We think the patient population that we would target is a little over 150 million individuals in the U.S. Think older adults that get dehydrated, and it really impacts you even further. Older adults, think occupational therapy, healthcare workers, where it might spread. If we even got a fraction of that, a fraction of 150 million, from a vaccination perspective, that would be a very sizable opportunity to which there is no competition. I say it's an important product. I think it's very meaningful from a revenue perspective. That's that. The second part was on the trial and our confidence around it. We'll see this year. We believe it'll happen this year, that there will be enough events that it'll read out.
Oh, from a approval perspective, what we see is where there is no other standard of care, anything that has relative vaccine efficacy of 50% above versus placebo normally is encouraged and approved. That's kind of the limit that we're looking for is to be above that, and we hope to bring it to market in the not-too-distant future, and we've said hopefully by 2028.
Yeah. On the forward trajectory here for the COVID vaccine, given Pfizer's pandemic-era contract in the EU will expire this year, that geography could meaningfully contribute to your growth in 2027+, as you mentioned. Can you discuss the size of the market and your strategy here to gain greater share and what steps you can take now for success?
For sure. There is a lot of active work going on right there. To size the market, the flu market is about $1 billion. These are our estimates, in Europe in the year 2027. COVID market, again, in the year 2027, from an actual demand perspective, there might be greater sales going into it right now, but we think it's a $700 million market, and RSV's like a $100 million market. A $1.8 billion market, pretty substantial, to which we have less than $100 million is what we've said. Even 20%, 30% share across that would be pretty substantial for us. That's kind of the market size. In terms of where we are, number one, I mentioned earlier we got our flu plus COVID vaccine approved in Europe, we're excited to bring that to market next year.
We got mNEXSPIKE approved as well, we're kind of ready to go. What are the actions we're taking now? Europe is normally a single-payer system where you go tender by tender with countries that are the decision-makers. We are working with them right now to shape tenders. The second thing is you need to work with health authorities and NITAGs to make sure that you have the right recommendation as well as reimbursement, we're working with various countries across Europe to make sure that when the tenders come out at the beginning of 2027 or maybe even some of them come out late 2026, we have market access, and we have two products approved that we can go compete in. Yeah, 20%, $360 million versus less than $100, it's another couple $100 million growth-
Yeah
maybe $300 million growth driver for us.
Yeah.
That's why I keep going back to you have to believe that if we get 50% of these hits, we could be above $3 billion, and we've already motioned at where our cost could go, at least in 2027.
Your flu/COVID combo vaccine, mCOMBRIAX, was approved in April by the European Commission as the first COVID flu combination. While not included in revenue guidance for 2026, can you speak to the commercial launch preparation underway, the kind of education and patient access efforts needed, and your expectations for top-line contribution in 2027-plus and expectations on timing for approval in the U.S.?
I kind of sized the market in Europe already, flu being $1 billion, COVID being $700 million, call it a $1.7 billion. First you got to shape tenders to actually allow for a combination vaccine as opposed to discretely COVID or discretely flu. Whether that is large in the first year or takes time to develop and maybe have additional competitors also, we'll see. That's number one. Then it's the same things I just talked about in terms of reimbursement, and getting recommendations and that kind of thing. That's kind of the size and the tender process. I think what's unique though, and what we're trying to educate on, is it brings a lot of simplicity. It brings simplicity to the healthcare system because they don't have to run two campaigns. They don't have to run a flu and a COVID campaign.
You can run one campaign, that should simplify things and increase compliance, frankly, as well. It's better for patients as well, so that instead of going and having two vaccination appointments, you can have one vaccination. That's really what we're trying to educate every country and every health authority in Europe right now, and I think it's resonating well. We'll see how much it can grow over time, but it could be a very substantial opportunity over time.
Great. For flu itself, you have an August 5th PDUFA date for the seasonal flu monotherapy vaccine. Would you expect to start contributing to revenue in 2027? How big is the U.S. market for an mRNA flu vaccine? We know how big
Yeah
The flu market is, what is the willingness to take an mRNA version?
Well, that remains to be seen. Yeah. You know it's a sizable enhanced dose market. That's where we'll play. What we think we're bringing is a lot of innovation to this space, I think actually we got quite a bit of education on that over the recent history because of everything that transpired around this. Why do I say we're bringing innovation to the space? We're bringing innovation to the space because the current flu vaccines take a long time to produce, since they take a long time to produce, you have to pick the strain well in advance of the actual season.
Whereas with mRNA, the innovation is you can be ready in 60 days, you can pick a strain that is more likely to circulate during the actual season and perhaps have a better impact and a better clinical, meaningful impact to patients because it could be more effective. I don't know exactly the consumer angle on that. I think people recognize that a better strain-matched vaccine, if allowed, could be much more effective. The burden of flu is still in the tens of millions of people in the U.S. The hospitalizations are in the hundreds of thousands. The deaths are in the tens of thousands. It's very meaningful but we have to continue to educate on what that can mean, we're excited to bring the innovation to the flu market.
On the education front, in the context of just the use of mRNA during COVID and to the period now, how much education do you need to do on side effects and safety just to have people recalibrated to real world data as it exists today?
Yeah. We've done a lot of that. We publish everything. We're super transparent on our website to make sure every single, in our view, myth that is out there. I say, look, last year we had 40%-45% market share. That tells you 40%-45% of the people that are willing to get vaccinated are willing to get our vaccine. I get that our competitor's also mRNA. Maybe then the better metric is look at COVID to flu. There's still over 30 million people that are getting a COVID vaccine that is mRNA right now. Hard to say. We try to debunk it. What will come of that? It's a journey, I would say. We stand tall behind our science, and we put it out there transparently.
There's still at least 30 million individuals that are willing to get an mRNA vaccine at this point. Hopefully if the flu vaccine is better or a combination vaccine is more effective, then maybe that will grow over time, and maybe the sentiment will change over time in the country and the world.
Okay. Jamey, as the last question, anything we didn't touch on that you want to highlight?
I think we touched on all the really pertinent stuff for the next three years, which is our next chapter, and that is what I know is on investors' mind, and rightfully so, particularly since the journey we've been through. That said, there is a lot going on behind the scenes for the chapter after that, so to speak, which is why we are having a Science Day on June 25th. There's been conscious and disciplined investment around our science, around our platform, and around programs. We announced one this morning, or last night, I think. There's more to come beyond this chapter, but we got to get this chapter right for sure. That's what we're focused on. The only thing we didn't touch on is there still is a lot of great work going on for the next chapter as well.
Great. With that, thank you so much.
Thank you.
Really appreciate the time.
Yeah. Thank you for having me.