01—Abstract
Summary
Summary of the 10-Q filed August 8, 2019. Cited figures are marked; the original filing is the authoritative source.
Moderna, Inc. (MRNA) filed its Form 10-Q for the period ending June 30, 2019, highlighting the adoption of the new revenue recognition standard, ASC 606, which significantly impacted its financial reporting, particularly for collaboration revenue.
While the company transitioned away from its Emerging Growth Company (EGC) status by the end of 2019, this report details the initial effects of ASC 606, including a cumulative adjustment to accumulated deficit and changes in deferred revenue recognition. Financially, Moderna continued to operate at a net loss, with significant investments in research and development across its diverse pipeline of mRNA-based therapeutics and vaccines. The company's financial position remains robust, supported by substantial cash reserves and investments, indicating the ability to fund ongoing operations and clinical development activities.
Key strategic alliances with major pharmaceutical companies like AstraZeneca, Merck, and Vertex continue to be a primary source of revenue, alongside grants from government and foundation entities. While revenue from these collaborations decreased year-over-year, largely due to ASC 606's impact on revenue timing, the company's commitment to advancing its extensive pipeline of 21 development candidates underscores its long-term growth strategy.
02—Key points
Key Highlights
- Adoption of ASC 606: The company adopted the new revenue recognition standard (ASC 606) on January 1, 2019, resulting in a $28.0 million cumulative adjustment to accumulated deficit and a decrease in deferred revenue. This change impacts the timing and recognition of collaboration revenue.
- Declining Collaboration Revenue: Total revenue decreased by 55% for the three months and 50% for the six months ended June 30, 2019, compared to the prior year, primarily due to a decline in collaboration revenue, notably from AstraZeneca and Merck, influenced by ASC 606 adoption.
- Significant R&D Investment: Research and development expenses increased by 23% for the three months and 33% for the six months ended June 30, 2019, reflecting continued substantial investment in its mRNA platform and diverse pipeline of 21 development candidates.
- Strong Cash Position: As of June 30, 2019, Moderna held approximately $1.44 billion in cash, cash equivalents, and investments, providing ample resources to fund ongoing operations and future development.
- Diverse Pipeline Progress: The company advanced its pipeline with 13 development candidates in clinical studies across various modalities, including prophylactic vaccines, cancer vaccines, and rare disease therapeutics.
- Transition from EGC Status: Moderna determined it would transition from an Emerging Growth Company (EGC) to a large accelerated filer, with this change effective as of December 31, 2019.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed August 8, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $13.08M$28.85M | −54.7% |
| R&D Expenses | $128.31M$104.48M | +22.8% |
| Operating Expenses | $156.79M$125.87M | +24.6% |
| Operating Income | -$143.71M-$97.02M | −48.1% |
| Net Income | -$134.94M-$90.60M | −48.9% |
| EPS (Basic) | $-0.41$-1.43 | +71.3% |
| Shares Outstanding (Basic) | 329.18M65.94M | +399.2% |
05—Questions
Frequently Asked Questions
How did the adoption of ASC 606 affect Moderna's financial results for this quarter?
The adoption of ASC 606 on January 1, 2019, led to a $28.0 million cumulative adjustment to Moderna's accumulated deficit and a decrease in deferred revenue. This change primarily impacted the timing of revenue recognition from collaboration agreements, leading to a year-over-year decrease in reported collaboration revenue for the three and six months ended June 30, 2019, despite cash receipts potentially remaining stable or different.
What is Moderna's current financial health and funding outlook?
Moderna maintained a strong liquidity position with approximately $1.44 billion in cash, cash equivalents, and investments as of June 30, 2019. While the company continues to incur significant operating losses due to substantial investments in research and development, its cash reserves are expected to fund operations for at least the next 12 months. Future funding is anticipated through equity or debt offerings, strategic alliances, and government grants.
Can you provide an update on Moderna's key strategic collaborations and their performance?
Moderna's revenue is primarily derived from strategic alliances with AstraZeneca, Merck, and Vertex, as well as grants. Collaboration revenue decreased year-over-year, partly due to the ASC 606 adoption impacting recognition timing. However, these partnerships remain crucial for advancing Moderna's pipeline, with ongoing research, development, and clinical trial activities across multiple programs within these collaborations.
What is the status of Moderna's product pipeline as of June 30, 2019?
As of June 30, 2019, Moderna had 21 development candidates across 20 programs, with 13 in clinical studies. Significant progress was noted in various areas, including the advancement of prophylactic vaccines (like RSV and CMV), cancer vaccines (in collaboration with Merck), and rare disease therapeutics. The company is actively investing in R&D to advance these candidates through clinical trials and towards potential regulatory approval.
06—Continue