Good morning.
Moderna is repositioning itself in the biotechnology space by betting on new innovation based on its mRNA platform. Moderna CFO Jamey Mock will play a major role in mitigating risk in these big investments as demand for the company’s only marketable product at this time—the COVID-19 vaccine—lags.
Moderna’s total revenue for Q3 2023 was $1.8 billion, compared to $3.4 billion in the same period in 2022, the company reported on Thursday. This is mainly due to a decrease in sales of the COVID-19 vaccine. Net product sales for the third quarter of 2023 were $1.8 billion, a decrease of 44% compared to the same period in 2022.
The company's 2023 sales guidance has been revised to at least $6 billion overall (previously $6 to $8 billion), and at least $2 billion from the U.S. (previously $2 to $4 billion).
“After looking through the month of October, it appears as though vaccinations are really following a trend consistent with last year, which would be on the lower end,” Mock says.
The soft demand for COVID-related products also resulted in a drop in sales for the company's competitor, Pfizer.
Moderna has taken steps like reducing manufacturing capacity to make sure the COVID franchise is a continuous and increasing source of income and cash generation next year, Mock says.
But he’s seeing these headwinds as a breeding ground for innovation.
“There’s a true organic growth opportunity here,” Mock says. “We still believe that we will launch 15 products by 2028.” These will include respiratory, oncology, rare disease and latent disease products, he says.
Among those is the experimental vaccine against respiratory syncytial virus (RSV). Moderna filed with regulators in July for full approval of the one syringe shot for adults ages 60 and older.
Support for innovation
Moderna plans on investing approximately $25 billion in research and development (R&D) from 2024 through 2028. This is all geared toward long-term value creation for the company, Mock says.
To support innovation and growth, his number one priority is understanding how much the company can afford to spend, Mock says.
“Our view is that we're fortunate to have a fair amount of capital right now,” he explains. “At the end of the third quarter, we have $13 billion in cash. In 2024, our sales will go down to what we think is about $4 billion. So we will most likely make a loss in the year 2024 and deplete some of that capital. We actually think that's the right thing to do. Now, you can't do it forever.” But the company is committing to break even by the end of 2026, he says.
Another priority is assessing where to spend, he says. For example, Moderna has de-risked infectious disease vaccines due to prior success with COVID, and now with RSV, he says. “So it's easier to invest there from a probability of success perspective,” Mock says.
He continues, “We also look at the duration and time to revenue. The way we can innovate more is to actually get more sales to be able to afford more capital to reinvest back in the business.” And then there's diversification and risk management, he says. “We don't want to put all of our eggs into a respiratory vaccine basket, that's why you see us investing in oncology and latent disease and rare disease,” Mock says.
And his third priority is helping with execution, especially in regard to the remaining manufacturing facilities,” Mock says. “So that's investing in it, making sure that it has a lot of automation, making sure that it's super efficient. And when these products are ready to be sold, we have a reliable source of supply.”
He adds, “finance, communications, and HR also need to support our frontline and make sure that we can do that in the most efficient way.”
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
