Executive Summary / Key Takeaways

• Moderna is actively transitioning from a COVID-centric revenue model to a diversified biotechnology company, leveraging its core mRNA platform to advance a broad pipeline across respiratory viruses, latent viruses, oncology, and rare diseases.
• Recent financial performance reflects this transition and the seasonal nature of respiratory vaccines, with Q1 2025 revenue of $108 million and a net loss of $1 billion, a significant decline from peak COVID sales but an improvement in net loss year-over-year.
• The company is aggressively pursuing cost efficiencies, achieving a 19% reduction in combined operating expenses in Q1 2025 and targeting substantial further reductions to reach a cash cost of approximately $4.2 billion by 2027, aiming for cash breakeven by 2028.
• A prioritized pipeline of up to 10 potential product approvals by 2028, including recent FDA approvals for the next-generation COVID vaccine (mRNA-1283) and expanded RSV vaccine label (mRNA-1345), alongside promising oncology and rare disease candidates, forms the core of the future growth strategy.
• While facing intense competition in the respiratory vaccine market and ongoing intellectual property litigation, Moderna's differentiated mRNA technology and focus on pipeline execution and cost control are critical factors for investors evaluating its long-term potential beyond the pandemic era.

Introduction

Moderna, Inc. emerged from the biotechnology landscape with a bold vision: to revolutionize medicine using messenger RNA (mRNA). The company's foundational premise is that mRNA can instruct the body's cells to produce proteins with therapeutic or preventive benefits, offering a versatile platform applicable across a wide spectrum of diseases. This vision gained global prominence with the rapid development and commercialization of its COVID-19 vaccine, Spikevax, which transformed Moderna from a research-stage entity into a multi-billion dollar commercial enterprise.

However, the extraordinary demand seen during the pandemic peaks has normalized, and the COVID-19 vaccine market has transitioned to a more predictable, seasonal pattern. This shift, coupled with increasing competition, presents a new financial reality for Moderna. The company is now in a critical phase, pivoting its strategy to harness the capabilities proven by its COVID success to build a sustainable, diversified business centered around its extensive pipeline and disciplined cost management. Operating within a competitive landscape that includes pharmaceutical giants like Pfizer (PFE), BioNTech (BNTX), Novavax (NVAX), and AstraZeneca (AZN), Moderna's ability to translate its technological edge into commercial success across new therapeutic areas is paramount.

The mRNA Engine: Fueling Future Growth

At the heart of Moderna's strategy lies its proprietary mRNA platform. This technology is designed to deliver synthetic mRNA sequences into cells, directing the cellular machinery to produce specific proteins. Unlike traditional vaccines that introduce weakened or inactive pathogens or protein subunits, mRNA vaccines provide the genetic instructions for the body to produce the target protein itself, triggering an immune response.

The tangible benefits of this approach are significant and, in some cases, quantifiable. The platform enables remarkable speed and flexibility in development; for instance, the company demonstrated the ability to move a personalized cancer vaccine (INT) from Phase 1 to Phase 3 readiness in a relatively short timeframe. This agility is crucial for responding to evolving pathogens, as demonstrated by the rapid adaptation of Spikevax to new SARS-CoV-2 variants and the ability to target specific strains like KP2 or GA1 for regional supply. The platform's modularity also allows for the development of combination vaccines targeting multiple respiratory viruses simultaneously, potentially improving compliance and public health impact. While specific, directly comparable quantitative metrics across all competitor technologies are not always publicly detailed, the speed of Moderna's initial COVID vaccine development and its ability to quickly design and manufacture variant-specific boosters highlight a distinct advantage in responsiveness compared to more traditional vaccine platforms.

