Moderna, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; filed May 7, 2020. Moderna was a clinical-stage mRNA therapeutics and vaccines company with no product-sale revenue. Financial figures below are unaudited and in U.S. dollars.
Financial performance and liquidity
| Metric | Q1 2020 | Q1 2019 |
|---|---|---|
| Total revenue | $8.4 million | $16.0 million |
| Operating expenses | $139.3 million | $157.7 million |
| Operating loss | $130.9 million | $141.6 million |
| Net loss | $124.2 million | $132.6 million |
| Basic and diluted loss per share | $0.35 | $0.40 |
| Cash used in operating activities | $106.2 million | $144.3 million |
Revenue comprised $4.5 million of collaboration revenue and $3.9 million of grant revenue. No product sales were reported, so product gross margins are not applicable. Cash, cash equivalents and investments totaled approximately $1.72 billion at quarter-end, including $391.7 million of cash and cash equivalents and $1.33 billion of investments. Cash, cash equivalents and restricted cash at quarter-end were $403.5 million.
Assets were $2.07 billion and total liabilities were $426.7 million. The filing reports lease obligations, including $38.9 million of non-current financing lease liabilities and operating lease liabilities; it does not report conventional borrowings in the balance-sheet figures presented. Current assets were $1.25 billion versus current liabilities of $134.6 million.
Investing activities used $316.0 million, largely reflecting purchases of marketable securities; financing activities provided $578.1 million, principally from a February public stock offering. The offering generated $549.5 million net proceeds, and common shares outstanding rose from 336.5 million at December 31, 2019 to 370.1 million at March 31, 2020.
Material changes versus Q1 2019
- Revenue fell 48% ($7.6 million), chiefly as collaboration revenue declined 68% ($9.7 million); grant revenue increased 106% ($2.0 million), primarily due to BARDA.
- Collaboration revenue decreased mainly because of timing of Merck deferred-revenue recognition and cumulative catch-up adjustments reflecting revised cost estimates under Merck and AstraZeneca agreements.
- Research and development expense declined 12% to $115.1 million, and general and administrative expense declined 12% to $24.1 million. Lower laboratory supplies, clinical/manufacturing costs, and legal and consulting costs were cited.
- Net loss narrowed by $8.3 million. Operating cash use also declined, while investing cash use increased substantially as the company shifted funds into marketable securities.
Outlook, management commentary and risks
- Management expects significant expenses and operating losses to continue and stated that quarter-end cash, cash equivalents and investments should fund projected operations for at least 12 months from the financial-statement issuance date. The company expects to need substantial additional funding over time; no specific earnings or revenue guidance was provided.
- Moderna was accelerating development and manufacturing of mRNA-1273, its investigational SARS-CoV-2 vaccine, while warning that the program was early-stage, costly, and could divert resources or delay other programs. The NIH was conducting its Phase 1 trial; the company reported FDA clearance for a Phase 2 study on May 6, after quarter-end.
- On April 16, after quarter-end, BARDA committed up to $483 million to support mRNA-1273 development. On May 1, Moderna entered a 10-year manufacturing collaboration with Lonza to expand production capacity. These are subsequent events, not Q1 revenue or cash receipts.
- COVID-19 had already disrupted clinical development. New enrollment was paused in rare-disease trials mRNA-3704 and mRNA-3927 and in the pediatric mRNA-1653 trial; enrollment at the mRNA-1944 site was also paused. The company cited potential further effects on trials, manufacturing, suppliers, staffing, and capital markets.
- Management reported positive interim CMV vaccine (mRNA-1647) immunogenicity and tolerability findings, but noted the small sample size and that further follow-up was pending. No vaccine-related serious adverse events were reported in the described analysis.
- Key risks include clinical and regulatory uncertainty for a novel drug class, manufacturing scale-up and supply constraints, dependence on collaborators and single-source suppliers, competition in COVID-19 vaccine development, potential dilution or financing constraints, and intellectual-property disputes. The company reported no material legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether the up-to-$483 million BARDA commitment is received and reimbursed as expected, and how eligible costs, revenue recognition, and cash timing compare with the commitment.
- Progress, safety, efficacy, regulatory milestones, and manufacturing scale-up for mRNA-1273, including the impact on other programs and the Lonza collaboration.
- Trial delays and enrollment status caused by COVID-19, and whether paused studies resume on revised timelines.
- Drivers of collaboration revenue volatility, including Merck and AstraZeneca cost-estimate adjustments, deferred revenue, and collaborator decisions.
- Cash burn, the duration of the stated liquidity runway, lease and other commitments, and the potential effects of further equity financing and share dilution.