Moderna 2023 Shareholder Letter

Dear fellow shareholders,

Our mRNA platform is working.

Today, we are seeing the high-case scenario from our 2018 five-year, long-range plan unfold. We have demonstrated the potential for clinical benefit in multiple infectious disease vaccines, in skin cancer and in three different rare genetic diseases. Based on these clinical successes, we have advanced a broad and diverse pipeline.

We advanced nine programs into late-stage development, including one approved, one filed for approval, and three more that have completed Phase 3 enrollment. We are many steps closer to reaching millions more people with unmet medical needs.

Through more than a decade of progress and investment in science, Moderna has led in establishing the field of mRNA medicine. The team has built a remarkable platform to scale Moderna at a pace not seen before in our industry. Now, it is up to us to bring these mRNA medicines to market for patients, and consequently to drive value for our shareholders.

As we reflect on the past year, our commitment to leveraging mRNA to deliver transformative medicines for patients has never been stronger. We have the platform, technology, resources and the team to establish a new era of medicine.

A Year of Transition

In 2023, SARS-CoV-2 continued to evolve. The virus that causes COVID-19 is clearly here to stay—just like influenza. Our business has also adapted to a more predictable, seasonal endemic market.

Managing the transition took significant effort in 2023. As you know, we rapidly scaled our manufacturing capabilities during the pandemic to play a critical role in combatting COVID-19 with our vaccine. We knew that this surge capacity may not be required in the endemic market, but we felt obligated to ensure we protected as many lives as we could during the pandemic.

During 2023, it became clear that demand for vaccines had entered a new stage of the endemic setting and we pivoted to significantly resize our manufacturing infrastructure to help ensure our COVID-19 franchise would be profitable in 2024 and beyond. Although undervaccination has been observed in the first endemic season, we believe this will settle out over the coming years as the impact of the virus and vaccine during endemic periods becomes evident and may affect future levels of vaccination.

At the same time, we invested in our people, processes, and digital systems to help us build Moderna for the long term. We opened a technology hub in Seattle and welcomed Brad Miller as Chief Information Officer, emphasizing our continued focus on building digital-first and investing in AI because of the profound impact it will have on our Mission. To further advance our mRNA science, we also entered into a partnership with IBM to explore quantum computing and generative AI. We believe that AI will be as transformational to any business as the desktop computer was when it entered the corporate world.

Additionally, we announced a strategic partnership with the Coalition for Epidemic Preparedness Innovations (CEPI), harnessing the power and speed of Moderna's mRNA platform to accelerate the development of mRNA vaccines against viral disease outbreaks that pose global public health threats. The expansion of our mRNA Access program reinforces our dedication to public health by providing researchers with our mRNA technology in the development of vaccines for emerging and neglected infectious diseases. We believe this program can play a key role in helping the next generation of researchers and engineers to advance mRNA science.

We also announced the acquisition of Japan-based OriCiro Genomics, which we now have integrated into Moderna as Moderna Enzymatics. That technology will enable us to reduce manufacturing cycle times and improve quality. We also established strategic collaborations with CytomX, Generation Bio, Immatics and Life Edit, to enhance our internal research and development.

Delivering the Greatest Possible Impact

Last year, we provided external guidance for Spikevax sales of at least $6 billion. We continued to focus on public health efforts to increase vaccination rates globally, and in the U.S. we achieved 48 percent market share for the 2023 fall season, compared to 37 percent in fall 2022—demonstrating our ability to compete in the commercial market. Recognizing that COVID is not going away, we are making it an important piece of our business with our vaccines against COVID-19 and our investigational combination vaccine against flu and COVID.

In parallel, we prepared for the potential 2024 launch of our investigational RSV vaccine for adults, which is expected to further strengthen our financial position and further demonstrate the commercial potential of our mRNA platform. We believe our RSV vaccine candidate has a potentially best-in-class profile based on clinical trial data and ready-to-use pre-filled syringes when compared to two recently launched products. In addition, the mRNA vaccine technology that our RSV vaccine uses has a well-established safety and tolerability profile, having been used in more than a billion COVID-19 vaccine doses.

Turning to the rest of our pipeline, positive clinical trial results across cancer, rare disease and infectious disease were shared during our annual R&D Day in September, when we announced our intent to launch up to 15 products in five years.

I will highlight a few notable 2023 milestones from across our 45 development programs.

Respiratory Franchise

In 2023, we advanced our COVID, RSV and flu respiratory disease programs to positive Phase 3 data. We received U.S. FDA approval of our updated COVID-19 vaccine and filed a Biologics License Application (BLA) for our RSV vaccine. Additionally, our seasonal flu vaccine candidate met its primary endpoint in a Phase 3 trial, and consultations with regulators on a potential licensing package are ongoing.

Our combination vaccine candidates, which can also provide substantial public health benefits, address respiratory viruses associated with the largest disease burden in the category and are designed for higher compliance, increased uptake, consumer convenience and benefits to healthcare systems. Enrollment was completed in our combination trials for flu/COVID-19 (Phase 1/2), flu/RSV (Phase 1), and flu/COVID-19/ RSV (Phase 1). We also recently initiated a Phase 3 trial of our combination vaccine against seasonal flu and COVID-19 with the intention to have a combination vaccine available as early as 2025.