Moderna's R&D efforts are focused on pushing the boundaries of this technology. Key initiatives include developing next-generation vaccines with potentially improved efficacy or durability, exploring combination vaccines, and applying the platform to complex areas like oncology (personalized neoantigen therapies, checkpoint modulators) and rare diseases (therapeutics designed to replace missing proteins). The stated goals for these programs include enhancing immune responses, improving safety profiles, and addressing diseases with high unmet medical need. For investors, this technological differentiation represents a core competitive moat, offering the potential for novel, high-impact products that could command premium pricing and capture significant market share, thereby offsetting the decline in COVID revenue and justifying ongoing R&D investment.

Financial Performance: Navigating the Transition

Moderna's recent financial results underscore the ongoing transition and the inherent seasonality of its primary commercial products. For the first quarter of 2025, the company reported total revenue of $108 million, a decrease from $167 million in the same period of 2024. Net product sales, primarily from the COVID vaccine, accounted for $86 million in Q1 2025, down from $167 million in Q1 2024. This decline reflects lower global demand and vaccination rates compared to the prior year as the market settles into a seasonal pattern. U.S. sales contributed $31 million, while Europe and the rest of the world accounted for $55 million.

Despite the revenue decrease, the net loss for Q1 2025 improved to $971 million, compared to a net loss of $1.175 billion in Q1 2024. This improvement was significantly influenced by cost reduction efforts. Total operating expenses decreased by 19% in Q1 2025 compared to Q1 2024. Research and development expenses saw a notable reduction, falling by $207 million (19%) to $856 million, driven by lower clinical trial and manufacturing costs across several respiratory programs, partially offset by increased investment in oncology and norovirus. Selling, general and administrative expenses also decreased by $62 million (23%) to $212 million, reflecting broad-based cost management initiatives.

Cost of sales in Q1 2025 was $90 million, representing a high 104% of net product sales for the period. This elevated percentage, up from 58% in Q1 2024, is a direct consequence of the lower sales volume combined with fixed manufacturing costs and inventory-related charges. The company recorded $42 million in inventory write-downs and $10 million in losses on firm purchase commitments in Q1 2025, primarily related to excess COVID vaccine inventory and raw materials based on adjusted demand forecasts. This highlights an operational challenge in matching supply with volatile demand in a newly seasonal market. Interest income decreased to $90 million in Q1 2025, down from $120 million in Q1 2024, primarily due to lower average investment balances.

Overall, the Q1 2025 results paint a picture of a company managing a sharp revenue decline from its peak product while actively working to control its expense base. The significant operating losses underscore the substantial investment still required to advance the pipeline, even with cost-cutting measures in place.

Strategic Pillars: Pipeline Advancement and Cost Discipline

Moderna's strategy for future growth rests on two primary pillars: advancing its diverse pipeline and executing with rigorous financial discipline.

The pipeline is the engine of future revenue diversification. The company has prioritized a portfolio of up to 10 potential product approvals by 2028, targeting markets with significant unmet needs and large addressable opportunities. Key late-stage programs include:

• Respiratory Virus Vaccines: Beyond the approved Spikevax and mRESVIA (recently approved for adults >60 and expanded label for 18-59 high risk), the next-generation COVID vaccine (mRNA-1283) recently received FDA approval (May 31, 2025). The seasonal flu vaccine (mRNA-1010) is in a Phase 3 efficacy study with interim data expected in summer 2025. The flu+COVID combination vaccine (mRNA-1083) for older adults, though filed, saw its approval timeline extended to 2026 pending Phase 3 flu efficacy data, and the 18-49 age group indication was deprioritized.
• Latent and Other Virus Vaccines: The CMV vaccine (mRNA-1647) Phase 3 study is fully enrolled, but the early efficacy criterion was not met in December 2024; final efficacy data is anticipated in 2025. The Norovirus vaccine (mRNA-1403) Phase 3 study is enrolling, with a clinical hold lifted in Q1 2025, and readout timing depends on case accrual, potentially leading to 2026/2027 approval.
• Oncology Therapeutics: The personalized neoantigen therapy (INT, Intismeran autogene, mRNA-4157) program, in collaboration with Merck (MRK), is a major focus with a fully enrolled Phase 3 in adjuvant melanoma and enrolling Phase 3 studies in NSCLC. A new Phase 2 in high-risk non-muscle invasive bladder cancer was launched, adding to ongoing Phase 2 studies. The Checkpoint AIM-T (mRNA-4359) program has been added to the prioritized pipeline based on early data, with a Phase 2 study enrolling melanoma and NSCLC patients.
• Rare Disease Therapeutics: The PA therapeutic (mRNA-3927) is in a registrational study targeting 2027 approval. The MMA therapeutic (mRNA-3705) was selected for the FDA START program, with a pivotal study expected to start in 2025 targeting 2028 approval.

