Moderna at Morgan Stanley Conference: Strategic Path to Growth

On Monday, September 8, 2025, Moderna (NASDAQ:MRNA) took the stage at the Morgan Stanley 23rd Annual Global Healthcare Conference. CEO Stéphane Bancel outlined the company’s strategic priorities, focusing on growth through its respiratory franchise, oncology investments, and international market expansion. While Moderna faces challenges like policy changes and market uncertainties, it remains optimistic about achieving cash flow break-even by 2028.

Key Takeaways

• Moderna aims to achieve cash flow break-even by 2028 through cost management and strategic growth.
• The company is investing heavily in its respiratory and oncology portfolios.
• Moderna plans to capture over 50% of the COVID-19 vaccine market.
• Recent policy shifts allow pharmacists to administer vaccines, enhancing distribution.

Financial Results

• Cash costs decreased from $8.9 billion in 2023 to a guided $5.1 billion in 2024, with further reductions planned.
• Losses are projected to decline from $4 billion last year to break-even by 2028.
• Sales are expected to range between $1.5 billion and $2.2 billion this year, with growth anticipated from markets like the UK, Canada, and Australia.

Operational Updates

• Moderna secured approvals for three mRNA vaccines in the last three months, including two for COVID-19.
• Manufacturing was resized post-COVID, contributing to gross margin expansion.
• Partnerships with Merck and Blackstone are underway, with Blackstone funding a flu phase 3 study.

Future Outlook

• The respiratory portfolio, including COVID-19, RSV, and flu vaccines, is expected to drive growth.
• Investments in oncology and rare disease programs are prioritized, with the Individualized Neoantigen Therapy (INT) program in partnership with Merck being a key focus.
• Moderna plans to file for regulatory approval for its flu and flu-COVID combo vaccines by year-end.

Q&A Highlights

• The decoupling of state policies from HHS recommendations for pharmacist-administered vaccines is expected soon.
• Current COVID-19 vaccination rates are anticipated to match last year’s levels.
• Moderna awaits data on RSV hospitalization rates to guide future vaccine strategies.

Readers interested in further details are encouraged to refer to the full transcript below.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: All right. Great. Thanks for joining us, everybody. I’m Terrence Flynn, Morgan Stanley’s large-cap US biopharma analyst. I’m very pleased to be hosting Moderna. We have Stéphane Bancel, who’s the company’s CEO. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Stéphane, thank you so much for joining us. Really appreciate the time today.

Stéphane Bancel, CEO, Moderna: Thank you for having us.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Absolutely. Maybe you could just start. Obviously, we were talking a little bit before about some of the cross-currents on the policy side. It’s been a pretty active period for the industry, both on drug development but also policy and some of the uncertainty. Just as you think about strategic prioritization, making investments, and these long-dated pipeline cycles, how are you navigating this period?

Stéphane Bancel, CEO, Moderna: Sure. I would say if you look at the FDA, we’re actually quite pleased how our team has been working with the FDA over the last six, nine months since the administration and the new commissioner. We’re very thankful for the FDA. We got three products approved in the last three months, actually three mRNA vaccines. If you just would read the headline and the tweets, you would think this will not happen. I know a lot of people thought back in January, February that this will not happen. We had very strong files with very strong clinical data. We had good relationships with our working teams at FDA to review those data. Those three approvals happened. They were in mRNA vaccines. You would think, and two of them were mRNA COVID-19 vaccines. I think very good relationship with the agency.

What happened with the lack of HHS recommendation as of today is in some states, there’s no issue for pharmacists to deliver products. In some states, by state regulation, the pharmacists can only deliver a product if it’s HHS recommended. That’s what you have seen happening since the new strain of a COVID shot was approved two weeks ago now. What you’re starting to see happening is the states rewriting legislation so that the state basically is decoupling from HHS. We saw it last week in Pennsylvania. We saw it also last week in Massachusetts. California is currently passing new legislation to do the same thing. The 16 states that have hardwired HHS recommendation to allow pharmacists to deliver a vaccine without a script from a clinician are basically disappearing because they’re being decoupled from those states. We’ll see what the seasons look like.

