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Moderna (NASDAQ: MRNA)
Q3 2024 Earnings Call
Nov 07, 2024, 8:00 a.m. ET

Moderna Reports Third Quarter 2024 Results: Steady Revenues Amidst Strategic Cost Reductions

Key Topics Covered:

• Prepared Remarks
• Questions and Answers
• Call Participants

Opening Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Moderna third quarter 2024 conference call. [Operator instructions] Please be advised today’s conference is being recorded. I would now like to hand the conference over to today’s speaker, Lavina Talukdar.

Please go ahead.

Lavina Talukdar — Senior Vice President, Head Investor Relations

Thank you, Kevin. Good morning, everyone, and thank you for joining us to discuss Moderna’s third quarter 2024 financial results and business updates. The press release issued this morning, along with the presentation slides, can be accessed on our investors page. Joining me on today’s call are Stéphane Bancel, our chief executive officer; Steven Cole, our president; and Jamey Mock, our chief financial officer.

Before we begin, please be aware that today’s call will include forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Refer to Slide 2 of the presentation and our SEC filings for key risk factors that might affect actual results versus forecasts. I will now turn the call over to Stéphane.

Financial Performance Snapshot

Stephane V. Bancel — Chief Executive Officer

Thank you, Lavina. Good morning or good afternoon, everyone. Let’s take a closer look at our business performance for the third quarter.

In this quarter, we generated $1.9 billion in revenue, with a net income of $13 million. Our cash and investments stand at $9.2 billion. Over the past year, we have focused on enhancing productivity, leading to a significant $500 million reduction in operating expenses compared to the first quarter of 2024. This excludes a $1.4 billion resizing charge from the first quarter of 2023.

I appreciate our team’s efforts to achieve these cost savings, and we remain committed to pursuing greater efficiencies. Notably, the COVID-19 market has benefited from a regulatory approval 19 days earlier than last year. This timely approval allowed us to reach more customers across various segments of the U.S. healthcare system.

The data indicates a positive trend, with an increase in vaccine doses delivered compared to last year. Currently, Moderna holds a 40% share of the retail COVID vaccine market.

Market Dynamics and Opportunities

As shown in Slide 6, our retail pharmacy distribution has improved significantly, with a continuous rise in total vaccine doses this season. However, the recent weeks show a decline in weekly doses, and we anticipate better clarity on trends as the season progresses. The outlook for the COVID-19 market appears promising, suggesting it could be both sizable and sustainable in the long run.

Analyzing the distribution channels for respiratory vaccines, it’s clear there are three main delivery avenues in the U.S.: retail pharmacies, integrated delivery networks (IDNs), and government programs. In 2023, retail pharmacies accounted for 73% of the U.S. COVID vaccine market. Looking at traditional flu vaccine distribution, we see greater reliance on IDNs and government programs.

Given that COVID-19 poses a greater health risk than the flu, we believe there is an opportunity to enhance public health by increasing vaccine rates. We are working on combined COVID and flu vaccination strategies that Stephen will elaborate on soon.

Looking Ahead

Our primary goal is to educate healthcare providers on the importance of COVID-19 vaccination to mitigate public health costs. This season saw three times more hospitalizations due to COVID-19 compared to the flu. Our direct-to-consumer campaign focuses on the dangers of long COVID and advocates for vaccination.

Furthermore, public health authorities, including the CDC, emphasize vaccination, which reflects the latest recommendations for additional COVID-19 doses for vulnerable groups in spring 2025. Lastly, our third-quarter revenue from our respiratory pipeline reached $10 million, falling short of our expectations for 2024 due to timing issues surrounding CDC approvals.

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Moderna Reports Third Quarter Financial Results Amid Strategic Changes

The recent FDA delays and increased competition have affected our ability to secure contracts. Competitors have significantly built inventory ahead of our product launch, leading to reduced sales performance.

As we look to 2025, we are optimistic about our prospects. We anticipate engaging fully from the start of the U.S. contracting season. Our application for a broader MECA label, intended for high-risk populations aged 18 to 59, is underway. Furthermore, should regulators suggest revaccination, it could open doors for market expansion. Sales outside the U.S. will also commence in 2025, as we begin to receive international approvals.

It is my pleasure to welcome Abbas Hussain to our board of directors. With over 25 years of commercial experience, including his recent role as CFO of Vifor and as CCO of GSK, Abbas’s insights will be invaluable. His expertise will guide Moderna’s growth strategy as we move toward commercializing our product portfolio.

