Dive Brief:
- Moderna will cut R&D spending by 20% and trim its pipeline as part of a strategic overhaul that will shift its research focus and put more resources into products that are either nearing approvals or already on the market, the company said Thursday.
- Ahead of a big presentation to investors, Moderna revealed plans to reduce yearly research and development expenses from an estimated $4.8 billion in 2024 to a range of $3.6 billion to $3.8 billion in 2027. It will also discontinue five clinical programs. Going forward, the biotechnology company intends to invest more heavily in oncology while “pacing” its spending in other vaccines and rare disease therapies.
- A company spokesperson confirmed in an email to BioPharma Dive that the restructuring is a "financial change" that won't involve layoffs. The company did again, however, lower its revenue outlook. It now projects $2.5 billion to $3.5 billion in sales in 2025 and to break even in 2028.
Dive Insight:
Before it rose to prominence developing one of the world’s first COVID-19 vaccines, Moderna was already known for its unusually large size.
As a privately held startup, Moderna raised billions of dollars in venture funding and partnership deals. It used that cash to amass a large pipeline of vaccines and drugs for rare diseases and other conditions, as well as build a large workforce and organizational footprint. By the time it went public in 2018 in one of the industry’s biggest-ever initial public offerings, Moderna had more than 20 programs in development, 10 of which were in clinical testing.
That bulk enabled Moderna to withstand early research setbacks and capitalize when the pandemic hit. It has since followed that success by winning approval of a vaccine for respiratory syncytial virus, and in the near future, could add a combination shot for flu and COVID infections.
A cancer vaccine it’s been working on with Merck & Co. has also shown promise in early testing and is currently in late-stage development, as is a potential shot for cytomegalovirus. An updated COVID vaccine is on the way, too, as is a flu-only vaccine project backed by Blackstone Life Sciences.
But dwindling revenue from its COVID shot and uncertain sales prospects for its RSV and flu programs have put Moderna under growing financial pressure. The company has revised revenue guidance several times in the past few years, and on Thursday, did so again. It also revealed the Food and Drug Administration doesn’t appear open to an accelerated approval of its Merck-partnered candidate, as some investors had hoped. Analysts have long wondered when the company might trim spending like its COVID vaccine rival Pfizer has.
In a statement, Moderna CEO Stephane Bancel said the size of the company’s late-stage pipeline, combined with the “challenge of launching products,” has led it to “slow down the pace of new R&D investment.” Moderna will focus more on products on the market or in advanced development, while taking a “more selective and paced approach” to drug research, according to the announcement.
The pipeline cuts include a shot for RSV in infants and two cancer vaccines in early development. The company estimates that axing those and other programs will reduce anticipated R&D spending by $4 billion between 2025 to 2028, from $20 billion down to $16 billion.
Moderna shares, which have been steadily losing value for months, fell roughly 18% in mid-morning trading on the news.
The moves “reflect a worsening financial position” for Moderna, and are “too far out chronologically to be credible from a management team that we think has proven serially unable to project the performance of their business,” wrote Leerink Partners analyst Mani Foroohar in a note to investors on Thursday.
