Moderna shares dropped sharply Thursday morning after the COVID-19 vaccine maker announced plans to scale back its research and development (R&D) efforts in a bid to reduce costs. The company will now concentrate on securing FDA approval for 10 key products, including vaccines for respiratory syncytial virus (RSV), cancer treatments, and a combination COVID-19 and flu vaccine.
By cutting down on its pipeline, Moderna aims to reduce expenses by $1.1 billion by 2027. This strategic move is part of the company’s broader plan to prioritize late-stage trials and products close to market, while slowing down investment in new R&D ventures.
Focus on Late-Stage Products:
Moderna CEO Stéphane Bancel explained the decision, saying, “The size of our late-stage pipeline combined with the challenge of launching products means we must now focus on delivering these 10 products to patients, slow down the pace of new R&D investment, and build our commercial business.“
Based on the latest trial data, Moderna anticipates receiving FDA approval for 10 products within the next three years. The company is particularly focusing on five vaccines targeting respiratory illnesses, including RSV, with promising phase 3 data. Three of these vaccines are expected to be submitted for FDA approval before the end of the year.
In addition, Moderna has five more vaccines in development for cancer and rare diseases, with potential FDA approval timelines stretching over the next few years.
Financial Projections:
Moderna’s R&D budget for 2023 is estimated at $4.8 billion, but the company plans to reduce this to between $3.6 billion and $3.8 billion by the end of 2027. The company has also provided fiscal guidance, forecasting revenue of $2.5 billion to $3.5 billion for 2025, slightly below analyst expectations of $2.9 billion.
By 2028, Moderna expects to generate $6 billion in revenue, breaking even on an operating cash cost basis once its new products have gained FDA approval and entered the market.
Market Reaction:
Following the announcement, Moderna’s shares dropped more than 12%, falling to $69.29 in pre-market trading on Thursday. Investors reacted to the company’s decision to scale back its R&D pipeline as it shifts focus to commercializing key products.
