Moderna Inc (MRNA) — Q3 2025 Earnings Call Transcript

Thank you, Kevin. Good morning, everyone, and thank you for joining us on today's call to discuss Moderna's third quarter 2025 financial results and business updates. You can access the press release issued this morning as well as the slides that we will be reviewing by going to the Investors section of our website. On today's call are Stéphane Bancel, our Chief Executive Officer; Stephen Hoge, our President; and Jamey Mock, our Chief Financial Officer. Before we begin, please note that this conference call will include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please see Slide 2 of the accompanying presentation and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. With that, I will turn the call over to Stéphane.

Thank you, Lavina. Hello, everyone. Thank you for joining us today. I will start with a quick review of the quarter, Jamey will present our financial results and outlook, Stephen will review our commercial progress and clinical programs, and then I will share our key value drivers as we look ahead before we take your questions. In the third quarter, our revenue was $1 billion, driven by sales of our fully approved vaccines, Spikevax, mNEXSPIKE, mRESVIA. The net loss for the quarter was $200 million. We ended the quarter with $6.6 billion in cash and investments. We remain highly focused on financial discipline. I'm pleased to announce that continued cost reduction efforts across the company in the third quarter of 2025 led to a 34% reduction in the cost of sales, R&D, and SG&A combined compared to the third quarter of 2024. During the quarter, we made good progress across our three strategic priorities. Our first priority is driving use of our commercial products. For Spikevax, our original COVID vaccine, we received approval in 40 countries for the seasonal 2025-2026 train update. mNEXSPIKE, our new COVID vaccine, was approved this year by the FDA. We also filed and received approval for the 2025-2026 strand update in the U.S., making this the first season that mNEXSPIKE is available in the United States. We also received approval for mNEXSPIKE in Canada. For our RSV vaccine, mRESVIA, we will continue to gain regulatory approvals, and mRESVIA is now approved in 40 countries. We have a strategic partnership with three countries, Canada, the U.K., and Australia, where we have established manufacturing facilities and secured multiyear offtake agreements. In each of these countries, we have achieved important milestones. In Canada, we delivered the first made-in-Canada mRNA vaccines to the Canadian government for use this season. In the U.K. and Australia, our facilities were granted licenses by their respective regulatory agencies. Our second priority is advancing our pipeline to drive sales growth. We announced in July positive Phase III flu efficacy data, which we believe will advance both our flu vaccine program, mRNA-1010, and our flu plus COVID combination program, mRNA-1083. For the flu plus COVID combination program, our filing continues to be under review by the European Medicines Agency. In our oncology portfolio, at the European Society of Medical Oncology (ESMO) Congress in October, we presented encouraging Phase Ib data for our cancer antigen therapy, mRNA-4359. Unfortunately, we also announced recently that despite the progress made by the scientific community in understanding the CMV virus, our CMV program did not meet its primary efficacy endpoints for congenital CMV. We will discontinue the development of our CMV vaccine in this indication. Our third priority is executing with financial discipline. The team continues to diligently advance our cost improvement program. Over the last four quarters, Q4 2024 to Q3 2025, we delivered a $2.1 billion improvement in costs across cost of goods, SG&A, and R&D versus the prior four quarters. I want to thank the entire Moderna team for this great achievement, and we continue to work on prioritizing our R&D pipeline, driving productivity, including by the use of more digital tools, including a large number of GPTs, but also better pricing with our suppliers across the entire company. Thanks to this good progress and momentum, we've reduced projected 2025 cash costs by approximately $500 million since just the last quarter investor call in August 2025 and by approximately $900 million since the beginning of the year. With this, I will hand over to Jamey.

