Analyst Conference Summary

biotechnology

conference date: February 23, 2023 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2023 (fourth quarter, Q4 2022)

Forward-looking statements

Overview: Declining revenue as Covid bolus seems to be tapering off.

Basic data (GAAP):

Revenue was $5.08 billion, up 51% sequentially from $3.36 billion, and down 30% from $7.21 billion year-earlier.

Net income was $1.47 billion, up 41% sequentially from $1.04 billion, and down 70% from $4.87 billion year-earlier.

EPS (diluted) was $3.61, up 43% sequentially from $2.53, and down 68% from $11.29 year-earlier.

Guidance:

Expects first half of 2023 product sales of $2.0 billion. Has advance purchase agreement for 2023 delivery of $5 billion. Full year 2023 cost of sales 35% to 40% of sales. R&D expense $4.5 billion, SG&A expense $1.5 billion. Expects negligible income tax, cap ex of $1.0 billion. $3 billion share repurchase program.

Conference Highlights:

Stephane Bancel, Moderna's CEO, said "2022 was another impressive year for Moderna, with over $19 billion in revenue and significant clinical breakthroughs across our portfolio. We continue to provide our Omicron-targeting bivalent vaccines worldwide, with the latest real-world evidence highlighting the continued protection of our vaccines against hospitalization and death. Our infectious disease platform continues to progress with positive Phase 3 data in RSV for older adults. We are investing to scale Phase 3 manufacturing for personalized cancer vaccines so that we can run several Phase 3 studies simultaneously. With planned R&D investments of $4.5 billion for the year, I am excited about the new medicines we believe we will bring to patients in the coming few years." Now has 4 medicines in Phase 3. Preparing for the private Covid-19 vaccine market in the U.S.

Moderna plans to file for regulatory approval for mRNA-1345, Moderna's investigational RSV vaccine for older adults, in the first half of 2023. In Q4 2022 the Phase 3 trial met its primary endpoint. A pediatric trial is fully enrolled.

In Q1 2023 Flu (mRNA-1010) interim analysis from Phase 3 P301 immunogenicity and safety trial demonstrated mRNA-1010 achieved superiority on seroconversion rates for A/H3N2 and A/H1N1, superiority on geometric mean titer ratios for A/H3N2, and non-inferiority on geometric mean titer ratios for A/H1N1. Non-inferiority was not met for seroconversion rates, and geometric mean titer ratios for the influenza B/Victoria- and B/Yamagata-lineage strains. mRNA-1010 was found to be generally well-tolerated. The Phase 3 P302 trial is ongoing, which focusses on influenza A.

In Q3 2022 the Moderna Omicron Covid variant vaccine received FDA approval in the U.S. and regulatory approval in many other nations. For 2023 Moderna has $5 billion in sales contracted for deliery and expects additional sales. In Q4 2022 the Spikevax Bivalent BA.4/BA.5 was authorized for everyone over 5 months old.

Moderna currently has 48 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. In Q4 $4.86 billion of revenue was from product sales and $225 million from was from other.

The primary efficacy analysis from Phase 2 study for personalized cancer vaccine program (mRNA-4157/V940)

Vertex initiated a Phase 1 trial for VX-522 for the cystic fibrosis therapy in Q1 2023.

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 showed a 44% reduction in recurrence of death. On October 12, 2022, Merck exercised its option to jointly develop and commercialize mRNA-4157/V940 pursuant to the terms of its existing Collaboration and License Agreement. Moderna received $250 million from Merck in Q4 2022 for the option exercise.

Cash ended the quarter at $18.2 billion, up sequentially from $17.0 billion. $ billion is deposits for future vaccine sales. Operating cash flow $na billion. $na million capital expense. $0 billion was used to repurchase million shares of stock in the quarter.

Operating expense (GAAP) of $3.50 billon consisted of $1.92 billion for cost of sales, $1.21 million for R&D, and $375 million for SG&A. Operating income was $1,58 billion. $87 million interest income; $12 million other expense. Income tax $190 million.

Full Year 2022 revenue $18.43 billion; GAAP net income $8.26 billion; GAAP EPS $20.12

Q&A Selective Summary:

Flu regulatory strategy given miss on B strain? We do not have complete information. Results from P302 study will help inform. Efficacy is needed for approval. May need to go to a second interim analysis. If we see P302 efficacy we can proceed to apply for approval.

Do you need to show superiority in flu to get approval? No. Non-inferior efficacy is the threshold. We have 4 further flu programs that we hope could show superior efficacy.

U.S. market share in 2023? None of the $2 billion in the first half for advanced purchases is for the U.S. Most U.S. sales will be in the second half of 2023. No market share projections.

We are updating the Flu B component and hope to get that to trials quickly.

RSV market in a few years? 3 companies have read out Phase 3 and are proceeding to filing. We see a favorable tolerability profile for our vaccine. Very pleased with our efficacy. But cross-trial comparisons are always difficult. We see it being at least a 3 player market. Believes is seasonal, adults will need boosters.

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