Complementing pipeline execution is a strong emphasis on cost discipline. Moderna is committed to rightsizing its operations for the endemic market and future launches. The 19% reduction in combined operating expenses in Q1 2025 is a tangible result of these efforts. The company has set clear targets for further reductions, projecting GAAP operating expenses between $5.4 billion and $5.7 billion in 2026 (down from a prior estimate of $5.9 billion) and between $4.7 billion and $5 billion in 2027. This translates to projected cash costs of approximately $4.7 billion in 2026 and $4.2 billion in 2027. These planned reductions represent a significant decrease from the estimated $11 billion in annual GAAP expenses in 2023, with R&D expected to be the largest source of future savings as large Phase 3 trials wind down. This aggressive cost management is central to the company's goal of achieving cash breakeven on a cash cost basis no later than 2028.

Liquidity and Capital Allocation

Moderna maintains a strong balance sheet, providing a cushion to fund its ambitious pipeline and operational needs. As of March 31, 2025, the company held $8.4 billion in cash and investments, down from $9.5 billion at the end of 2024. This decrease was primarily driven by net cash used in operating activities, which totaled $1.0 billion in Q1 2025. This negative operating cash flow reflects the current period of lower revenue and significant R&D investment.

Investing activities provided $730 million in cash in Q1 2025, mainly from the maturity and sale of marketable securities ($2.6 billion), partially offset by purchases of new securities ($1.8 billion) and capital expenditures ($117 million). Capital expenditures are projected to be approximately $400 million for the full year 2025, supporting manufacturing capabilities and infrastructure.

The company has substantial future commitments, including $454 million in non-cancelable purchase commitments for raw materials and manufacturing through 2027 and $191 million for R&D and other services through 2028. Additionally, there are significant cancelable open purchase orders totaling $2.6 billion related to clinical operations and contract manufacturing, representing potential obligations if agreements were not terminated.

Despite the negative operating cash flow, management believes its cash, cash equivalents, and investments, combined with expected product sales, will be sufficient to fund operations and capital expenditures through at least the next 12 months from the Q1 2025 filing date. However, they foresee continued negative cash flows from operations in upcoming periods due to ongoing investments in the business for future product launches and acknowledge the risk of utilizing capital resources sooner than expected if actual results differ from estimates.

Competitive Dynamics and Market Positioning

Moderna operates in highly competitive markets, facing both large, diversified pharmaceutical companies and other innovative biotech firms. In the respiratory vaccine space, its primary competitors include Pfizer/BioNTech (Comirnaty, Abrysvo), GSK (GSK) (Arexvy), and potentially Novavax. Pfizer and GSK, in particular, possess established global commercial infrastructures, broad product portfolios, and deep relationships with healthcare providers and payers, which can exert significant pressure on pricing and market access. Moderna's entry into the RSV market with mRESVIA faces direct competition from these established players. While Moderna's mRNA technology offers potential advantages in speed and adaptability, competitors leverage scale, existing market share, and potentially lower manufacturing costs, which can be inferred from their typically higher gross margins compared to Moderna's fluctuating margin, which was negative in Q1 2025 due to low volume.

Moderna's strategic response involves leveraging its mRNA platform's flexibility to develop differentiated products like combination vaccines (Flu+COVID) and next-generation versions aimed at improved profiles. It is also building its own commercial infrastructure and securing strategic supply agreements with governments (like the EU tender and BARDA funding) to ensure market access and diversify its customer base beyond direct-to-consumer retail channels.