We are also expanding our executive committee. Stephen will now oversee a full commercial organization instead of a divided structure. Joining us are Rose Loughlin and Jacqueline Miller, who have both been promoted to significant roles—Rose as Executive Vice President of Research and Jackie as Chief Medical Officer of Development. This marks the first time in Moderna’s history that we have promoted internal talent to the executive committee, demonstrating our commitment to cultivating our existing workforce.

Tracey Franklin will expand her responsibilities to become Chief People and Digital Technology Officer. This role emphasizes the integration of culture and digital innovation as we refine our business processes. I would like to thank Stephen and Tracey for their ongoing partnership and extend my congratulations to Rose and Jackie on their promotions.

Now, I will turn it over to Jamey Mock, our Chief Financial Officer.

Jamey Mock — Chief Financial Officer

Thank you, Stephane, and hello, everyone. I’ll provide an overview of our financial performance for the third quarter and our outlook for the remainder of 2024. Let’s examine our commercial outcomes, starting with Slide 14. For the third quarter of 2024, our net product sales reached $1.8 billion, bringing our year-to-date total to $2.2 billion.

In addition to this, we earned around $100 million in other revenues from grants, collaborations, licensing, and royalties, which are not reflected on this slide. Out of our Q3 2024 product sales, $1.2 billion came from the U.S. market, benefitting from an earlier launch compared to the previous year. Our results exceeded expectations mainly due to a favorable sales timing and securing FDA approval of our updated COVID-19 vaccine three weeks earlier than last year.

Included in our $1.2 billion U.S. sales is a released provision of approximately $140 million, attributed to fewer product returns from the prior season than anticipated. We also initiated sales of our new speed vaccine during Q3, generating initial revenue of $10 million. However, we see potential for future growth in this area.

Our international sales totaled $0.6 billion, aligning with our forecasts but showing a decline compared to Q3 2023, which benefited from orders deferred from the previous year. For 2024, we maintain our product sales estimate of $3 billion to $3.5 billion, indicating a range of $0.8 billion to $1.3 billion for Q4. We expect U.S. product sales in this quarter to range from $200 million to $500 million.

This range depends on three key factors: our Spikevax market share, vaccination rates, and the performance of the RSV market. Currently, our retail market share stands at about 40%. However, it’s early to gauge our share in the government and institutional markets. Our projections assume COVID vaccination rates could be flat or down by 10% compared to the previous year. If these conditions persist, we anticipate being at the lower end of our sales estimates.

For international 4Q product sales, we estimate between $600 million and $800 million, reflecting a tighter range due to the contracted volumes and confirmed orders we have in place.

Transitioning to Slide 15, I’ll dive deeper into our Q3 financial results. Our net product sales for Q3 amounted to $1.8 billion. The cost of sales during this period was $514 million, accounting for 28% of net product sales—this represents a significant decrease from $2.2 billion in Q3 2023.

This reduction stems from our previous strategic initiatives to reform our manufacturing footprint, which involved $1.4 billion in charges related to inventory write-downs and cancellation fees. Without this charge, our cost of sales still saw a decline of 38% year-over-year, showcasing our drive for productivity improvements in manufacturing.

Research and development expenses were $1.1 billion in Q3 2024, reflecting a slight decrease from $1.2 billion the previous year. This quarter, we also acquired a priority review voucher, included in our results. Excluding this purchase, we noticed a considerable reduction in R&D, pointing toward efforts to achieve higher cost efficiencies.

Our SG&A expenses were $281 million for Q3 2024, down 36% year-over-year. This decline is part of our broader efforts to enhance cost efficiency while making essential investments to boost productivity. Our income tax for this quarter stood at $8 million, significantly lower than the $1.7 billion from the same period last year, primarily due to a $1.7 billion valuation allowance on deferred tax assets established last year.

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Significant Turnaround: Company Reports $13 Million Net Income in Q3 2023

The recent quarter has shown promising improvements in our financial performance as we continue to focus on cost management and efficiency strategies.

Improved Financial Health

Our net income for this period reached $13 million, a remarkable turnaround from the net loss of $3.6 billion that we reported in Q3 2023. Earnings per share rose to $0.03, a significant recovery compared to a loss of $9.53 per share during the same time last year.