Thanks, Stéphane, and hello, everyone. Today, I will provide an overview of our financial results for the third quarter and share our outlook for the remainder of 2025. Let's start by reviewing our commercial performance, which you can follow on Slide 7. Year-to-date, total revenue was approximately $1.3 billion, with $900 million from the U.S. and the remainder from international markets. In addition to product sales, revenue also includes collaboration, grant, and stand-ready revenue associated with our strategic partnerships. For the third quarter of 2025, our total revenue was $1 billion. U.S. revenue was $800 million in the third quarter, the vast majority of which was from our COVID vaccines, which included the successful launch of our new COVID vaccine, mNEXSPIKE. Stephen will give more detail on the U.S. COVID vaccination season in a moment. Revenue outside the U.S. was $200 million. Approximately half of international revenue in Q3 was delivered to Canada, where we began executing on our strategic partnership through our in-country manufacturing facility. As a reminder, we have similar strategic partnerships with the Australian and U.K. governments and expect to begin shipping locally manufactured product in 4Q '25 and 1Q '26, respectively. For the full year 2025 outlook, we are narrowing our revenue range to $1.6 billion to $2 billion from our previous guidance of $1.5 billion to $2.2 billion. For U.S. market, we expect fourth-quarter sales of $100 million to $400 million. This would bring our updated full-year U.S. revenue guidance to $1 billion to $1.3 billion versus our prior guidance of $1 billion to $1.5 billion. Our original guidance assumed year-over-year revenue to be flat to down 33%, excluding one-time items. Our updated guidance now assumes a year-over-year decline of 15% to 33%. COVID vaccination rates remain the largest variable to this range, which Stephen will walk through in a moment. For international markets, we now expect revenue to be between $300 million and $400 million in the fourth quarter, bringing the full year to $600 million to $700 million versus our previous guidance of $500 million to $700 million. We have a tighter range on our international sales as most of these sales are for contracted volumes, leaving delivery timing and filed vaccination rates as the only remaining variables. Moving to Slide 8, I will review our Q3 financial results in more detail. Total revenue was $1 billion in the quarter, as I just discussed on the prior page. We had net product sales of $973 million and other revenue of $43 million from grants, collaborations, royalties, and stand-ready fees. The 45% year-over-year decline in revenue was expected and primarily reflects lower COVID vaccine demand. It's also worth noting that last year's third quarter included approximately $140 million from a true-up adjustment to prior period sales provisions, which did not repeat in Q3 this year. Cost of sales for the third quarter was $207 million, representing 21% of net product sales for the quarter. This was a 60% year-over-year decrease in our cost of sales from $514 million in Q3 last year. The improvement was driven by lower inventory write-downs, reduced unutilized manufacturing capacity, and lower volume. Overall, these results reflect the productivity gains and the efficiency improvements we've achieved in our manufacturing operations. R&D expenses in the third quarter were $801 million, a 30% decrease from last year. The reduction mainly reflects lower clinical trial costs as we completed several large Phase III studies in our vaccine portfolio, as well as efficiency gains across the organization. Last year's results also included an expense related to the purchase of a priority review voucher. SG&A expenses were $268 million in the third quarter, a 5% decrease year-over-year. The decline mainly reflects lower consulting and external service costs across multiple functions, along with reduced digital and facility spending. These savings reflect the cost discipline we've built into the organization and our continued focus on streamlining how we operate. Our income tax provision for the quarter was immaterial, consistent with the prior year. We continue to maintain a global valuation allowance against the majority of our deferred tax assets, which limits our ability to recognize tax benefits from losses. Net loss for the quarter was $200 million compared to net income of $13 million in Q3 2024. Loss per share was $0.51 compared to earnings per share of $0.03 last year. We ended Q3 with cash and investments of $6.6 billion, down from $7.5 billion at the end of Q2. The decrease was primarily driven by seasonal impact to working capital. With that, let me take a minute to share the progress we've made on our cost reduction goals. As a reminder, our original target this year was to reduce our GAAP operating expenses from $7.2 billion in 2024 to $6.4 billion in 2025. On a cash cost basis, excluding stock-based compensation, depreciation, and other noncash charges, that represented a decrease from $6.3 billion in 2024 to $5.5 billion. I'm happy to report that we are now on track to beat our 2025 cost plan by over $1 billion on a GAAP basis and by $900 million on a cash cost basis, both at the midpoint of our projections. During our previous 2Q call, we have lowered our GAAP and cash costs by $400 million each, with GAAP costs lowered from $6.4 billion to $6 billion, and cash costs lowered from $5.5 billion to $5.1 billion. Today, we are further lowering our 2025 expense guidance due to additional progress across the company to drive efficiency gains and continued investment prioritization. Our GAAP operating expense guidance is being reduced by another $700 million from $6 billion to $5.3 billion at the midpoint. This reduction is composed of $500 million of cash costs, plus $200 million of noncash reductions in stock-based compensation and depreciation. The $700 million GAAP reduction from prior guidance is split evenly between cost of sales and R&D. We are lowering our cost of sales forecast by $300 million to $400 million from $1.2 billion to a range of $0.8 billion to $0.9 billion. This reflects an acceleration of the efficiency programs we are targeting as part of our multiyear cost-out plan. We are also lowering our R&D expense range to $3.3 billion to $3.4 billion, approximately a $350 million improvement due to continued investment prioritization and efficiency gains in the execution of our clinical trials. In just two years, we expect to reduce our cash costs by approximately 50% from nearly $9 billion in 2023 to $4.6 billion in 2025. We are now ahead of our plans, and we'll update improvements to our 2026 and 2027 targets at our upcoming Analyst Day on November 20. Importantly, we continue to target cash breakeven in 2028. I would like to take this moment to thank all my Moderna colleagues for their hard work and commitment to improving the financial profile of our company. Moving to Slide 10. I will share our updated 2025 financial framework. For total revenue, as I mentioned in my earlier remarks, we are narrowing our range to $1.6 billion to $2 billion from our previous guidance of $1.5 billion to $2.2 billion. For cost of sales, our updated guidance is $0.8 billion to $0.9 billion, an improvement from our previous guidance of $1.2 billion. This updated range assumes a higher cost of sales in 4Q versus 3Q, which factors in similar sales volume and higher unutilized manufacturing charges. Newly introduced tariffs are not expected to have a material impact on our business, but we continue to monitor changes to global tariffs. Our revised R&D range of $3.3 billion to $3.4 billion projects an increase in 4Q spend due to the seasonality of vaccine trial spending as well as studies in support of regulatory approvals. SG&A expenses are expected to be $1.1 billion. Similar to last year, we expect SG&A expenses in the fourth quarter to increase primarily due to commercial-related activity. We expect taxes to be negligible in 2025. We expect our capital expenditures are also supposed to be approximately $300 million. We are increasing our year-end cash guidance to $6.5 billion to $7 billion, an increase of $0.5 billion to $1 billion from our prior guidance of approximately $6 billion. This increase is projected to raise year-end cash due to the reduction in our operating expenses for the year. In summary, we have made strong financial progress against our 2025 financial objectives. We have tightened our sales range because of increased visibility into our seasonal sales. And we have lowered our 2025 cash cost estimate by $900 million from $5.5 billion to $4.6 billion, resulting in a higher projected year-end cash balance of $6.5 billion to $7 billion.