Latent Franchise

We continued to develop vaccines against six latent and other viruses with unmet or underserved needs, including cytomegalovirus (CMV), Epstein-Barr virus, herpes simplex virus, varicella zoster virus, norovirus and HIV. The pivotal Phase 3 study, CMVictory, of our CMV vaccine candidate fully enrolled with adults to evaluate the efficacy, safety and immunogenicity of the vaccine in the prevention of primary infection in women of childbearing age. The Phase 3 study is event-based but given the number of cases we have already seen, we could have CMV Phase 3 data in 2024. CMV is the most common infectious cause of birth defects in the U.S. and CMV has been designated a top priority in new vaccine development by the U.S. National Academy of Medicine for more than two decades.

Oncology Franchise

In 2023, we reported additional data from our Phase 2b trial evaluating our individualized neoantigen therapy (INT) in combination with Merck’s KEYTRUDA in melanoma patients compared to KEYTRUDA alone. The treatment continued to show significant and clinically meaningful improvement in recurrence-free survival and reduced the risk of recurrence or death by 49 percent. These data, with a median follow-up of approximately three years, demonstrate the durability of the therapy.

We were excited to see such a robust clinical benefit with our mRNA therapy, and to launch a new Phase 3 trial with non-small cell lung cancer patients in December. To support this continued progress, we have been investing in building a factory in Marlborough, Massachusetts, and in building out our people capability, which will enable the commercial launch for INT.

Rare Disease Franchise

Our rare disease portfolio, which includes therapies targeting methylmalonic acidemia (MMA), propionic acidemia (PA), glycogen storage disease and Phenylketonuria, continued to show promise. The Phase 1/2 trial for our MMA therapy candidate has dosed 11 participants with a total of 221 doses administered and all participants have opted into the Open-Label Extension study. A global Phase 1/2 trial for our PA candidate, which is our most advanced rare disease program, is enrolling patients in the dose confirmation arm, and most patients who have completed the treatment period of the main study have opted to enter a long-term extension study.

Focusing on Execution

As you can see, we have built significant momentum across our business and our pipeline. Across our respiratory, latent, oncology and rare franchises, we are aiming to launch up to 15 new products over the next five years. We are excited by the near future and focused on execution to deliver for patients.

Staying true to our Mission, we will also continue to invest in science to expand the field of mRNA medicine into new frontiers. For example, in partnership with Vertex, we are advancing an investigational inhaled mRNA therapy in the lung to treat the underlying cause of cystic fibrosis, which we expect to read out in 2024.

Over the same five-year period, we expect to advance many new candidate medicines into clinical trials across established and new modalities. To do this, we will continue to lead with our Values, our Mindsets and a deep sense of purpose in everything we do.

Acting Responsibly

Our commitment to corporate social responsibility remains strong, as evidenced by the publication of our second annual ESG Report in June. As a company, we care deeply about our patients, our employees, the environment and our communities, and we recognize that we have an opportunity to change medicine for all. We will continue to engage, listen and understand what our stakeholders expect from us as a sustainable, responsible business and leader in mRNA medicines.

This leadership is made possible by our people, who are the driving force behind our progress and our culture. I am proud of our team and award-winning culture, which earned Moderna recognition from Science as a top employer for the ninth consecutive year, from BioSpace as the #1 large employer in its Best Places to Work report for the third year in a row, and from the Human Rights Campaign Foundation as an Equality 100 company for the first time in 2023.

Looking Ahead

Our focus for 2024 and 2025 is to drive sales growth and profitability. To achieve that, we are focusing on three priorities.

Priority one is commercial execution. Our recent market share gain in the U.S. demonstrates that we can compete with large established players. We expect COVID sales to stabilize in a fully endemic market, and we will build on our current momentum to grow our market share for Spikevax in 2024.

To support this, we made the decision at the end of 2023 to flatten our commercial organization to help us accelerate decisions and increase customer understanding as we prepare for multiple product launches. With the expected launch of our RSV vaccine candidate in 2024, and potential launch of our flu/COVID combination vaccine as early as 2025, we believe Moderna will experience sales growth in 2025.

Priority two is disciplined investment. We will continue to review our manufacturing costs, product pipeline, and deliver efficiencies. Our upcoming respiratory product launches in 2024 and 2025 will also achieve efficiencies from a growing pipeline.

Priority three is executing on our late-stage pipeline to drive organic sales growth. We have an exciting late-stage pipeline, and we expect to double the number of programs in Phase 3 by 2025 and launch up to 15 products in five years. Up to four of those launches could come by 2025.

With these priorities, we are completing our strategy to accelerate the growth of our business, a journey we have been on since mid-2021. We expect to break even in 2026, as revenue grows and late-stage R&D costs recede, when the current large Phase 3 clinical trials wind down and result in many potential new product launches.

Along the way, we will continue to invest in our people—the changemakers who help us maximize our impact on human health. I am so grateful for their dedication to our Mission and their relentless work. I am also thankful to all the people and organizations that partner with us on this journey to advance our Mission to deliver the greatest possible impact to people through mRNA medicines.

Thank you all for your ongoing trust and support as we work to deliver value to all our stakeholders, and bring mRNA medicines to the world.

We are excited about 2024. This is just the beginning…

Warmest regards,

Stéphane Bancel
Chief Executive Officer