Cash Reserves and Spending Trends

At the close of the quarter, our cash and investments stood at $9.2 billion, a decline from $10.8 billion at the end of Q2. This drop primarily resulted from ongoing research, development expenditures, and operational costs. Let’s look closer at the effective cost reductions we are implementing throughout the company.

Commitment to Efficiency

As discussed in prior calls, we are building a unique operating model designed to enhance efficiency. Over recent years, we have strategically invested in people, processes, and technologies to create foundational capabilities, setting the stage for scalable growth. Our results for 2024 reflect these efficiency gains. Notably, we reduced our selling, general, and administrative (SG&A) expenses by 36% year-over-year in Q3.

SG&A reductions occurred across all areas, including commercial, medical, and general administrative spending. Key contributors to these savings included decreased spending on purchased services and external consultants, driven by better use of digital technologies and AI. Year-to-date, our SG&A costs are down 24% compared to the previous year. While we strive for greater productivity, we are also committed to boosting COVID-19 vaccination rates through investments in healthcare professional education and consumer advertising campaigns.

Outlook for Future Spending

As we aim to strengthen our competitive position in the marketplace for COVID-19 and RSV vaccines, we anticipate less drastic year-over-year reductions in Q4 SG&A spending. For the full year, we project SG&A will drop approximately 20% to $1.2 billion, which is illustrated in our updated financial framework on the next slide.

Guidance on Product Sales and Expenses

Our guidance for net product sales remains between $3 billion to $3.5 billion. Several factors are under our watch as the season unfolds. For cost of sales, we have narrowed our guidance to 40%-45% of product sales, thanks to enhanced manufacturing productivity initiatives. Additionally, we are lowering our full-year research and development (R&D) estimate to $4.6 billion from a previous estimate of $4.8 billion. This change reflects both productivity improvements and shifts in clinical study timelines.

We anticipate SG&A expenses for the year to be around $1.2 billion, reduced from $1.5 billion in 2023, a year-over-year decrease of approximately 20%. Our tax expenses are expected to remain minimal in 2024, and we are revising our capital expenditures outlook to about $1.2 billion. This adjustment accounts for the purchase of our Norwood campus for roughly $400 million, which will be partially offset by reductions in other capital expenditures totalling about $100 million. Securing this asset grants us control to expand and develop the campus to enhance productivity and innovation.

We expect the transaction for the Norwood campus to finalize in December. By the end of 2024, we forecast cash and investments to total near $9 billion. The additional expenditure for the campus acquisition will be balanced by lower costs in sales, R&D, and other capital expenses. Following our actual product sales of $1.8 billion in Q3, we have strong visibility into customer cash collections for Q4.

Pipeline Update from Stephen Hoge

Now, I will turn the call over to Stephen Hoge, our President.

Thank you, Jamey, and good day to everyone. I will briefly go through our pipeline status. During our R&D event in September, we highlighted our goal for 10 product approvals over the next three years. Below is a summary of those programs.

Advancements in Respiratory Vaccines

Focusing on our respiratory vaccines, we are pleased to report positive Phase III data for our next-generation COVID vaccine, MRNA-123a, showcasing a 13.5% improvement in efficacy for participants aged 65 and older. We intend to file mRNA-1283 for approval in 2024 and will request priority review.

Our RSV vaccine, mRNA-1345, also demonstrated positive safety and efficacy in high-risk participants during Phase III trials. We are planning to submit a priority review voucher for this program later this year. Additionally, we reported favorable Phase III results for our combination flu and COVID vaccine, mRNA-1083, with plans for a 2024 approval submission pending ongoing discussions with the FDA.

We chose not to pursue a priority review voucher for the flu vaccine due to the submission timeline relative to the upcoming respiratory virus season in 2025. We will announce any confirmed PDUFA dates for these programs as they are established. Regarding our standalone flu vaccine, MRNA-1010, we have launched and substantially enrolled participants for the first season of our Phase III efficacy study.

Addressing Other Key Vaccines

Now, looking at our non-respiratory vaccine portfolio, for our CMV vaccine, we expect approval for the 81 cases needed for interim analysis in our Phase III study by the end of this year. The Data Safety and Monitoring Board will conduct statistical analysis, and if they recommend unblinding, we will share those results. For norovirus, enrollment in our Phase III trial is progressing quickly.