Beyond vaccines, Moderna competes in oncology and rare diseases with companies pursuing various therapeutic modalities. Its personalized neoantigen therapy program (INT) competes with other approaches to cancer immunotherapy, including those from BioNTech and traditional pharma. The rare disease programs face competition from companies developing gene therapies, enzyme replacement therapies, and other novel treatments.

Intellectual property litigation represents a significant competitive risk. Moderna is involved in patent disputes with Pfizer/BioNTech regarding COVID vaccine technology (with mixed outcomes in different jurisdictions, including a favorable ruling in Germany in March 2025 but unfavorable PTAB decisions in the U.S.) and faces lawsuits from Arbutus/Genevant (ABUS) and GSK concerning LNP technology and vaccine patents. The outcomes of these legal challenges could impact market share, profitability, and the ability to commercialize products.

Moderna's competitive positioning is that of an innovative, technology-driven disruptor seeking to establish significant market share in new areas based on the proven power of its mRNA platform. Its success hinges on its ability to execute on its pipeline, demonstrate clear clinical advantages over existing or competing therapies, and build out efficient manufacturing and commercial capabilities to compete effectively against larger, more entrenched players.

Outlook and Risks

Moderna's outlook for 2025 reflects the current market dynamics and strategic focus. The company expects total revenue to be in the range of $1.5 billion to $2.5 billion, with the majority of sales concentrated in the second half of the year due to seasonality. This guidance range is notably wide, reflecting the inherent uncertainties in COVID vaccination rates, the competitive intensity of the respiratory vaccine market, the uptake and market size of the new RSV vaccine, and the timing of international regulatory approvals and manufacturing site licensures. Importantly, this guidance does not include potential revenue from new product approvals like the recently approved next-generation COVID vaccine (mRNA-1283) or the expanded RSV label (mRNA-1345), which represent potential upside.

Key risks to this outlook and the broader investment thesis include:

• Market Demand Uncertainty: Continued volatility in COVID vaccination rates and intense competition in the respiratory market could lead to sales at the lower end of or below guidance.
• Clinical Trial Outcomes: Negative or inconclusive results from ongoing pivotal trials (e.g., CMV, Norovirus, INT) would significantly impact the pipeline value and future revenue potential.
• Regulatory Hurdles: Delays in approvals, unfavorable label restrictions, or changes in regulatory requirements (like the new FDA framework for COVID vaccines) could slow market entry or limit market size.
• Manufacturing and Operational Challenges: Scaling up manufacturing for multiple new products and achieving targeted cost efficiencies are critical for profitability but face execution risks.
• Intellectual Property Litigation: Adverse outcomes in patent disputes could result in significant damages or injunctions, impacting the ability to sell key products.
• Cash Burn: While cost-cutting is underway, continued high R&D spending may lead to faster-than-anticipated depletion of cash reserves if revenue growth is insufficient.

Conclusion

Moderna stands at a pivotal juncture, transitioning from the unprecedented era of COVID-19 vaccine demand to building a sustainable, diversified biotechnology business. The core investment thesis rests on the proven power and versatility of its mRNA platform, the potential of its deep late-stage pipeline to deliver multiple new product approvals by 2028, and a clear commitment to aggressive cost discipline aimed at achieving cash breakeven.

While the recent financial performance reflects the challenges of a normalizing market and the significant investment phase the company is in, the strategic focus on pipeline execution and operational efficiency provides a roadmap for future value creation. The recent approvals of the next-generation COVID vaccine and expanded RSV label offer tangible progress, while the potential of programs in CMV, Norovirus, oncology, and rare diseases represents substantial long-term upside. However, investors must weigh this potential against the inherent risks of clinical development, regulatory uncertainty, intense competition from established players, and ongoing litigation. Moderna's success will ultimately depend on its ability to translate its technological leadership into a diversified portfolio of commercial products and demonstrate sustained profitability beyond the pandemic's shadow.