It’s not often that a CEO outright dismisses M&A prospects, but Moderna CEO Stéphane Bancel says the mRNA biotech has enough programs on its hands.
Investors watching Moderna’s quarter-after-quarter losses and restructuring shouldn’t expect a major M&A deal anytime soon. Instead, CEO Stéphane Bancel said the famed mRNA biotech has more late-stage programs than it can handle and will instead be looking for partners to access new technologies.
Asked directly on a second-quarter earnings call Friday if Moderna is looking for deals in China or anywhere else, Bancel said no, instead extolling the value the company sees in partnering.
“We’ve always thought that partnering is a great way to access assets that are non-mRNA technology,” he added, pointing to the company’s work with Merck in oncology that pairs Moderna’s mRNA vaccines with immuno-oncology heavyweight Keytruda.
It’s rare for a CEO to dismiss M&A prospects so outright, but Bancel seemed confident in Moderna’s platform, which has been cranking out candidates. The company has had to sideline a number of assets that Bancel believes are promising, including its Epstein-Barr virus vaccine candidates that include a prophylactic and a therapeutic agent.
“We believe those programs have to move forward, which is why . . . we are actively talking to potential pharmaceutical partner[s] and potential product financing partners for several good assets that we cannot prosecute forward alone, because they are great assets, but we need to be financially disciplined at the same time,” Bancel told investors on the call.
For now, Moderna’s pipeline boasts dozens of candidates with a blank spot next to the hopeful “partner” label for most assets. Existing partners include, of course, Merck, along with Immatics and Vertex, and government agencies like the National Institutes of Health and Biomedical Advanced Research and Development Authority.
The Decline Continues
With the expected summer slump in COVID-19 vaccine sales in full swing, Moderna’s reported $800 million net loss for the second quarter was not a surprise. But the biotech needs to get its cash burn down to bring investors back on side, Jefferies analysts said Friday.
Moderna’s second-quarter results were slightly better than expected despite missing estimates, according to Jefferies. The company reported vaccine sales of $114 million for the period compared to analyst expectations of $188 million. Sales of the respiratory syncytial vaccine mRESVIA were “negligible,” Moderna reported. This, too, was expected, according to the analysts.
This has been the story for the past few quarters. Instead of focusing on sales and revenue, analysts and investors have been keenly watching Moderna’s aggressive efforts to slash spending in R&D to steady itself for a slew of launches. A day before the earnings release, Moderna announced the latest major step: a 10% headcount reduction to bring its workforce under 5,000 people.
Bancel provided a bit of clarification on where the cuts will hit—particularly in manufacturing and R&D—where Moderna has previously communicated plans to trim Phase III respiratory activities as those studies naturally wind down. But the CEO also noted that Moderna is hiring elsewhere, flagging 150 currently open roles that are geared toward new product launches.
CFO Jamey Mock said the company has already cut $4 billion in costs from the business and has an achievable plan to remove another $1 billion by the end of the year. That particularly hit Moderna’s R&D portfolio, as the discovery engine had been cranking out programs.
“We did have greater ambitions, but we will continue to adjust, and have adjusted, and I think that’s what we’re seeing,” Mock said.
Moderna ended the quarter with $7.5 billion in cash, down from $8.4 billion at the end of the first quarter. Jefferies predicts the company will end the year with $2 billion spent from that pile, for a total of $6 billion. Cash is expected to further dwindle to $4 billion in 2026.
Moderna’s approved products are extremely seasonal, meaning earnings will ebb and flow with the need for the vaccines. This is why revenue was expected to dip this quarter—and it did. Mock pointed to Moderna’s work in rare diseases, oncology and the cytomegalovirus (CMV) vaccine as diversification from this seasonality. While a virus, CMV does not exhibit seasonality like common respiratory diseases do.
Otherwise, analysts peppered executives with questions about clinical programs, particularly that CMV vaccine mRNA-1647, which has which has reached the pre-specified event threshold of 112 in a Phase III study, the company reported Friday. But Moderna remains blinded to the results and will analyze the data when it’s available. Still, President Stephen Hoge couldn’t shake the inquiries.
“We are completely blind, so the company does not know the results on the primary or any of the secondaries,” Hoge insisted. “We are just making sure to protect the integrity of the study, that we update the statistical analysis plan and receive approvals for it prior to initiating that analysis with an unblinded team.”
