Moderna, the biotech company behind the successful Covid vaccine, has announced its plans to cut approximately $1.1 billion in expenses by 2027. This comes as the company looks to move forward after the decline of its Covid business. Moderna expects to gain approvals for 10 new products by 2027, but it also plans to pause work on some products in its pipeline and scrap others. The aim is to reduce research and development (R&D) spending to a range of $3.6 billion to $3.8 billion in 2027, down from the expected $4.8 billion by the end of this year.
According to Moderna CEO Stephane Bancel, the company is putting its latent product portfolio “on hold.” This refers to a category of viruses that remain in patients for extended periods without causing symptoms but can later reactivate and lead to serious health complications. The decision to scale back R&D spending and focus on current products has resulted in a decrease in Moderna’s stock value, with shares falling more than 15% on Thursday.
Analysts have expressed concerns about Moderna’s financial position and the impact of the company’s updates on its stock. Leerink Partners analyst Mani Foroohar believes that the reduction in R&D spending is not credible, considering Moderna’s history of inaccurate business performance projections. Jefferies analyst Michael Yee notes that the bulk of cost savings will not be realized until 2027, delaying profitability until 2028.
Despite these challenges, Moderna remains optimistic about its future. The company plans to break even on an operating cash cost basis with $6 billion in revenue in 2028. It expects revenue for 2025 to range from $2.5 billion to $3.5 billion. From 2026 to 2028, Moderna anticipates a compounded annual growth rate of over 25% as it launches new products.
During its annual research and development day investor event, Moderna shared updates on its product pipeline. The company announced positive late-stage trial results for its vaccine against respiratory syncytial virus (RSV) in high-risk adults aged 18 to 59. It also revealed positive data on its experimental stand-alone flu shot for adults aged 65 and older. Moderna plans to file for approval for these age groups this year.
Moderna’s pipeline includes not only respiratory products but also nonrespiratory ones targeting cancer, latent viruses, and rare diseases. The company expects to have five nonrespiratory products approved by 2027. Moderna aims to use a “priority review voucher” to expedite the FDA’s approval process for its RSV vaccine for adults aged 18 to 59. This voucher would reduce the review time to six months. Moderna hopes to receive clearance in time for the RSV season in 2025.
While Moderna faces challenges in its R&D efforts and financial projections, it remains committed to developing innovative solutions. The company is discontinuing the development of its RSV vaccine for infants under 2 years old due to emerging clinical data. However, it is progressing with other projects, such as an experimental stand-alone flu vaccine and a norovirus shot, which could be two years away from launch. Moderna is also partnering with Merck to develop a personalized cancer vaccine, which is being studied in combination with Keytruda.
Overall, Moderna’s plans to cut expenses and focus on its current product portfolio reflect its strategy to achieve profitability and long-term growth. The company is navigating challenges but remains determined to bring innovative solutions to market. With ongoing research and development efforts, Moderna aims to address unmet medical needs and improve patient outcomes.