Oncology and Rare Disease Initiatives

In oncology, alongside our partner Merck, we have initiated a Phase III trial evaluating adjuvant INT or mRNA-4157 in combination with KEYTRUDA for patients with specific types of resected non-small cell lung cancer. This marks the second Phase III trial for INT in this space, targeting patients who might not respond well to neoadjuvant therapy alone. Details of this study will be shared in upcoming slides.

For our rare disease therapeutics, we aim to generate pivotal trial data for our PA program in 2024, with FDA agreement on our pivotal trial design expected to commence in the first half of 2025. On Slide 22, we detail the design of our Phase III study for the norovirus vaccine candidate. This study, involving 25,000 adults aged 18 and above, is randomized, observer-blind, and placebo-controlled.

Turning to the design for our second Phase III study in non-small cell lung cancer, involving the IMT in collaboration with Merck, over 1,200 patients with Stages I to IIb non-small cell lung cancer without an EGFR mutation will be enrolled, and they are set to receive neoadjuvant therapy combining KEYTRUDA and chemotherapy before surgery.

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Innovation and Strategy: Company Discusses Future Prospects During Earnings Call

In its latest earnings call, executives outlined critical advancements in research and development and projected expectations for sales growth in the coming years.

Introduction of Clinical Trials and Key Findings

The company announced plans to randomize approximately 680 patients who have not achieved a pathologic complete response. This study will compare two treatment groups: a combination of INT plus KEYTRUDA and KEYTRUDA plus placebo. The primary goal is to evaluate disease-free survival, while secondary outcomes will focus on distant metastasis-free survival and overall survival rates. Now, I will turn the call over to CEO Stephane V. Bancel.

Priorities and Future Developments

Thank you, Stephen and Jamey. During our R&D Day in September, we discussed our company priorities. Firstly, we aim to boost sales of our approved products, Spivak and Morelia. The second priority is our last step plan, aiming for up to 10 product approvals over the next three years to drive sales growth. Furthermore, we are dedicated to enhancing cost efficiency and plan to reduce annual R&D expenses by $1.1 billion starting in 2027.

Our initial focus will be on our baseload and Media products, which form the backbone of our respiratory vaccine portfolio. We are committed to working across all market channels to maximize buyback availability and are enhancing our marketing efforts to increase our core pagination rate.

On an international scale, we plan to open manufacturing plants in the U.K., Canada, and Australia by 2025 to fulfill multi-year contracts. Along with conducting full R&D contracting in the U.S. and other countries, we anticipate an increase in both sales and market share. Our goal remains achieving up to 10 product approvals in the next three years, paving the way for future investment driven by sales growth.

Clinical Milestones and Expected Products in 2024

We have set clear milestones for our upcoming programs. For our CMV vaccine, we aim to analyze Phase III vaccine efficacy study results by year-end. We are also initiating pivotal studies on norovirus, while flu Phase III vaccine efficacy studies are already in progress.

Additionally, we plan to file three products in 2024, including a COVID vaccine for RSV targeting high-risk individuals aged 18 to 59, and a combination COVID-flu vaccine, which is currently under discussion with the U.S. FDA. A continued focus on operational efficiency is essential, with expectations for flat to decreasing expenses in 2025. As seen in our latest quarter performance, our cost-saving initiatives are showing traction.

By 2027, we expect to have reduced annual R&D expenses by $1.1 billion. Our adjustments in cost of sales aim to achieve operational leverage while continuing our commitment to modern medicine, as we currently have two approved products that protect daily lives.

Confidence in Future Execution

While challenges remain, we trust our team’s ability to meet targets. The ongoing efforts to improve patient outcomes are starting to show their impact. With that, I will now open the floor to questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Salveen Richter from Goldman Sachs. Your line is open.

Salveen Richter — Analyst

Thank you, good morning. I have two questions. First, could you provide details on the source of the rest of world revenue in Q3 and your expectations for Q4? Which countries are contributing, and can we anticipate these contracts to continue into 2025?

Secondly, regarding CMV, you mentioned the DSMB’s recommendations for unblinding. Can you clarify whether interim data will be released or if we must await full analysis results? Thank you.

Stephen Hoge — President

Thanks for your questions, Salveen. To address your first inquiry about rest of world revenue, we are establishing a presence in the U.K., Canada, Australia, and have recently announced an order in Brazil. Shipments will flow through Q3 and Q4. For Q4, we expect low-end revenue of $600 million, mostly contracted with these nations. However, some decline is expected in 2025, with potential upticks in 2026 based on existing contracts.

