Moderna plans to invest $7 billion in R&D and collaborations

2023-06-20

Moderna, Inc. held its earnings call at the Goldman Sachs 44th Annual Global Healthcare Conference on June 14, 2023. The call featured Jamey Mock, CFO, and Lavina Talukdar, Head of IR, and was attended by Salveen Richter, Biotechnology Analyst at Goldman Sachs.

During the call, the management of Moderna, Inc. expressed optimism about the market outlook and announced plans to invest $7 billion back into the business in 2023. Of this amount, $4.5 billion will be allocated towards research and development (R&D) while the remaining funds will be used for collaborations with other companies to deliver other medicines.

However, the company also acknowledged that the predictability and size of volume are decreasing as the COVID-19 pandemic transitions to an endemic. This has an impact on the cost of goods sold (COGS), which is estimated to be around 35% to 40% for this year and beyond. The company expects the COGS to come down to 20% to 25% in the long term as the market becomes more predictable.

The key drivers of the business for Moderna, Inc. are the COGS and the deployment of cash into internal R&D, SG&A, and capital expenditure. The predictability of volume and size of the volume is also a significant factor in COGS. As the market becomes more predictable, the long-term COGS is expected to be in the 20% to 25% range. The company has over $16 billion in cash, and the primary focus of capital allocation is reinvestment in the business, including R&D, SG&A, and capital expenditure.

The CFO of Moderna, Inc. also revealed during the earnings call that the company plans to invest $1 billion towards capital expenditure in 2023. However, there was no discussion about the company's plans for product/service expansion in the meeting. The conversation was focused on the company's financials, including COGS, cash deployment, and capital allocation priorities.

In conclusion, Moderna, Inc. remains optimistic about the market outlook and plans to invest heavily in R&D and collaborations with other companies. The predictability of volume and size of the volume is a significant factor in COGS, but the company expects it to come down in the long term as the market becomes more predictable. The primary focus of capital allocation is reinvestment in the business, including R&D, SG&A, and capital expenditure.