We have strong demand from the retail channel, which, as you know, we have direct contracts with the retailers. There’s no PBM for vaccines. We’ll know more in a few weeks, but the start of the season is very good.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: How long will that decoupling process take? Because it sounds like it kind of varies by state. If you look ahead, is this a weeks thing that’s going to happen, or is it like months?

Stéphane Bancel, CEO, Moderna: We’re talking weeks. We’re talking weeks. Some have already made it happen, and the other ones are weeks. I think everybody is trying to make sure that by mid-end of September, when you really start to get into thinking about flu shots and COVID shots and so on, this is not a limitation for people just walking into a pharmacy. In those states, if you email your doctor and you get a script to your pharmacy, you can still go there. Of course, you have leakage there. Some people don’t want to do it, they forget or whatever. The states have a very high incentive to make sure it’s as easy as it was last year.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Yes, that’s going to be true. The decoupling is not just for the COVID-19 vaccine, but it’s going to be for any vaccine across the board. Any recommendation, there will be a decoupling.

Stéphane Bancel, CEO, Moderna: Correct.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: All right. As you think about this environment, I mean, this new kind of steady state, it feels like you’re confident that you can navigate this and deliver on your kind of strategic objectives despite some of the policy dynamics.

Stéphane Bancel, CEO, Moderna: Sure. Because if you look at what we are trying to do before is to finish the respiratory portfolio and then to create basically a cash cow of that business. Because if you think about it, we have two COVID-19 shots approved. Think about it as a high-dose vaccine and low-dose. RSV, we have now positive phase 3 on flu and positive phase 3 on flu-COVID combo. At a different time with different policy environments, we might have wanted to do RSV, COVID-19, flu combo, which we have shown data in preclinical. We are not going to invest the capital for it. We do not think it warrants it now. Maybe later we can restart it. Those investments in respiratory disease are mostly behind us. We have a little bit of a tail in R&D because as you do vaccines, sometimes you have multi-year safety commitment post-launch.

If you think about it, basically, we have a business that this year we said is $1.5 to $2.2 billion of sales. You are launching the high-dose product. We think this should allow us to take market share because the retailer will make more profits because of a higher price. We have flu, which is a market three times the size of COVID-19. It is a market where we are not participating now. The flu-COVID combo is going to be helpful across the world. I would say especially outside the U.S., if you think about it, when you are a one-payer system, like the NHS in the UK or in France or in Germany, you want people to get the best coverage they can so that you do not pay hospitalization. You can force what you cannot do in the U.S.

In those countries, you can force consumers that this is a product they are getting. The flu-COVID combo is going to be quite interesting to drive compliance on COVID-19 and to drive volume for us. If you think about the respiratory business, you are going to have very nice growth in the coming years. You are going to have improvement in gross margin because given we have a platform, we do not have to invest CAPEX to launch new products. You are going to have improvement in gross margin, R&D coming down, as we spoke about, and SG&A being flat. You could tell me, "Stéphane, how can you have SG&A flat when you launch a new product?" It is because it is a B2B setup. We are not selling, detailing to doctors the flu vaccine or the combo vaccine.

We’re directly negotiating with CVS and Walgreens and Walmart and all the big retailers that have a pharmacy or grocery chain that do pharmacy. We can now hold those products without adding salespeople. Actually, we get more leverage because we can do portfolio negotiation, which we couldn’t do last year when we had only 1,273. If you look at the next two to three years and you think about what we’re trying to do strategically, it’s like finish the respiratory franchise. We would end up being the company that has the most products in respiratory of any company selling to that channel, create cash flow from that business, invest it in oncology.