Jamey Mock — Chief Financial Officer

Regarding your CMV question, if the DSMB decides to recommend unblinding based on our findings, we will share the results. It’s possible they may not recommend unblinding if our first interim analysis doesn’t show statistical significance, leading to the final analysis being conducted later.

Operator

Thank you. Our next question comes from Ellie Merle from UBS. Your line is open.

Ellie Merle — Analyst

Thank you for your time. I have a question on Axios COVID revenues. In prior conversations, you’ve mentioned contracts providing guaranteed purchases extending to the end of the decade. Could you outline the general size of these contracts and any minimum revenue commitments for these countries moving forward? Also, regarding CMV, could you update us on the expected timing between interim and final analysis events?

Jamey Mock — Chief Financial Officer

On the contracts, we prefer not to disclose specifics. However, as we introduce new products, we anticipate the minimum purchase commitments will rise over time. That said, there may be a decrease in 2025, followed by growth in 2026 as contracts take effect.

Stephen Hoge — President

Regarding the timing of CMV, our accruals are progressing steadily. We are addressing a backlog of case confirmations and navigating several steps required for validation.

Moderna Discusses COVID-19 Vaccine Economics and Future Products in Recent Earnings Call

Ellie Merle — Analyst

Great. Thanks.

Operator

Our next question comes from Gena Wang with Barclays. Your line is open.

Gena Wang — Analyst

Thank you. I have two questions. One is about commercial aspects. If we consider $1.2 billion in revenue and accumulate $19 million in U.S. doses, is it correct to view this calculation as a net price per dose? Additionally, could you provide the final reserve return from last winter? What is your reserve return so far for this winter season? Finally, regarding the combined flu and COVID vaccine, why not use a priority voucher? How many vaccines do you plan to submit this year, and which of these might be ready for the 2025 winter season?

Jamey Mock — Chief Financial Officer

Yes, Gena, let me answer your first question. The $19 million you mentioned likely refers to the total market for COVID vaccinations in the U.S., rather than specifically for Moderna. While we won’t disclose exact pricing, it aligns fairly closely with the figures you’re considering.

Stephen Hoge — President

Regarding the flu COVID combo, we have decided not to use the priority review voucher this year, as it wouldn’t help us meet the contracting season due to timing constraints. We’ll reserve it for a future product instead.

For submissions, we expect that two of our products will proceed using priority review vouchers. If all goes well, we anticipate the possibility of receiving approvals next year before the flu season. However, we do not factor any revenue from the RSV SBLA or the 1,283 application into our 2025 guidance, so these approvals would be considered an upside, but not accounted for in revenue projections.

Gena Wang — Analyst

Could you repeat that about the reserve returns? I missed those details.

Gena Wang — Analyst

Could you provide the final reserve return from last winter? I know you initially booked over $500 million but adjusted it later. What are the final numbers? And what is your reserve return assumption for this winter season?

Jamey Mock — Chief Financial Officer

As I mentioned in my earlier remarks, the final reserve return was about $140 million, driven primarily by lower-than-expected reserves. The prior estimate of over $500 million was adjusted to around $400 million. We are continuously monitoring vaccination rates and adjusting our projections for this winter season.

Gena Wang — Analyst

Thank you.

Operator

Our next question comes from Michael Yee with Jefferies. Your line is open.

Michael Yee — Analyst

Thank you. I have two questions. First, on the combo vaccine, can you clarify the factors contributing to uncertainty around filing? Is an infection study required? Second, the market seems to have anticipated significant growth here, but there are many dynamics at play. What gives you confidence that you’ll remain competitive in this space, considering your current guidance for 2025?

Stephen Hoge — President

Thank you for the questions. Regarding the combo vaccine, we have been in discussions with the FDA about what data is required for a successful filing. As we’ve recently shared data from our ADA study, we aim to submit for approval this year. We believe that withdrawing the priority review voucher allows for a more in-depth review process that could ultimately benefit us and the agency.

Stephane V. Bancel — Chief Executive Officer

As for RSV, the market dynamics this year are different from last year’s robust expectations. New CDC guidelines had a noticeable impact on this year’s demand. Customers are primarily focused on ensuring appropriate vaccinations and inventory levels, which affect sales velocity. It will be crucial to observe the market response in Q1. We expect that strong data on our vaccines will aid in future contracting and sales, particularly outside the U.S., where we are actively pursuing approvals.