Thank you, Jamey, and good morning or good afternoon, everyone. Today, I'll review our current commercial positioning in the U.S. as well as our progress across our pipeline. As you know, COVID vaccine sales still represent the vast majority of our revenues. As Jamey pointed out earlier, the U.S. is our largest market in 2025. Slide 12 reviews the U.S. COVID vaccination market during the fall of '24 and the cumulative vaccinations to date for the retail channel for the fall of '25 as reported by IQVIA. As a reminder, the retail channel represented 72% of the total vaccinations in the fall of 2024. We expect this segment will represent a similar proportion of the market in 2025. As Jamey noted earlier, our U.S. revenue guidance is $1.0 billion to $1.3 billion. This range is based on our preseason expectation for a 20% to 40% decline from fall 2024 retail vaccinations of approximately $26 million. As of October 24 of this year, cumulative retail vaccinations were $13.2 million, down approximately 30% year-over-year and well within the 20% to 40% decline we had assumed in our 2025 U.S. revenue outlook. Moving to Slide 13. Our COVID retail market share is 42%, up 2 percentage points from last year. We are most pleased by the strong market uptake for mNEXSPIKE, even given a midyear launch. mNEXSPIKE now makes up 55% of our COVID vaccination volume. Slide 14 is a summary of our prioritized pipeline. This pipeline now consists of three approved products, two programs with positive Phase III results, and five more candidates in clinical studies with registrational potential. Moving to Slide 15, which outlines the latest developments in our late-stage respiratory portfolio, I think to start with our COVID vaccines. As mentioned earlier, Spikevax's updated 2025-2026 Formula is now approved in 40 countries. For mNEXSPIKE, we received approval for the 25-26 Formula in the U.S., and we are also approved in Canada. We have also applied for approval in Europe, Australia, Taiwan, and Japan and would expect to launch in those countries in the 2026-2027 seasons. For mRESVIA, our RSV vaccine, it has been approved for adults aged 60 and older in 40 countries and also approved for high-risk adults aged 18 to 59 in 31 of those 40 countries. We recently presented multiple data sets from the mRESVIA clinical program at ID Week. For our flu vaccine candidate, MRNA-1010, we expect to complete regulatory submissions for approval in the United States, Canada, Australia, and Europe by January 2026. The positive results from our Phase III vaccine efficacy trial were presented at both ID Week and the European Scientific Working Group on Influenza (ESWI) this past month. Moving on to mRNA-1083, our combination flu COVID vaccine candidate. Our filing for approval is under review with the European Medicines Agency. We expect to refile with Health Canada by the end of 2025. In the U.S., we are awaiting further guidance from the FDA on our plans to refile. We presented Phase III immunogenicity sub-analyses for our flu COVID combination program at ESWI. Now turning to our non-respiratory vaccine and rare disease portfolios. Our ongoing Phase III norovirus study has not yet accrued sufficient cases needed to conduct the interim analysis after the first season. As a result, we will proceed to enroll a second Northern Hemisphere season this winter. As before, the timing of the Phase III readout will be dependent upon accruing sufficient cases to trigger the interim analysis. For mRNA-1647, as we announced in late October, we did not meet the primary endpoint for prevention of infection in our Phase III CMV efficacy study. We are discontinuing development in congenital CMV. However, we will continue to evaluate mRNA-1647 in an ongoing Phase II trial in patients who are undergoing bone marrow transplantation. In rare diseases, I'm happy to announce that we have reached target enrollment of the registrational study for our propionic acidemia (PA) program. We also had the opportunity to present data from our ongoing Phase I/II study at the International Congress of Inborn Errors of Metabolism medical meeting during the quarter. For methylmalonic acidemia (MMA), we presented interim data from the Phase I/II trial at that same meeting, and we expect our MMA registrational trial to start in 2026. Turning now to our oncology portfolio. We continue to make significant progress in advancing our programs. For intismeran, which is partnered with Merck, we have several late-stage studies underway. Our Phase III trial in adjuvant melanoma is fully enrolled and accruing events towards its interim analysis. Our Phase II adjuvant renal cell carcinoma trial is also fully enrolled. As we have disclosed previously, we have two Phase III studies in non-small cell lung cancer and multiple randomized Phase II studies, including a Phase II study in high-risk muscle-invasive bladder cancer and a Phase II study in high-risk non-muscle invasive bladder cancer, all of which are still enrolling. We have also expanded our intismeran program into the metastatic setting with a Phase II study in first-line metastatic melanoma and a recently opened Phase II study in first-line metastatic squamous non-small cell lung cancer. Both these studies are randomized trials. Neoantigen analysis from our Phase II adjuvant melanoma trial was presented at the Society for Melanoma Research Meeting in October. Now moving to mRNA-4359, which is enrolling a Phase II study in first-line metastatic melanoma and first-line metastatic non-small cell lung cancer patients. The decision to proceed to that phase was based on encouraging Phase Ib data, some of which was presented at the recent ESMO Medical Congress. In early-stage oncology, we are dosing patients in a Phase I trial for our cancer antigen therapy program, mRNA-4106. For our T-cell engager program, mRNA-2808, I'm happy to announce that the first patient was dosed in the Phase I trial during the quarter. Finally, the IND for our cell therapy enhancer, mRNA-4203, is open, and we look forward to enrolling and dosing the first patient in that study. We're pleased by the growth and breadth of our clinical stage oncology pipeline and the continued strong momentum of the multiple Phase III and randomized Phase II trials within our intismeran clinical trial program conducted in partnership with Merck. With that, I will hand the call over to Stéphane.

