At an investor lunch held by Goldman Sachs, and a fireside chat held a few days later by Jefferies, Moderna’s top executives laid out a similar hopeful scenario for why they believe the company will be able to carry out the comeback plans it first announced in September and continue its development of mRNA-based vaccines should Kennedy come to oversee HHS.
Moderna CEO Stéphane Bancel and president Stephen Hoge (joined at the event by Lavina Talukdar, the company’s senior vice president and head of investor relations) based their optimism in part on the historic administrative relationship between HHS and its secretaries.
“Management highlighted that, according to legislation, the Secretary of the Department of Health and Human Services (HHS) is responsible for managing the department rather than creating policy,” the Moderna leaders asserted, according to a report by Benzinga based on a Morgan Stanley analyst’s account of the lunch.
“Significant effort”
The leaders also reportedly asserted, “It remains uncertain how political appointees might affect the current vaccine regulatory framework, which Moderna believes would require significant effort to alter.” While Kennedy has previously raised concerns about vaccine safety, the concerns focused on vaccines for children; Moderna’s vaccines are not specifically targeted for children.
During the luncheon, Bancel and Hoge “expressed strong confidence” in the comeback strategy they laid out for Moderna in September at its annual R&D Day. Moderna committed to stepping up the development of vaccines for cancer and rare diseases, while dialing back investment in infectious disease jabs.
Moderna’s strategy jolted investors enough to send shares diving 14% over the two days following the announcement, to $68.28 on September 13 from $79.51. That’s because the company pushed back by two years, from 2026 to 2028, its plans to break even on an operating cash cost basis—which excludes stock-based compensation, depreciation, and amortization expense—with $6 billion in revenue.
Moderna also revealed plans to slash between $1 billion and $1.2 billion in expenses by shrinking its R&D budget by about 20%, from the $4.8 billion it anticipated spending this year to between $3.6 billion and $3.8 billion by 2027.
However, last month, Moderna surprised analysts by reporting net income of $13 million (up from a $3.63 billion net loss in Q3 2023) and higher-than-expected sales of its COVID-19 vaccine Spikevax® ($1.8 billion). Yet the unexpected profit wasn’t enough to stave off a drop in Moderna shares.
Rebounding shares
This past week saw better stock news for Moderna, as shares rebounded 12% from last week, rising to $41.11 Friday, from $36.85 on November 15. That low (just $1.05 or 3% above the stock’s 52-week low) followed Wolfe Research initiating coverage of Moderna with analyst Alexandria Hammond rating the stock an “Underperform” and setting a 12-month price target of $40.
One likely factor in Moderna’s comeback: HSBC analyst Yifeng Liu on November 18 upgraded the firm’s rating on the company’s shares from “Hold” to “Buy.” However, Liu chopped the firm’s price target on Moderna by 29%, from $82 to $58, citing concerns over the company’s comeback plans, according to TipRanks.
Despite this week’s relatively good news, Moderna shares are down 48% year-over-year, having closed at $78.17 on November 22, 2023, no small factor in the company mapping out its comeback. But the stock has upside potential, he added, should Moderna deliver on plans to bring 10 pipeline candidates to approvals, up from the current two (SpikeVax and respiratory syncytial virus [RSV] vaccine mRESVIA, the latter approved in May). The 10 include three of Moderna’s five respiratory vaccines with positive Phase III results, which the company expects to submit for approval this year.
On Thursday, Jefferies equity analyst Michael J. Yee reported highlights of its fireside chat with unnamed Moderna “management” leaders to investors. Summarizing the event, Yee wrote that the “co[mpany] believes RFK may have caused investor nervousness but unlikely doing anything draconian or removing vaccines.” That belief is based on RFK Jr. asserting in numerous interviews, including an NPR appearance, that: “Of course, we’re not going to take vaccines away from anybody,” and, “We are going to make sure that Americans have good information about vaccines and vaccine safety.”
Moderna’s view was buttressed by comments made in a separate Jeffries fireside chat with Peter Marks, MD, PhD, director of the FDA’s Center for Biologics Evaluation and Research (CBRE). According to Yee, Marks “doesn’t expect any changes to vaccine approvals + the new admin’s stance has mostly been around vaccine mandates [FDA only weighs in on safety/efficacy].” He expects “add’l AdComm’s [advisory committee meetings on applications for new vaccines] or other pushes for transparency would be an oppt’y to reinforce + shift dialogue towards risk benefit.”
Not “going anywhere”
In a separate summary elaborating on Marks’ comments, Yee reported: “Dr. Marks stated that ‘he isn’t going anywhere’ and sees it as imp’t [important] that people see constant and consistent leadership—FDA leadership has a long track record of working w/ different admins including the Trump admin[instration].”