Of course, oncology people are highly aware of the R&D program that we’re doing with our colleagues at Merck, which we should have a five-year data of a phase 2 coming either late this year or in January, but also a phase 3 melanoma coming next year in 2026. We have seven studies that are currently ongoing. You can see us doing with Merck what Merck has done with Keytruda before, which is when you get good signal, just expand to a number of tumor types and keep learning and keep expanding the use you can have of the product for patients. If you look behind that product, we have up to 10 additional products that are really exciting that we own 100% of the economics.

There’s mRNA-4359, which we’re going to be presenting new data at ESMO in Germany mid-October, where we’ve said that we accelerated the phase 2 recruitment in lung and in melanoma. What we saw is patients that were in stage 4 cancer that were refractory to checkpoints. They had failed Keytruda. Some of them that take Keytruda end up vivo. Then you give them mRNA-4359 with Keytruda and you see a response of people that are in stage 4 cancer, metastatic. We are enrolling the phase 2 in lung and in melanoma. Because it’s metastatic, you could see the data potentially in 2026. Unlike when you go early in disease, unfortunately, you see data quickly. That could be a first-line metastatic setting for lung and melanoma to start with. That asset we own. Same that I said because we made it in the platform.

You don’t need to add $1 CAPEX to launch this product. I think what we’re going to start to see in the next few years is really now that we’ve resized manufacturing post-COVID because we had to build 2 billion doses and then go back to more normal volume. I think you’re going to see a nice gross margin expansion across the portfolio, more products coming and Moderna using most of its capital investing into oncology and rare disease.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. Great. I know one of the other strategic priorities is cash flow break-even by 2028. Given everything you’ve just walked through, given some of the policy cross-currents, you’re still confident in achieving that goal.

Stéphane Bancel, CEO, Moderna: Yes. I think there’s a few things. First is we controlled the cost. If you look at the work we have done with the team on cost, the cash cost of the company in 2023 was almost $9 billion, $8.9 billion in 2023. Last year, we were at $6.3 billion cash cost. Really, a lot of work happened to take this down. We entered the year guiding $5.5 billion of cash costs for the year. On the Q2 earnings call early August, we said because we are way ahead of plan, we should be at $5.1 billion of cash costs this year. $6.3 billion last year, $5.1 billion this year. I’m going to work really hard. This is not guidance, but I’m going to work really hard to beat that $5.1 billion. The team is doing a great job.

We’ve said that we should be around $4.7 billion next year and $4.2 billion in 2027. That’s for what we can control. We always said, look, if the sales are not there, we will reduce costs further. Remember, I was there when the company had 10 people, actually 2 people, and not spending even $20 million a year. We will titrate the R&D investments. We will partner. As you know, we have partnered over the years with pharma companies like Merck and Vertex and AstraZeneca. Last year, we partnered with Blackstone, and they actually funded 100% of the phase 3 study for flu. We will be very happy to do things like that. We’ve said publicly that we are looking for partners for latent virus products like EBV. Of course, if CMV is positive, most probably we’ll partner this product.

I don’t think it would make sense for us to build a new sales force just for CMV. For a lot of companies that are doing women’s health and also pediatric settings, that would be a great product to add to the bag of our sales rep. There’s no CMV product approved, no vaccine approved. That would be quite interesting. That’s a bit what we’re trying to do, which is really work on growing the top line again. I think another piece that people sometimes underappreciate is how outside the U.S. is going to be important for us. As you know, in the UK, Canada, Australia, we’ve signed multi-year, seven-year deals with those governments to supply vaccines. We have volume commitment. Every year, we just choose the split of products between COVID and flu and combo and RSV and so on.

If you do the math based on public information, it will be close to $1 billion of sales starting next year that will be recurring. You are going to see growth next year outside the U.S., and then you are going to see stability and visibility for many years to come. As you know, in Europe, there was a contract that was done out of the legal framework of tenders in Europe during the height of the pandemic in the spring of 2021 between Pfizer and the President of Europe, Ursula von der Leyen. There never was a tender for that deal. We were basically excluded from Europe last year, this year, and again in 2026. At the end of 2026, that contract expired. Already some countries, like for example, Poland, sued Europe, won, and were able to exit that contract. Actually, we won tender in Poland.