Thank you, Stephen and Jamey. Looking at the three value drivers of our business; commercial, pipeline, and financial. Commercially, we are seeing the benefit from market share gains of mNEXSPIKE, which we believe will continue in 2026 and beyond. Next year, our commercial business will benefit from the full year contribution from our strategic partnerships in Canada, U.K., and Australia. From a pipeline standpoint, we look forward to potential approvals of our combination flu plus COVID vaccine in Europe. The file is currently being reviewed and in Canada, we expect to refile soon. In the U.S., we look forward to refiling pending further guidance from the FDA. Later this year, we will file our seasonal flu vaccine, mRNA-1010, for approval in the U.S., Canada, Australia, and the EU. We also expect to see two clinical milestones from our intismeran program. First, the five-year follow-up data from our Phase II adjuvant melanoma study; and second, the efficacy data from our Phase III adjuvant melanoma study. We look forward to the Phase II data from our cancer antigen therapy, mRNA-4359. We also look forward to a Phase III efficacy data from the norovirus vaccine and the registrational efficacy study data for our PA program, propionic acidemia in rare disease. We have exercised strong financial discipline so far this year. We are ahead of our initial 2025 cash cost reduction by $900 million. We will continue to improve our cost structure and drive productivity. For the year-end cash balance projection, we have increased our year-end projection to a range from $6.5 billion to $7 billion, up $500 million to $1 billion from our prior guidance of around $6 billion. We know that a higher cash balance to exit 2025 and a much lower cost structure when we enter 2025 is the right strategy as we transition from a single pandemic product company to a large diversified portfolio of commercial products in seasonal vaccines, oncology medicines, and rare disease medicines. In closing, I want to recognize the entire Moderna team for their relentless dedication to our mission. Our progress, scientific, clinical, commercial, and operational is focused on our mission: delivering the greatest possible impact to people through mRNA medicines. With this, operator, we'll be happy to take questions.

