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One of my distinct memories of the early pandemic was sitting in Moderna CEO Stéphane Bancel’s office in Cambridge, MA, as he told me about the future.
It was March 2020, just as the pandemic was becoming the pandemic, and the Frenchman turned on the charm. Despite not having dosed a first human, Bancel voiced such confidence in its Covid-19 vaccine that he was already entertaining questions on pricing, ramping up manufacturing, and even how success would change the still-young company.
“We are moving biology to a digital world, where we can work out of a sequence, and we don’t invent a molecule,” Bancel told me then.
Moderna has always been polarizing, ambitious and full of big claims. In 2018, it conducted what was then the industry’s largest-ever biotech IPO before a single drug had started late-stage studies.
During the pandemic, that boldness helped beat drugmakers far larger and more experienced. But that same confidence is now at risk of contributing to the company’s downturn, as a management team that’s become known for those huge promises is now learning what happens when it doesn’t meet them.
On Thursday in New York, I watched as Bancel kicked off a news-packed R&D day, speaking to roughly 75 investors, analysts and members of the press. He pitched a once-foreign message of financial discipline underneath crystal chandeliers and a sky-painted ceiling on the top floor of the St. Regis.
So far, the market hasn’t liked what it’s heard. Moderna’s stock ended the day down 12%, flirting with the lowest levels it has been since 2020. Shares were down a further 3% by midday Friday. Its stock has fallen over 80% from 2021 highs, with Moderna’s market value going from $180 billion to about $26 billion.
That’s despite giving investors what they’ve long asked for: cuts to R&D expenses by about 20% over the next few years. But Moderna also delayed one of its key financial targets, now saying that it won’t break even until 2028, two years later than its prior guidance.
It’s not Moderna’s first guidance misstep. Last month, the biotech lowered its 2024 revenue guidance from $4 billion, to $3 billion to $3.5 billion. On Thursday, the company said it now expects $2.5 billion to $3.5 billion for 2025 revenues, an underwhelming range given it previously framed 2025 as a return-to-growth year.
Stéphane BancelIn the words of Leerink Partners analyst Mani Foroohar, Bancel and his leadership team have “proven serially unable to project the performance of their business.” He holds an underperform rating on the stock.
In a sitdown interview Wednesday, I asked Bancel about these forecasting challenges with investors.
“We’re trying to tell them the best judgment we have at the time, with the data we have,” Bancel said, noting that no company has successfully managed the transition out of the pandemic (Pfizer and BioNTech being the other obvious cases). “We are trying to now be more conservative in our numbers.”
It’s true that the Covid market has been nearly impossible to forecast. But that doesn’t excuse the underwhelming start for Moderna’s RSV vaccine. Bancel acknowledged they were “a bit naïve” in their planning and forecasting on RSV for this coming season, particularly in winning competitive contracts with retailers and pharmacies.
The biotech says it plans to launch 10 products over the next four years. At the heart of its R&D day, financial headaches aside, Bancel made a compelling case that that platform is performing. He shared data that the company’s clinical success rate is six times better than the industry average.
“It’s just a question of being patient,” Bancel said. “I know sometimes some investors are not very patient. It’s just a question of time for all those things to fall together.”
The market’s reaction Thursday and Friday sent a clear message: Bancel might have less time than he wants to deliver.