As those countries start to use all their Pfizer volume commitment, they are starting to want a higher efficacy product. As you know, many worldwide evidence studies have shown that Spikevax has higher efficacy in the elderly and high-risk people than Comirnaty. Now we have also shown that Mnexpec in phase 3 study has a higher study head-to-head to Spikevax. You can start to see the market differentiating the products. If you are in Holland, if you are in the Nordics, and you already have used a lot of Pfizer doses, you can start using Moderna doses for your high-risk population, keeping the Pfizer doses for the low-risk population. What we are seeing more and more is a bit of progress in 2025, much more in 2026, and then full market access in Europe in 2027.

Between Canada, UK, and Australia are helping us a lot in terms of growth, potentially up to $100 billion of growth next year. The reopening of Europe means you are going to start to see the respiratory business. Then you have flu. I am excited about flu mono before even flu combo with COVID because flu is three times bigger than COVID as a market in the U.S. We have seen the payers willing to pay a higher price for a high-efficacy product. We have seen good flus on HD that retail around three times higher price than the standard flu product that is given for a healthy population. If you look at all those factors, I think we have quite a number of drivers for growth. We manage the cost. Last year, we lost $4 billion. This year, we lose $3 billion of cash.

Next year, $2 billion, 2027, $1 billion, and then 2028 break-even.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Maybe just before we go on to some other topics about market share, I mean, I think you guys right now are kind of 40% versus Pfizer-BioNTech, like 60% in the U.S., and again, actually, that’s probably a little bit less. Where do you think that ultimately shakes out, given what you were just walking through? I mean, does this become a 50/50 market, or do you think you can deliver above 50%?

Stéphane Bancel, CEO, Moderna: It’s a great question. Our goal is going to try to be able to deliver above 50% because, as you say, from a portfolio standpoint, we have a few things. It’s going to take several years. I’m not talking about just next year. First is the Mnexpec product with a premium pricing should allow us to gain share. Why? Because the channel is going to make more profit versus selling the Spikevax or selling the Comirnaty. As we get more and more products in the portfolio, we can start to bundle. Last year, we know we lost share to Pfizer in the pharmacy sector because they give discounts on Prevnar. We couldn’t give discounts on the Prevnar-like products. We don’t have it in the bag.

As you start to have more products and as you start to have products that are unique, that your competition doesn’t have, like a flu-COVID combo, Pfizer won’t have that product because they are back to square one in the clinic. Norovirus is another product that will be sold in the pharmacy that we are not aware of anybody else being in the phase 3 with Norovirus. If you think again about what the portfolio is in 2026 and then in 2027, it’s going to be one of the most important portfolios for the retailers in terms of their own EBIT growth. As we map this out for a customer point of view, we think it’s going to be quite interesting for us to be able to drive sales and to drive share.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. Maybe coming back to COVID for a second, as we think about the timing here of this unbundling that’s happening, you still think this current season, if we look at total vaccinations, it’s still going to be roughly similar to what we saw last year, just on a high-level basis in the U.S.?

Stéphane Bancel, CEO, Moderna: That’s what we think. Again, as you know, we still have a wide range to the year because there’s some unknown that will allow us to still be in the range, but on the low side of the range. Indeed, if you look at what happened in the spring, especially in what we call the hardcore vaccinees, people that get their shot and follow the recommendations and so on, it was actually flat in the spring of 2025. It’s quite interesting because there was no government support for vaccination. If you look at the previous years, for the seasonal COVID booster in the spring, there was always advertising done by the CDC on local radio for the elderly, on local TV programs for the elderly. This year, everything was scattered. Despite that, you saw the same volume as you saw last year in 2024, which is a good indicator.

