Moderna (NASDAQ:MRNA) saw its stock tumble over 19% intra-day on Thursday following the company’s announcement of significant reductions to its research and development (R&D) budget.
At its annual R&D Day, the biotech firm disclosed plans to scale back R&D spending by approximately $1.1 billion. The company aims to reduce projected R&D expenses from $4.8 billion in 2024 to a range of $3.6 billion to $3.8 billion by 2027.
This move is part of Moderna’s broader strategy to shift its focus from new R&D initiatives toward maximizing the potential of its current product pipeline and driving commercial growth. CEO emphasized that while the company has made considerable strides in mRNA vaccine and therapeutic development, it now needs to concentrate on bringing existing products to market.
The CEO acknowledged the company’s strong track record in advancing R&D, with a success rate exceeding industry standards at every stage. However, he noted that Moderna’s late-stage pipeline, along with the complexities of product launches, necessitates slowing down on new investments to prioritize delivering ten new products by 2027.
Among these upcoming products are a next-generation COVID-19 vaccine and a combined flu/COVID vaccine, both expected to receive approval in 2024. Moderna is also making progress in areas such as oncology and rare diseases.
Despite the planned budget cuts, Moderna underscored its high success rate in clinical trials, with a 66% combined probability of success—well above the industry average of 19%.
However, the decision to reduce R&D spending has unsettled investors, contributing to the sharp decline in the company’s stock price.