Moderna to Cut $4B in R&D by 2028 Amid Intense Launch Schedule

Moderna, the renowned biotech company, has unveiled plans to reduce its research and development (R&D) spending in anticipation of launching up to ten new products. During an investor day presentation, Stephen Hoge, Moderna's President and head of R&D, disclosed that the move aims to fund existing projects without raising additional equity, targeting operational cash break-even by 2028, which is a shift from the earlier target of 2026. This announcement, however, led to a significant drop in Moderna's stock price, reflecting investor skepticism about the company's financial strategy and future prospects.

The company intends to cut annual R&D expenditure by $1.1 billion, intending to reduce overall expenses by 2027. Despite this strategy being aimed at securing ten product approvals, the disclosure failed to instill confidence among investors, resulting in a 12% decline in Moderna's stock to $69.68, down from the previous day's $79.51. Analysts from William Blair attributed this reaction to the revised breakeven timeline and concerns over Moderna's melanoma vaccine mRNA-4157, developed with Merck, which is unlikely to receive accelerated approval as an adjuvant treatment for recurrent disease.

Moderna has reinvested the $20 billion it generated during the COVID-19 pandemic back into its product pipeline. Now, the company faces the challenge of launching multiple new medicines simultaneously. Hoge acknowledged the daunting nature of this task, stating that the company needs to demonstrate progress on these launches before ramping up its R&D engine again.

This year, Moderna has secured approvals for its updated COVID-19 shot and its RSV vaccine mResvia, part of its respiratory vaccine portfolio. These approvals benefited from insights gained during the development of the COVID-19 vaccine SpikeVax. Hoge explained that studies for these vaccines can be expedited due to the seasonal nature of the infections.

Moderna plans to submit three additional products for approval this year, including a next-generation COVID-19 shot (mRNA-1283) and a flu-COVID combination vaccine (mRNA-1083), which showed positive Phase III results in June. The company will also seek to expand the label for its RSV vaccine to include a broader population.

Looking ahead, Moderna aims to diversify its pipeline, focusing on latent vaccines, rare diseases, and oncology portfolios. Key programs include Phase III assets mRNA-1403 for norovirus and mRNA-1647 for cytomegalovirus. Hoge emphasized the significant effort behind these projects and the commercial challenges of launching numerous products within the next three years, leading the company to adopt a more measured pace.

As part of its strategic adjustments, Moderna will be more selective in advancing rare disease and latent vaccine assets into pivotal development stages. The company also plans to scale back its respiratory R&D spending that initially surged due to COVID-19 funds, with no new pivotal trials for these products expected in 2024–2025.

Moderna has also pared down its pipeline, discontinuing several initiatives. For example, the preclinical endemic human coronavirus vaccine program (mRNA-1287) and the infant RSV program (mRNA-1345) will not progress beyond current trials. In oncology, the company will halt development of the KRAS antigen-specific therapy (mRNA-5671) and the triplet therapy mRNA-2752, along with the cardiovascular relaxin program (mRNA-0184) following Phase I.

Moderna's average annual R&D expenditure is projected to be $4.6 billion for this year and the next, decreasing to $3.8 billion from 2026 to 2028. This adjustment means total spending will drop from a projected $20 billion between 2025 and 2028 to $16 billion. These R&D cuts will start next year and reach their full impact by 2027.

The commercial respiratory franchise is expected to be profitable in 2023, with anticipated sales of $3 billion to $3.5 billion. However, this revenue will not be sufficient for Moderna to break even until 2028. Analysts from William Blair and Jefferies anticipated the extended profitability timeline, but the update still left investors unconvinced.

William Blair analysts noted that Moderna was becoming a "show-me" story, requiring tangible progress to restore investor confidence and make the company an attractive investment prospect once again.