Moderna, Inc. Q3 FY2024 earnings call

• Reduced operating expenses by $500 million across cost of sales, R&D, and SG&A in Q3 2024 compared to Q3 2023, excluding a $1.4 billion charge in 2023. - COVID market: Earlier U.S. regulatory approval in 2024 helped push total market vaccine growth, with Moderna having 40% share of retail shots in arms season to date. - RSV: Q3 sales were $10 million, affected by late approval and inventory build-up by competitors; looking to 2025, expecting to participate from the start of contracting season and vying for broader label approval. - Pipeline: Next-gen COVID vaccine mRNA 1283, RSV vaccine mRNA 1345, and combination flu/COVID vaccine mRNA 1083 in various stages; Phase III studies for flu and norovirus vaccines underway. - Executive committee expansion: Stephen's role expanded, and new members added to the executive committee.

In the third quarter of 2024, Moderna delivered $1.9 billion of revenue. Net income was $13 million, and cash and investments ended the quarter at $9.2 billion. For commercial performance, net product sales in Q3 2024 were $1.8 billion, with year-to-date product sales at $2.2 billion. U.S. market contributed $1.2 billion in Q3 2024, with international sales at $0.6 billion. RSV vaccine sales in Q3 were $10 million. Revenue contribution: U.S. market was a significant portion of the product sales, with international sales in line with expectations but lower than the same period in 2023.

• Reaffirmed product sales estimate of $3 billion to $3.5 billion for 2024, with 4Q product sales range $0.8 billion to $1.3 billion. U.S. 4Q product sales expected between $200 million and $500 million, driven by factors like market share, vaccination rates, and RSV market performance. - Narrowed cost of sales guidance to 40% to 45% of product sales. - Lowered full-year R&D estimate to $4.6 billion to $4.7 billion from $4.8 billion. - Expected SG&A expenses for full year 2024 to be approximately $1.2 billion, down 20% from 2023. - Anticipated capital expenditures of approximately $1.2 billion, including purchasing the Norwood campus.

• Regulatory challenges: Delays or issues in vaccine approvals and label expansions. - Market dynamics: Slow market uptake for RSV due to late CDC guidelines, inventory in the channel, and slower-than-expected vaccination rates. - Litigation risks: Potential legal challenges related to COVID vaccines, as seen with GSK's recent lawsuit.

Q: Can you speak to the source of the rest of world revenue generated in the third quarter and expected in fourth quarter with regard to which countries are contributing here, and that these contracts, that should you expect them to recur in 2025?

A: Without getting into specifics, Moderna is establishing presence in UK, Canada, Australia, etc. Contracts will change with added products over time, with revenue expected to drop in 2025 and grow in 2026.

Q: On CMV, you talked about the DSMB--you’ll share the results if the DSMB recommends un-blinding. Can you speak more to that, as to whether we will actually get interim data provided to us, or we’re going to have to wait for the full analysis here?

A: If DSMB recommends un-blinding to sponsor at first interim analysis, results will be shared. If not, may go to final analysis, and results will be shared upon un-blinding.

Q: Just another one on how to think about the ex-U.S. COVID revenues. In the past, you’ve talked about some contracts with some countries for guaranteed purchases, like some even throughout the end of the decade. Maybe can you just in broad strokes characterize the size of some of these contracts that you have outstanding ex-U.S., and I guess, what’s essentially guaranteed from a revenue perspective here in terms of some of these ex-U.S. contracts, if you have a sense of maybe, like, what the minimum sales ex-U.S. could be in certain years going forward based on that.

A: Not going to disclose specifics, but minimum purchase commitment will grow with added products over time, dropping in 2025 and growing in 2026.

Q: On the combo, I know that you say you’re in discussions with the FDA. Can you just clarify what are the different factors that are contributing to why you have maybe lack of confidence on filing, or I guess not certainty on filing the combo, for example, would there be an infection state that has to be run?

A: In discussions with FDA, data for mRNA 1083 came mid-year, and ongoing discussions about BLA for accelerated approval based on immunogenicity results; timing of approval and contracting season impact decision not to use priority review voucher.

Q: On the election results, just wondering given the pending change in administration, what barriers are in place from a policy or legislative standpoint that would meaningfully limit threats to [indiscernible] vaccine in the U.S.? What steps are you doing to reassure confidence there and protect against potential increase in legal liabilities?

A: Work closely with government leaders; mission is to bring innovative medicine to help people, and will continue to do so; will defend against legal claims as lawsuits are not uncommon in market formation.