Moderna surged to prominence thanks to its rapid development of a competitive COVID-19 vaccine. Since the early days of the pandemic, however, the company has struggled to maintain its momentum. Year-to-date, its stock is down close to 40%, trading around $110 per share.
Adapting to COVID-19 variants
The company hopes that its development of vaccines for the XBB.1.5 COVID-19 variant will help bolster financial performance. “We are now awaiting approval to start for our updated COVID-19 vaccine applications to regulators globally,” Moderna CEO Stéphane Bancel said.
Developing a robust pipeline
Moderna CEO Stéphane Bancel has stressed in the past that Moderna is more than a COVID-19 company. “Our commercial team is also preparing for the 2024 launch of our next respiratory commercial product,” Bancel said. This product in question, a vaccine for respiratory syncytial virus (RSV) could potentially compete against products from GSK and Pfizer, among others.
In all, Moderna has 47 programs in its pipeline. This includes six programs in phase 3 and seven in phase 2. Outside of COVID-19 and RSV, the pipeline has candidates for flu, CMV, Zika and cancer.
Moderna places AI-driven strategy front and center
Another way Moderna aims to bolster its competitive edge is by integrating artificial intelligence (AI) across its operations. In 2021, it launched AI Academy, a mandatory corporate-level training initiative for its employees. “As of 2023, AI training is required for all Moderna team members, and we facilitate this training at the corporate level through our AI academy,” said Bancel in an earnings call.
“AI has been part of the foundation of Moderna’s research and development programs for several years,” Bancel said. “We have built our own AI models for protein and mRNA engineering, asset data analysis, regulatory interactions and many more use cases as we continue to be an AI leader in biopharma.”
The Boston Consulting Group honored Moderna as one of the world’s most innovative companies in part for its work in AI.
“I’m happy to share our AI implementation is accelerating for Moderna,” Bancel noted, adding that the use of the company’s large language model, mChat, has grown rapidly among employees since its introduction. “Around 50% of our employees use it already only 60 days after launch.”
The company is also working with IBM to explore drug discovery implications of quantum computing.
Acknowledging challenges
Despite its forward-looking strategies, Moderna has encountered some significant hurdles of late. The company incurred a $464 million write-off for expired vaccines and a $135 million charge from unused manufacturing capacity. This financial hit came about as a result of a significant shift to the company’s newly developed XBB.1.5 vaccine, which rendered its inventory of their previous bivalent omicron vaccine obsolete.
“In Q2, we reported revenues of approximately $300 million, reflecting the seasonal nature of endemic respiratory vaccines,” Bancel said. “This off-season quarter sales resulted in a GAAP net loss of $1.4 billion, GAAP diluted loss per share of $3.62.”
As the world gradually recovers from the pandemic, Moderna, and its contemporaries Pfizer and Novavax, is also seeing declining sales of COVID vaccines and therapeutics.
Moderna reported a net loss of $395 million and a 34% revenue decline to $5 billion in the fourth quarter, but raised its full-year 2023 outlook for its COVID-19 vaccine sales. The company now expects COVID-19 vaccine sales of $5 billion to $7 billion this year, down from $13.5 billion in 2022 but higher than previous estimates. This is driven by potential U.S. demand for 50-100 million doses in the fall. Moderna is banking on uptake of its updated Omicron-targeting bivalent booster shots to drive future COVID-19 vaccine sales and reverse the recent sales slump. Moderna, along with Pfizer and Novavax, have seen steep declines in COVID-19 vaccine sales as global demand weakens.
Strategic capital allocation and future plans
In the second quarter of 2023, Moderna repurchased 4.4 million shares for $600 million. Additionally, the company has invested in OriCiro (now Moderna Enzymatics), CytomX, Life Edit and Generation Bio in 2023, diversifying its investments and reinforcing its growth strategy.
Moderna’s global workforce of approximately 5,150 employees and its 17 commercial subsidiaries across North America, Europe and Asia Pacific are working to develop new revenue opportunities. The potential launch of an RSV product, among others, could position Moderna well for growth in 2024.
“Moderna has a promising commercial outlook,” Bancel noted.