We looked at the claim data. You really have this group of people in the U.S. that know that they are high-risk, either because of age or because they have a risk factor or because they have a loved one, like a spouse or a parent in the same household that has a risk factor. Those people, we call them internally the hardcore vaccinees. If you look at the claim data, they are compliant to everything. They get the Shingrix shot, they get the Prevnar shot, they get the fall and then the spring COVID shot, they get the flu shot, they get the RSV shot. They follow everything. We really believe that those people are why the market has come down to and are going to provide a strong base or foundation.

As we start adding Mnexpec with a higher price, as we are adding flu and then flu plus COVID combo and then Noro, you’re going to see how we’re going to create the growth based on that base.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. One you didn’t mention as much is just RSV. I’m guessing that’s partly because there still is some uncertainty about how kind of revaccination plays out. Maybe just level set us in terms of where that fits in terms of the portfolio strategy. Then we’ll come back to the flu side.

Stéphane Bancel, CEO, Moderna: Sure. So RSV, I think there’s two things as you articulated. There’s the market and then the channel with a lot of products in it right now. Let’s start with the market. As you know, the first season RSV was approved. It was a great season. Surprised everybody to the upside, I think mostly because of pricing more than volume. What happened the year after is HHS did not recommend a booster for RSV. That’s why I think everybody got a cold shower, including the manufacturers and the channel. What happened basically is on the first year, you got those same hardcore vaccines I just spoke about. They’re like, "Okay, there’s a new vaccine. It’s recommended. I’m going to get it." Those people did not come back the following winter.

If you look at the type of distribution of vaccinees, you have much less people in that second cohort that don’t follow all the recommendations. You have the volume massively down. You have the channel totally stuffed with product because the channels, the manufacturers were expecting a strong year as well. Plus, there was a lot of discount given after our approval because there’s a one-month window between our approval and our HHS recommendation. It was a kind of good way for the competition to go kind of get more product into the channel. You went into that season with a lot of product in the channel and no boosting. With very small demand, there’s still a lot of product in the channel. I think until we get clarification from healthcare experts in terms of when you will vaccinate, you know, is it every three years?

Is it every four years? What is good is that people who got this first class of vaccines are being followed in terms of hospitalization rate. I think that as we start to see the vaccination, the hospitalization rate going up, the boosting recommendation will come up. Is it every three years, every four years? We don’t know yet. That most probably is what it’s going to look like. By the way, it’s not so surprising if you look at the epidemiology. People 65 and above get sick again from RSV every two, three, four years. That’s kind of in that ballpark.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay, you think it’s going to come down to really like hard data on the hospitalization rate, and then that’ll ultimately drive a different recommendation or something.

Stéphane Bancel, CEO, Moderna: Payers will go behind it just because of hospitalization costs.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. Okay. Understood. All right. Maybe just going back to the pipeline and the flu program. I mean, here, you know, do you feel confident in terms of the regulatory outlook on the flu side?

Stéphane Bancel, CEO, Moderna: We feel good about it because again, the data, I mean, you saw the top line. We’re presenting at medical conferencing and publishing the data. The data is as clean as you can get in terms of safety and so on. There’s a precedent of two products for high efficacy, high dose for the people at high risk, again, elderly and younger adults at high risk. I think there’s a playbook that has happened before us. We are preparing the filing for the FDA. We’ll submit the file to the FDA and to agencies around the world. We will refile in the U.S. the combo. The good news in Europe, as we’ve said, is that we are not asked to withdraw the file of a combo. We’ll file the phase 3 flu data as an amendment. We might get a three-month clock stop, but not a full restart of review.

There’s a world in which the combo is approved in Europe before the U.S. As I said, in a lot of countries outside the U.S., there’s a strong appetite for the combo in order to increase the COVID compliance by just putting it in a product and having people, because they’re on a one-national system, to get it.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Maybe just to remind us, you’re going to file in the U.S. by the end of this year. That’s still the guidance?

