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Moderna, Inc. (MRNA) announced today a significant reduction in its research and development budget, sending shockwaves through the biotech industry and causing its stock to plummet. The company, known for its mRNA technology and COVID-19 vaccine, plans to cut $1.1 billion from its R&D spending by 2027 as it grapples with commercial setbacks and a shifting market landscape.

Moderna’s Strategic Shift and Pipeline Adjustments
 

In a move described as a “more selective and paced approach” to drug development, Moderna outlined plans to reduce its annual R&D spending from the current $4.8 billion to between $3.6 billion and $3.8 billion by 2027.

The company has discontinued five programs, including vaccines for endemic human coronaviruses and a pediatric RSV program, as well as several oncology and cardiovascular candidates. Notably, Moderna has abandoned plans for accelerated approval of its standalone flu vaccine, shifting focus to a flu-COVID combination shot.

Despite these cuts, Moderna maintains ambitious goals, aiming to secure 10 approvals over the next three years. However, the company has pushed back its break-even timeline to 2028, two years later than previously anticipated. This delay, coupled with regulatory hurdles for key prospects like the cancer therapy mRNA-4157, partnered with Merck & Co., has raised concerns about Moderna’s path to profitability.

Moderna Stock Drops Over 17%
 

The announcement triggered a sharp decline in Moderna’s stock price, which fell 17.62% to $65.50 as of 10:02 AM EDT.

This drop reflects investor concerns about the company’s future prospects and ability to diversify beyond its COVID-19 vaccine revenue stream. Moderna’s market capitalization has shrunk to $25.178 billion, with the stock experiencing significant underperformance compared to the broader market.

Moderna’s financial metrics paint a challenging picture, with a profit margin of -116.18% and a return on equity of -40.94%. The company reported $5.05 billion in trailing twelve-month revenue and holds $8.49 billion in cash, but faces pressure to achieve $6 billion in sales to break even by 2028.

Analyst recommendations remain mixed, with price targets ranging from $58.00 to $310.00, underscoring the uncertainty surrounding Moderna’s future performance.

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