Michael Yee — Analyst

Thank you.

Operator

Our next question comes from Tyler Van Buren with TD Cowen. Your line is open.

COVID Vaccine Sales Projections Raise Questions for Future Strategies

Overview of Vaccine Sales Trends and Expectations

Recent discussions among analysts highlight concerns surrounding the projected decline of COVID vaccine sales in the U.S. It has been noted that these sales were relatively stable from Q3 to Q4 last year. However, sales guidance for Q4 this year anticipates a dramatic drop of 60% to 80% if RSV (respiratory syncytial virus) sales remain low. This situation prompts a closer look at market dynamics and potential changes in vaccination patterns.

Market Dynamics and Vaccination Strategies

Stephane V. Bancel, Chief Executive Officer, emphasized the importance of examining various channels in the U.S. market. The company has access to extensive data from retail and long-term care facilities, tracking vaccination trends closely. Bancel noted that an early start to the vaccination season has likely influenced current sales patterns. Retailers are ramping up their vaccination efforts in anticipation of the holidays, but the results remain uncertain as adjustments are made going forward.

Interest is also focused on the Integrated Delivery Networks (IDNs), where efforts are underway to boost COVID vaccination rates compared to last year. However, visibility into these campaigns has been limited as many commenced recently. Overall, Bancel believes that despite potential setbacks, the market for COVID vaccinations remains significant.

Manufacturing and Future Approval Insights

Regarding the company’s new manufacturing facility in Massachusetts, Bancel confirmed that progress is on track for completion by year-end. This facility will play a crucial role in transitioning clinical work and is expected to alleviate any bottlenecks in the approval process, a topic addressed during discussions with Terence Flynn from Morgan Stanley.

Regulatory Climate and Market Competitiveness

Evan Wang from Guggenheim Securities raised questions about potential legal liabilities and changes in policies with the upcoming administration. Bancel reaffirmed that the company will continue collaborating closely with government entities regardless of administration shifts. The aim remains clear: to enhance public health through innovative medicines.

When discussing RSV, Bancel acknowledged the differing timelines in international markets regarding product approvals and recommendations. He conveyed confidence that the global market for RSV vaccines will grow, particularly as public awareness increases about the virus’s impact. Understanding these factors will be essential for establishing a competitive presence beyond U.S. borders.

Conclusion

As analysts and executives alike examine the shifting landscape of COVID vaccine sales and the future of RSV vaccines, it is clear that strategic adaptations are necessary. Enhanced efforts in communication and education regarding these vaccines will be vital in addressing both public health needs and market challenges going forward.

Next Steps in Vaccine Development

The focus will now shift to monitoring sales trends closely while maintaining efforts to establish robust communication channels with consumers and healthcare providers. As the world continues to navigate the challenges of vaccination and disease prevention, ongoing assessments and strategic planning will be key to the company’s success.

Important Updates on Upcoming Clinical Trials and Market Strategies

Trial Designs and Patient Enrollment: What’s Next?

Jamey Mock — Chief Financial Officer

Thank you, Ed. We plan to progress into pivotal study designs for MMA either this year or very soon in 2025. The timeline differs between MMA and PA. For MMA, we believe there’s a biomarker that supports potential approval. We’re currently discussing this with the FDA, and results from this biomarker can be obtained relatively quickly.

Conversely, the PA studies lack a clear biomarker. Therefore, we’ll focus on event rates which typically require more time. Ultimately, how soon we see significant benefits depends on patient enrollment speed. We hope to launch that product around 2026, but quicker patient enrollment may shorten this timeline. We’ll keep you updated regarding our progress in patient enrollment.

Edward Tenthoff — Analyst

Great. Thanks, Jamey.

Operator

Next, we’ll hear from Luca Issi with RBC Capital. Your line is open.

Luca Issi — RBC Capital Markets — Analyst

Thank you. Regarding RSV, this year has posed challenges due to late approval timing. What are your expectations for next year? Would you estimate capturing a third of the market share given the availability of peripheral syringes and the absence of GBS? Also, for COVID in the U.S., what’s your outlook on market share? Last year seemed to show growth against Pfizer, while this year may indicate a decline.