Stéphane Bancel, CEO, Moderna: We have not given personalized guidance. We are working as hard as we can. I mean, those are the two products we have to file, the flu and the combo. Thankfully, the combo we already had filed. We have everything but the flu data, and we are going to get flu data that are going to go to the flu file. We are just going to copy and paste it. I think the flu-COVID combo is not a lot of work for us. It is really getting the flu file in, because as you know, you have to go back and those are not 100 people studied. Those are 10,000 people, 30,000 people studied. You have a lot of work to do with medical and safety teams just to clean all the files to make sure we have good data that we can send to the regulator.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: That’s in the U.S., the path is get the flu filing in and then get an FDA decision, and then you go forward with the flu-COVID combo.

Ex-U.S., it’s more of a parallel path, it sounds like.

Stéphane Bancel, CEO, Moderna: Correct. In a lot of countries, they let us keep going with the combo. It will be parallel paths. In some countries, it is like the U.S. asks us to withdraw because they look up to the U.S., and we’re going to refile behind. You are going to have those two situations outside the U.S.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. Maybe talk a little bit about post-marketing commitments and how that plays into the investment required here for vaccines, because it seems like that’s another area where there’s some uncertainty. I know with COVID, maybe you have more visibility on what that post-marketing commitment looks like. Should we expect something similar with the flu program, for example, and how you’re thinking about those post-marketing requests?

Stéphane Bancel, CEO, Moderna: It is possible with flu that we’ll have the same requirements. We don’t know yet because we have not filed the file, obviously. For COVID, we don’t have a full sense for the cost because discussions are still ongoing with the agency. We’re in very active discussions because, of course, we want to make those studies happen. Once we have a final plan approved by the agency, we’ll communicate the cost in par. That’s a bit where we are today.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. Maybe we’ll pivot over to oncology now. I know you mentioned this is another area where you’re scaling on the respiratory vaccines, but then you’re taking some of that cash flow and investing in the cancer side. There’s a lot of focus on the Individualized Neoantigen Therapy (INT) program that you mentioned you have partnered with Merck here. Maybe just remind us about, I think the next major readout we’re expecting is the phase 3 adjuvant melanoma study. Maybe just remind us about the confidence in that study. What gives you guys the confidence there? Any thoughts on timing of the data to show that study?

Stéphane Bancel, CEO, Moderna: Let’s start on the easy part. On the timing of the data, there’s nothing new since our last Q call, which is 2026. As you know, those are case-based. Our statistician runs the numbers regularly because, of course, cases are accruing all the time given it’s a big study. They confirmed before the Q when we confirmed 2026. They confirm 2026. As we get closer and we have more cases, we will reduce that window. What gives us confidence? I think confidence is two things. First is the phase 2 data. As you know, I know everybody is not as familiar as you are on the phase 2 data. This was a randomized study. A group of around a third of patients got K2Drive monotherapy. Another group, two-thirds of patients, get K2Drive plus Individualized Neoantigen Therapy (INT).

If you look at the data and the survival, if you look at the distant metastases, which is always a leading indicator in cancer, you had two out of three people in that study. It was 150 people. 100 people, let’s say, on active INT. You had two out of three people that four years out had no death or distant metastases. As we know, what kills people is rarely the primary tumors. If you look at that data, and if you look at the mechanism of action, which we have shown at ASCO several years in a row, we have shown that we’re able to take blood from patients on INT before we start INT. We know from sequencing the tumor and sequencing the healthy cells where they have mutations and which mutation we cause in the 34 mutations going into our product. We know those.

We take the blood of cancer patients before we start dosing INT. We basically test the T-cell for the epitope we know are coded in our product. They don’t respond. We’ve shown that if you take the blood of those patients three to four days after having done three to four cycles of INT, you have T-cell response against those epitopes. At least to my knowledge, there’s no better proof that you have basically reprogrammed T-cells of patients to be able to recognize the epitope that we want to put in the product. Based on that mechanism and the clinical data that we have so far of a phase 2, that gives us confidence. I think again, Merck has a lot of experience in oncology.