Marks cited FDA cooperation with Operation Warp Speed initiative, through which Trump’s first administration shepherded development of COVID-19 vaccines through funding of trials and manufacturing. According to a 2021 study, Operation Warp Speed spent over $18 billion dollars of U.S. public funds on six vaccine candidates, including Moderna’s SpikeVax, the subject of a $1.5 billion agreement announced in August 2020 to manufacture and deliver 100 million doses.
“While acknowledging uncertainty and that he can’t fully predict workforce impacts, his belief is that the vast majority at FDA generally have very strong relationships w/ their management and leadership and a commitment to unmet needs and rare diseases which wouldn’t change under a new admin,” Yee added.
At HHS, Kennedy would oversee agencies that include the FDA—for which Trump said Friday he plans to nominate Marty Makary, MD, as commissioner—and the U.S. Centers for Disease Control and Prevention (CDC), for which Dave Weldon, MD, a physician and former Republican Congressman from Florida, will be nominated as director.
Moderna leaders also told Jefferies that they projected COVID-19 vaccines revenues averaging $2 billion to $3 billion annually, Yee reported, a “durable base biz [business] given vaccination data from the last 2 years in the ‘endemic’ commercial market.” The company reasoned that because COVID-19 vaccines are not now mandated, “people who are opting to receive the jab should con’t [continue] to do so year over year.”
Analysts cautious on Recursion-Exscientia
Two pioneers in artificial intelligence (AI)-based drug development became one this past week when Recursion [NASDAQ: RXRX] and Exscientia completed a business combination they said would help them fulfill commitments to deliver first-in-class and best-in-class drug discovery. However, a pair of analysts took a more cautious view of the companies joining forces.
Mani Foroohar, MD, of Leerink Partners acknowledged two benefits of the combination deal: It extends Recursion’s cash runway into 2027 and provides the company with additional tools in Exscientia’s pipeline candidates, as well as its precision chemistry tools and capabilities, including its newly commissioned automated small molecule synthesis platform.
“We see long-term risks associated with pipeline prioritization and deal execution,” Foroohar cautioned, citing the companies’ plan to generate annual savings through operational “synergies’ of $100 million. Those synergies included job cuts, Najat Khan, PhD, Recursion’s chief R&D officer and chief commercial officer, told GEN Edge last week. The combined workforce has shrunk from about 900 pre-combination to approximately 800.
Foroohar also cited Recursion’s delayed timing for several of its pipeline candidates:
- REC-1245, a Recursion-developed RBM39 degrader indicated for solid tumors and lymphoma expected to report data from the FDA-cleared Phase I/II DAHLIA dose-escalation trial (NCT06678659) in the first half of 2026 (previously expected by year-end 2025)
- REC-2282, a pan-HDAC inhibitor being developed to treat Neurofibromatosis Type 2. Results from a six-month progression-free survival (PFS6) futility analysis from the Phase II/III POPLAR trial (NCT05130866) are expected by the first half of 2025 (previously Q4 2024).
- REC-3964 an oral, non-antibiotic small molecule designed to treat Clostridioides difficile (C. diff), and recently dosed the advanced to Phase II. Preliminary data from the ALDER trial (NCT06536465) is now scheduled for the first quarter of 2026 (previously by Q4 2025)
The company also deprioritized a second program for a fourth candidate, REC-4881, in advanced AXIN1/APC-mutant cancers.
The combined company, which assumed the Recursion name and stock ticker (Exscientia’s ticker of NASDAQ: EXAI has ceased trading and has been delisted), is a trans-Atlantic AI powerhouse with a pipeline of more than 10 clinical and preclinical programs, 10 programs in advanced discovery phases, and more than 10 additional programs partnered with biopharmas. Recursion CEO Chris Gibson, PhD, who keeps his position in the combined company, has envisioned growing to as many as 100 candidates in roughly a decade.
“Investors continue to struggle with the abundance of programs for a company with a heavy cash burn,” Foroohar commented. “In light of this dynamic, we would advocate a more disciplined and focused approach with aggressive headcount and pipeline rationalization.”
Investor reaction
Investor reaction appeared to reflect the caution voiced by Foroohar. Shares of the newly-combined Recursion fell about 5% the day the combination took effect Thursday, from $6.04 to $5.75, and dipped another 1% Friday, to $5.70. In the months leading up to the combination, the stock yo-yoed from $6.84 on August 8, peaking at $7.84 on November 11 before retreating.
Foroohar reiterated Leerink’s “Market Perform” rating and $8 price target on Recursion shares. Also staying in place was Needham analyst Gil Blum, PhD, who reiterated his firm’s “Buy” rating and $11 price target.
Dennis Ding, equity analyst with Jefferies, wrote in a research note that the company could generate a potential $50 million in cost savings next year alone from shrinking its real estate footprint, reducing its spending on external contract research, and consolidating its late discovery stage pipeline programs. He projected Recursion will offer more information on cost-cutting when it reports fourth quarter 2024 results early in the new year.