Stephane V. Bancel — Chief Executive Officer

We don’t provide specific market share guidance. However, we expect that competing in a full season will yield different outcomes than last year. For 2025, we’ll assess our full strategy. Regarding COVID, we have seen some loss in market share as indicated earlier. The retail market remains competitive, and we’ll have a clearer picture of our overall share as the season concludes.

Luca Issi — RBC Capital Markets — Analyst

Thank you.

Operator

Our next question comes from Courtney Breen with Bernstein. Your line is open.

Courtney Breen — AllianceBernstein — Analyst

Thank you for the opportunity to ask a question. I’d like to know about the recent initiation of the 009 trial in non-small cell lung cancer, especially with its chemotherapy combination approach. What motivated this trial design? Additionally, what factors will influence the program’s expansion to other tumor types? Is it primarily scientific evidence or manufacturing capacity for Phase II development?

Stephen Hoge — President

Thank you for your questions. The design for the non-small cell lung cancer trial reflects a shift in standard care. There’s an increasing trend toward neoadjuvant treatments involving chemotherapy and KEYTRUDA, with many patients achieving a complete response through this method.

Recognizing this shift, we aim to assess the potential for IMT to benefit these patients. The study will enroll around 680 patients, a majority of whom we expect will not achieve a complete response. Our goal is to study the added benefit of the therapy when combined with KEYTRUDA in the neoadjuvant context.

Regarding other applications, we are actively collaborating with Merck to explore various areas where IMT could be beneficial. Although manufacturing capacity is a factor, our pace in beginning new studies will be driven by multiple considerations, including execution capabilities. We are planning further Phase III programs with Merck and will announce them as we move forward.

Operator

Lastly, we have a question from Manos Mastorakis with Deutsche Bank. Your line is open.

Manos Mastorakis — Deutsche Bank — Analyst

Thank you. If approved, how quickly do you foresee the flu market transitioning to a combination vaccine for COVID? Is this expected in 2025, or is it more of a mid-term prospect? Also, what’s the latest update regarding the cover litigation, particularly concerning GSK’s recent lawsuit?

Stephen Hoge — President

I’ll address the first question on timing. As we move forward…

Moderna CEO Discusses Future of COVID and Flu Combination Vaccines

Moderna’s leadership shares insights on the timing of new vaccines and ongoing litigation.

During a recent conference call, Moderna’s CEO, Stephane V. Bancel, addressed the anticipated timeline for a combined COVID-19 and flu vaccine. Approval processes and health recommendations will significantly influence the launch schedule. Bancel noted, “We do not believe that 2025 is the time that will happen” because flu cases in the United States typically surge in the early part of the year.

Given the timing of the submission for regulatory approval, Bancel expressed hope for a 2026 launch instead. He emphasized the public health impact that could result from a successful combination vaccine, potentially preventing hundreds of thousands of hospitalizations through better compliance with COVID vaccines alongside an effective flu vaccine. However, achieving this goal depends on the regulatory review and recommendations in various markets.

Long-term, Moderna is optimistic about combo vaccines. Bancel highlighted the importance of protecting high-risk groups from seasonal respiratory viruses across its markets.

Stephane V. Bancel — Chief Executive Officer

When addressing the ongoing case with GSK, Bancel stated, “Fresh lawsuits are not uncommon during market formation around new technology and we are prepared to defend ourselves from these claims.” He looks forward to presenting their side at the scheduled trial.

Operator

Thank you. Ladies and gentlemen, this does conclude the Q&A portion of today’s conference. I’d like to turn the call back over to Stephane for any closing remarks.

Stephane V. Bancel — Chief Executive Officer

Thank you for joining us today. We look forward to engaging with many of you in the coming weeks. Have a great day.

Operator

[Operator signoff]

Duration: 0 minutes

Call Participants:

Lavina Talukdar — Senior Vice President, Head Investor Relations

Stephane V. Bancel — Chief Executive Officer

Jamey Mock — Chief Financial Officer

Stephen Hoge — President

Stéphane Bancel — Chief Executive Officer

Salveen Richter — Analyst

Ellie Merle — Analyst

Gena Wang — Analyst

Michael Yee — Analyst

Tyler Van Buren — Analyst

Terence Flynn — Analyst

Evan Wang — Guggenheim Partners — Analyst

Edward Tenthoff — Analyst

Luca Issi — RBC Capital Markets — Analyst

Courtney Breen — AllianceBernstein — Analyst

Manos Mastorakis — Deutsche Bank — Analyst

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