If you think about what they are agreeing to do with us, we have seven studies, phase 2 or phase 3, that are ongoing across a lot of tumor types of K2Drive plus INT. I think it’s a good proof that some people could argue and say, "Okay, what does Moderna really know about oncology?" because you guys are only infectious disease company. Of course, as you know, we have a lot of oncologists that we hire from BMS and Merck and great companies in oncology. Merck is being part of all of those decisions. Merck pays 50/50 of any study. It’s a huge amount of capital for Merck. Some studies they even run themselves, like the phase 3 melanoma is 100% run by Merck. We were in the phase 1 too before.

I think given what Merck has delivered with K2Drive and what they have seen of the data and the patient data that they have seen in all the studies, I think the best, for me, is the best confidence that they believe, like we do, that the signal is real, which is why we’re investing so massively. We’re also invested together 50/50 in the manufacturing facility. While we spoke about the margin improvement for the rest of the portfolio five minutes ago, as we launch more products and as we grow volume, we’re going to see very nice gross margin expansion. INT, because it’s individualized, it’s a different manufacturing process where we hear we’re shrinking everything. That plant is built. It’s in Massachusetts, so it’s in the U.S. We have no thyroid issue or risk. It’s in the U.S. We’ve already done PPQs.

That plant will not be a critical path to launch because, as you know, we’re getting that plant ready for potential access to the approval. Really, the only thing we’re waiting to file the BLA is the phase 4 data. That’s good news that manufacturing won’t be a critical path.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. I know this is in the adjuvant setting. You know, when we talked to Tewells, they have enthusiasm for the adjuvant setting, but there’s more debate on, I’d say, the metastatic setting. You guys made a decision to advance into metastatic. Maybe just talk to us about that dynamic and why that decision now to go into metastatic as well. I think, again, from a first principles perspective, it seems like there’s a lot of data to suggest why this could work in adjuvant. Metastatic, it’s, I think, more of a debate.

Stéphane Bancel, CEO, Moderna: Yeah. In cancer, every time you try something new, people are skeptic. As we know, a lot of things don’t work, and cancer is complicated. I’ll start there. We have to do the clinical experiment to know. The reason Merck and us think it’s an experiment worth running is, again, we have proven mechanism on the technology. We have a lot of data, including mRNA-4359 in metastatic settings, using the same core technology of mRNA with the same manufacturing process, showing some interesting responses. We have data that we have seen across a lot of different studies, including the early studies, monotherapy in combo, including in lung, head and neck. There’s just a lot of data that we’re spending a lot of time to look at, again, on the patient-by-patient case. We think it’s an experiment which will really run, and we’re running it.

The fact that Merck is willing to pick half the bill, I think, is a good sign that they think there’s merit in doing that experiment.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Is that ultimately going to move? This is melanoma. Is that ultimately going to move to other metastatic tumor types, or is this kind of a POC and then you see what?

Stéphane Bancel, CEO, Moderna: I think it’s a bit like what we’ve done for everything, which is starting melanoma, like has been done for checkpoints, starting melanoma. When you work, everybody says, "Oh, but you don’t want to work only on melanoma. So start another tumor." We’re just expanding the chessboard by going into many tumors, going later with metastatic. Another thing we talked about that I want to see happen, and when something has been decided, we’ll communicate, of course, I want to go monotherapy early. If you think about, for example, lung is a good example. There’s a lot of people who get diagnosed through an X-ray of stage one lung cancer. Most of those people do not get a checkpoint because the side effect of a checkpoint is so profound. It’s literally life-altering.