On the value creation side, however, Ding said Recursion’s stock could see a boost if it reports positive data next month from its lead cancer candidate REC-617 (formerly GTAEXS617), an Exscientia-developed CDK7 inhibitor being developed to treat advanced solid tumors. Recursion expects to report initial monotherapy safety and pharmacokinetic and pharmacodynamic (PK/PD) data from the Phase I portion of the Exscientia-initiated Phase I/II ELUCIDATE trial (NCT05985655) on December 9 during the American Association for Cancer Research (AACR) Special Conference, being held in Toronto, and the following day at a webinar.
“We think this is the next catalyst for the stock and coming up imminently,” Ding declared.
In a September presentation, Exscientia said preclinical models suggested 8-10 hours of IC80 [in vitro 80% inhibitory] coverage on CDK7 was optimal, while less coverage compromised efficacy and longer coverage could result in signals of safety problems.
“The therapeutic window is very narrow for CDK7, and—outside of obvious chemical design choices—RXRX hopes to have a short half-life ~6-8 hours to hit CDK7 hard but not long enough to drive tox[icity],” Ding observed. “It’s imperative they thread the needle on this.”
Leaders and laggards
- Aclaris Therapeutics (NASDAQ: ACRS) shares more than doubled, soaring 124% over two days after the company licensed exclusive global rights excluding Greater China to Biosion’s BSI-045B, a clinical-stage, novel anti-TSLP monoclonal antibody; and BSI-502, a preclinical novel bispecific antibody directed against both TSLP and IL4R. The value of the deal was not disclosed. “BSI-045B’s compelling Phase IIa proof-of-concept data in atopic dermatitis, together with BSI-502’s dual-targeting approach, complement our existing ITK inhibitor portfolio, resulting in a pipeline of differentiated assets that targets multiple high-value indications,” stated Neal Walker, DO, Aclaris’ interim CEO, chair, and co-founder. Aclaris shares leaped 53% from $2.05 on November 15 to $3.14 Tuesday, then jumped another 47% Wednesday to $4.59.
- Forte Biosciences (NASDAQ: FBRX) shares more than doubled, zooming 128% Wednesday from $5.93 to $13.55, after the company said it completed an oversubscribed $53 million equity financing intended to support continuing clinical advancement of its lead pipeline candidate FB102, an anti-CD122 monoclonal antibody therapeutic with what the company says are potentially broad autoimmune and autoimmune-related indications. The financing attracted new and existing investors that included OrbiMed, Janus Henderson Investors, Tybourne Capital Management, Alger, Ikarian Capital, BVF Partners, and the Red Hook Fund. Forte said it has completed a healthy volunteer study of FB102, and is carrying out a trial of the drug in celiac disease, with topline readout projected to come in the second quarter of 2025. Shares climbed another 18% late last week, reaching an even $16 at the close Friday.
- Neurogene (NASDAQ: NGNE) shares plunged 55% over four days, as investors responded to the company’s November 18 disclosure that a patient dosed in a Phase I/II open-label trial (NCT05898620) with the high dose (3E15 vg) of its NGN-401, a gene therapy designed to treat women with Rett syndrome, developed “signs of a systemic hyperinflammatory syndrome,” linked to systemic exposure to high doses of adeno-associated virus (AAV). On Thursday, Neurogene disclosed in a regulatory filing that the patient had died “following complications from a rare and life-threatening hyperinflammatory syndrome.” The FDA allowed Neurogene to proceed with the trial using the low dose (1E15 vg) for both the pediatric and adolescent/adult cohorts. “Neurogene will also incorporate the 1E15 vg dose in its future registrational trial design planning,” the company added. Shares sank 43% Monday from $34.51 to $19.82, then skidded another 21% by Thursday to $15.59, before rebounding 30% Friday to $20.30.
- Perspective Therapeutics (NYSE American: CATX) shares plummeted 51% from $6.17 to an even $3 Thursday after the company reported initial results from its ongoing Phase I/IIa clinical trial (NCT05636618) assessing its neuroendocrine tumor treatment candidate [212Pb]VMT-α-NET that disappointed investors. Perspective reported that eight of nine patients dosed with the somatostatin receptor subtype 2 (SSTR2) targeting peptide showed durable control of disease, while six of nine had a measurable reduction of tumor volume, though only one of the six had a confirmed response as defined by RECIST v1.1. Signals of anti-tumor activity were generally more pronounced in patients with lower body weight, the company said. Perspective presented the data at the 2024 North American Neuroendocrine Tumor Society (NANETS) Multidisciplinary NET Medical Symposium, held November 21-23 in Chicago.
