Analyst Conference Summary



conference date: November 3, 2022 @ 5:00 AM Pacific Time
for quarter ending: September 30, 2022 (third quarter, Q@ 2022)

Forward-looking statements

Overview: Revenue declined, profits plunged, as vaccine bolus tapers quickly.

Basic data (GAAP):

Revenue was $3.36 billion, down 29% sequentially from $4.75 billion, and down 32% from $4.97 billion year-earlier.

Net income was $1.04 billion, down 53% sequentially from $2.20 billion, and down 69% from #3.33 billion year-earlier.

EPS (diluted) was $2.53, down 52% sequentially from $5.24, and down 67% from $7.70 year-earlier.


Advanced Purchase Agreements, as well as previously deferred product sales, currently represent $4.5 to $5.5 billion in anticipated product sales in 2023. The Company expects additional sales in key markets, including the U.S., E.U., Japan, Middle East, Latin America and Asia Pacific in 2023.

Conference Highlights:

Stephane Bancel, Moderna's CEO, said "Today's earnings continue to show strong corporate momentum. With $13.6 billion in product sales through the first three quarters of the year, and advance purchase agreements for anticipated delivery this year now expected to produce around $18 to $19 billion of product sales, we continue to have a strong financial position as we prepare for multiple upcoming global product launches. It has never been clearer that the future of medicine is upon us. As a platform company with scale and resources, Moderna is uniquely positioned to execute on exciting programs in flu, RSV, rare diseases and immuno-oncology, where we have an imminent Phase 2 data read-out."

A new $3 billion share repurchase program was authorized in August 2022.

Moderna is looking at the annual Covid booster market to form its outlook for 2023. Believes opportunity is as large or higher than for flu, but cannot reliably predict sales volume.

In Q3 2022 the Moderna Omicron Covid variant vaccine received FDA approval in the U.S. and regulatory approval in many other nations.

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) and its omnicron booster variants. Advanced Purchase Agreements for 2022 reduced to $18 to $19 billion as some deliveries have moved to 2023. 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.

In Q3 $3.12 billion of revenue was from product sales, $144 million from grants, and $100 million from collaborations. Sales were about $1 billion in the U.S., $1 billion in EU, and $1.1 billion rest-of-world.

The primary efficacy analysis from Phase 2 study for personalized cancer vaccine program (mRNA-4157/V940) is expected in 4Q 2022.

RSV Phase 3 data due in winter 2022-23, timing driven by cases accrued.

Flu Phase 3 data due in Q1 2023.

Vertex plans to submit an IND for the cystic fibrosis therapy by the end of 2022.

The personalized cancer vaccine (PCV) Phase 2 study evaluating mRNA-4157/V940 in combination with Keytruda as adjuvant treatment for patients with high-risk melanoma is fully enrolled. The primary efficacy analysis is expected in the Q4 2022. As announced on October 12, 2022, Merck has exercised its option to jointly develop and commercialize mRNA-4157/V940 pursuant to the terms of its existing Collaboration and License Agreement, and Moderna received $250 million from Merck in Q4 2022 in for the option exercise.

Cash ended the quarter at $17.0 billion, down sequentially from $18.1 billion. $3.8 billion is deposits for future vaccine sales. Operating cash flow $na billion (but $3.3 billion for 9 months). $na million capital expense. $1 billion was used to repurchase 7 million shares of stock in the quarter.

Operating expense (GAAP) of $2.20 billon consisted of $1.1 billion for cost of sales, $820 million for R&D, and $278 million for SG&A. Operating income was $1.17 billion. $58 million interest income; $7 million other expense. Income tax $174 million.

Q&A Selective Summary:

Pricing for Covid vaccine in private market? Our thinking for the endemic setting is based on value to healthcare systems around the world. ACIP recommended vaccines have $0 out-of pocket to consumers cost in the U.S., so gross pricing should not impact consumers.

Cost burden for 2023? We will pick up distribution costs, there may be increased vial costs, we will give guidance at a later date.

Personalized Cancer Vaccine (PCV) data targets? It is a 150 patient Phase 2 study. We did not prespecify a statistic we wanted to hit, but we want to show a significant benefit over the standard of care, hoping for a low p value.

Orphan disease pipeline expansion? Yes, that is the hope. We are extremely encouraged by results across two separate diseases, for both safety and efficacy. In addition to publically disclosed programs, we have others we will be adding.

RSV competition? We are encouraged by results from competition. There is a bar established, but there is some difficulty comparing studies. We hope, given our Covid efficacy, we will also see superiority in RSV.

Ex-US booster pricing? Depends on timing of shift from pandimic to endemic model. Will follow cost effectiveness guidelines of the various nations.

Are signed EPAs a floor for revenue? $4.5 to $5.5 billion is the floor. Does not include options from the U.S. government or sales from key markets and regional markets. The evolution of the U.S. market into a commercial setting will be a key factor.

Short term supply constraints? Q3 manufacturing was complex, given 2 products, doses per vials changing. We are still working through some of those issues.

Booster uptake this fall v. expectations? Seeing variability around the world. We are seeing a similar pattern in boosters in 2022 as in 2021, but the actual rates are low.

For business development, we are most interested in nucleic acids, not in small molecules, cell therapy, etc. We may announce partnerships in the quarters to come.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2022 William P. Meyers