Of course, if you’re in a metastatic setting or if you’re going to die, better to have an autoimmune disease from your checkpoint than dying, obviously. If you are stage one, could you get an INT monotherapy? We know we can reprogram T-cell. We’ve shown it to people that have much more advanced disease. We believe that people that are early in disease should have a stronger immune system. What does it look like if you could deliver to a stage one cancer lung patient a therapy that you could take that has a side effect profile of a vaccine? Not like chemotherapy, not like immune therapy, but like a vaccine. You might be tired for a day or have a spike of fever for 24 hours and then be fine. That’s a side effect for cancer. That would be pretty phenomenal for patients.

That’s another experiment I think we need to go around. Nothing has been announced yet, but that’s something that, again, if you keep expanding and learning. You don’t start there, but that’s a logical place to go.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: In lung, I mean, that’s another question. When you talk to the KOLs, they’ll say, "Everything works in melanoma." When you go to cold tumor type, it’s harder to know. How should we think about translatability in the event of positive phase 3 adjuvant melanoma data? How much translatability is there to non-small cell lung cancer?

Stéphane Bancel, CEO, Moderna: We think it’s pretty good. I don’t want to get ahead of myself because we’re not from the phase 3 study. If you go back again to data we showed at ASCO in 2018, we showed monotherapy people in lung cancer responded to INT monotherapy. Before we combined with K2Drive, some INT K2Drive responded in lung setting, like in head and neck and other tumors, because we did a typical phase 1 basket study with all comers. People just have to do the work and go back to the data. We do that for a living. We know the data pretty well. The data are out there. Does it mean it’s going to work with two out of three patients doing better than K2Drive, like in distant metastasis for melanoma? I don’t know. Nobody in the world, I think, knows, because it’s oncology. We have to run the clinical experiment.

Do we think it’s an experiment worth running? If it’s materially better, you have a product, and you already have a manufacturing infrastructure, and it’s a lung, which is a big indication that has a huge number of patients in the U.S., but also around the world. We think, yes, it’s worth running. That’s why Merck and us decided that it’s worth investing the capital.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Okay. Maybe just in the last minute, the other one we’re expecting some data on is the Norovirus vaccine later this year. Maybe just help us think about the market opportunity because I think there’s a lot of debate among investors in terms of, is this a very niche market or is this a much larger opportunity? How do you see that market opportunity?

Stéphane Bancel, CEO, Moderna: Sure. It’s interesting how people react to things. I think anybody who got Noro before doesn’t want Noro again, right? I speak as somebody who got Noro once in my life before. If it’s a pharmacy product where you don’t need a script, that makes the bar much lower in terms of adoption. If you start to do market research, which, of course, we have done before investing the capital, as you would expect us to do, you have not only demand in the elderly and, again, adults at high risk, going back to the respiratory similar setting. You have that population. On top of that, you have healthcare professionals because, again, do market research with doctors and nurses. They don’t like to get Noro regularly from their patients, which they do.

If you start asking educators, kindergarten, first grade, second grade, literally lower school, go ask the teachers how much they like Noro. They don’t. Enough young parents who had Noro from one of the kids, how much you like Noro? They don’t really. If you start to add those numbers, you start to get to very significant numbers. If you think about the way we think about this in really a multi-year study, we’re not doing this to manage next quarter EPS. This is a one-time R&D investment. I have zero CAPEX to invest. I have zero sales and marketing to invest. It’s the same sell source. I get more leverage with my customers because I get a portfolio with unique products.

I think what Moderna might be two, four years from now if I have flu plus COVID alone, or maybe down the road with Novavax and OT, we’ll see. If I got Noro alone. How much sellers do I need to justify a good return on investment? It’s not a crazy high number of dollars. I don’t have to invest CAPEX. I make my cost of goods for all the other products better by absorbing on my fixed cost. We think it’s a really good investment of our capital.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: Great. I think we’re up on time, Stéphane. Thank you so much.

Stéphane Bancel, CEO, Moderna: Thank you.

Terrence Flynn, Large-Cap US Biopharma Analyst, Morgan Stanley: It was a pleasure.

Stéphane Bancel, CEO, Moderna: Thank you so much.

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