Analyst Conference Summary

biotechnology

conference date: August 3, 2022 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2022 (second quarter, Q@ 2022)

Forward-looking statements

Overview: Sequential revenue drop could show the bolus is past its height.

Basic data (GAAP):

Revenue was $4.75 billion, down 22% sequentially from $6.07 billion, and up 9% from $4.35 billion year-earlier.

Net income was $2.20 billion, down 40% sequentially from $3.66 billion, and down 21% from $2.78 billion year-earlier.

EPS (diluted) was $5.24, down 39% sequentially from $8.58, and down 19% from $6.46 year-earlier.

Guidance:

Sales are expected to be higher in Q4 than in Q2. Cost of sales full year 2022 in mid-20s range. R&D and SG&A expenses near $4 billion. Cap ex $600 to $800 million.

Conference Highlights:

Stephane Bancel, Moderna's CEO, said "Today's earnings represent a strong second quarter performance, with $10.8 billion in revenue for the first half of the year. We continue to have advance purchase agreements for expected delivery in 2022 of around $21 billion of sales. Given our strong financial position and commercial momentum, we are announcing today that the Board of Directors has approved a new share repurchase program for $3 billion. Despite the slowing economy and challenges in the biotech industry, Moderna is in a unique position: a platform to drive scale and speed in research of new medicines, a strong balance sheet with $18 billion of cash and an agile, mission-driven team of over 3,400 people and growing. We will continue to invest and grow as we have never been as optimistic about Moderna's future. Right now, we have four infectious disease vaccines in Phase 3 trials, and later this year, we expect important data from proof-of-concept studies in rare diseases and immuno-oncology." Moderna is looking for attractive external opportunities; in multiple discussions at this time.

A new $3 billion share repurchase program was authorized in August 2022, in addition to the $1 billion still outstanding from the prior program.

In Q2 2022 Moderna received FDA authorization for a dose-dependent, two-dose primary series of mRNA-1273 for Covid prevention in children and adolescents 6 months to 17 years of age; similar approvals have been received from authorities in more than 40 countries for children and adolescents 6 years to 17 years of age, and in the US, Canada, Australia and other jurisdictions for children 6 months to 5 years of age.

Moderna is working on a vaccine that will address the Omicron Covid variant. Also a refrigerator-stable version.

In Q1 2022 Moderna reported positive Phase 2 interim analysis of seasonal flu vaccine candidate mRNA-1010. The Phase 3 study in the Southern Hemisphere began in the second quarter. Also fully enrolled a Phase 1/2 trial of flu + covid.

Moderna currently has 46 mRNA candidates now in development. The goal of the next phase of development is to submit multiple BLAs to the FDA. Other than the Covid vaccine, the most advanced candidate, for CMV, is preparing for a Phase 3 trial. There are 3 other indications in Phase 3.

All product revenue is from COVID-19 vaccine mRNA-1273 (Spikevax). The FDA, EMA, and other health agencies around the world have authorized a booster dose of the Moderna COVID-19 vaccine at the 50 µg dose level. Advanced Purchase Agreements for 2022 are $21 billion. A new 70 million dose supply agreement with the US was signed in Q2, with option for 4 million pediatric doses exercised and additional option for 230 million doses.

The R&D Investor Day will be held September 8, 2022.

In Q2 $4.53 billion of revenue was from product sales, $183 million from grants, and $35 million from collaborations.

Initiated an HIV vaccine Phase 1 trial in Q1 2022.

Numerous other vaccines are at various stages of development. But in Q2 AstraZeneca returned the VEGF program to Moderna.

Cash ended the quarter at $18.1 billion, down sequentially from $19.3 billion. But $4.1 billion is deposits for future vaccine sales. Operating cash flow $0.3 billion. $87 million capital expense. $1.27 billion was used to repurchase stock in the quarter.

Operating expense (GAAP) of $2.30 billon consisted of $1.38 billion for cost of sales, $710 million for R&D, and $211 million for SG&A. Operating income was $2.45 billion. $40 million interest income; $13 million other expense. Income tax $277 million.

Q&A Selective Summary:

Color on business development? We are looking for interesting assets at an appropriate price. Looking at a lot of things. Probably not a large acquisition. Possibly partnerships.

1273.222 path to authorization? Working hard to pull data together, including manufacturing. Data demonstrated superiority. FDA has asked for an additional study for future deployment if another variant emerges, would begin enrollment in August. But we don't need that data for authorization.

APA going forward? Already captured majority of demand in the $21 billion, but continuing to work with nations to see if there is additional demand.

Will the FDA in the future authorize based on preclinical data? We believe that, the flu model for strain authorization will make sense for covid strain boosters. Will still need supplmental BLAs.

Monkeypox? We did start a research program, but very early.

Dose numbers for the 21 billion APA guidance? Reflects lower demand from covax countries. Already in discussions for 2023.

11% Pfizer share gain claim? Shares we report a cumulative across 3rd and 4th boosters, different from what Pfizer reported. We are seeing some share gains in boosters ytd, most of our sales are now boosters.

We believe the covid tail will happen seasonally and continously, but depends on variations in virus. But would mainly be for the more vulnerable parts of the population. We would depend on government recommendations.

A space of interest could be gene therapy; not attracted to large or small molecules. Plus nucleic acid therapies.

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