As we look to the expense management on the forward here, can you help us understand what's being deprioritized or changed to allow for these changes? And then secondly, in accordance with kind of Roivant and the IP dynamics that are playing out here, can you just frame your strategy here on the forward as we look to 2026?

Sure, Salveen, thank you for your question. I'll address the first part. The perspective on cost reduction varies based on the reference point you consider. Over the past few years, we have achieved a 50% decrease in cash costs. Regarding our recent reduction of $500 million to $700 million, this is evenly divided between R&D and cost of sales. The reduction in cost of sales is driven purely by efficiencies. Our teams are working diligently to accelerate processes and achieve results more quickly. They are focusing on eliminating unutilized manufacturing capacity and reducing material waste, which is enhancing labor productivity. This is not a neglected investment. For R&D, we are focusing on both efficiency and cost. Our clinical trial execution has improved significantly. Previously, we prioritized speed; now, we are also prioritizing cost and efficiency. Execution plays a big role in this, and we are making strategic decisions about not progressing certain phases of trials. Overall, our large Phase III vaccine trials are tapering off, including the recent CMV and flu combination vaccine trials. We are shifting focus to oncology, which involves different patient groups in those trials. There is a prioritization process involved, as we've stated before, but we are also successfully executing our plans. We are excited about the nine or ten late-stage programs that Stephen mentioned in his prepared remarks, and we anticipate further cost reductions in the coming years. We will provide more updates during Analyst Day.

On Arbutus, the trial in the U.S. is scheduled for March 9, 2026. We remain confident in the groundbreaking technology we pioneered, including our lipid nanoparticle delivery system. We are vigorously defending the case and responding to new filings outside the U.S. We believe that our technology does not infringe any valid patents asserted by Arbutus.

I have two quick questions. The first is about the U.S. COVID revenue of $781 million. I assume most of this comes from inventory buildup or delivery to pharmacies. How often do you monitor pharmacies to maintain their inventory? Also, could you provide more details on your revenue estimate for the rest of this year? My second question is about the CMV vaccine. What insights can you share regarding why the immunogenicity data did not result in clinical benefits?

Thank you, Gena. It's great to hear from you. I’ll discuss U.S. sales. Ultimately, the key measure is vaccinations in the U.S., which means we’re focusing on the actual shots administered. In the third quarter, we shipped a significant amount of our product to wholesalers, who then distributed it to pharmacies, whether retail or through IDN networks, and doctors' offices. We monitor this closely, nearly on a daily basis. The information Stephen shared with you illustrates why we focus on the number of shots given. We believe that’s the most important metric. As of October 24, vaccinations administered in the U.S. have decreased by 30%. There are several reasons for this decline, some of which we anticipated. Reflecting on our earlier guidance, we had projected U.S. sales between $1 billion and $1.5 billion, with the $1.5 billion figure essentially showing no change from the previous year across various factors, including market share and vaccination rates, aside from a non-recurring element from the prior year. The lower $1 billion estimate indicates a 33% decline. We expected that vaccination rates, which are the biggest variable, might decrease, and that’s indeed what we’ve observed, prompting us to adjust our projections. We now estimate that vaccination rates could decline by 20% to 40%. We’re currently in the thick of the vaccination season and believe we are about halfway to two-thirds through. We have clear visibility into these numbers and continue to track vaccinations closely. We’re also monitoring our market share daily and weekly, assessing whether there is an increase in pull through to physicians and retailers, as well as any additional shipments expected in the fourth quarter. We’re comfortable with our revised range of $1 billion to $1.3 billion. However, we do not expect vaccination rates in the U.S. to return to previous levels, which explains our adjustment from $1.5 billion to $1.3 billion.

I'll address the CMV question. Currently, we only have the preliminary top-line data from the trial. In the coming weeks and months, we will receive a substantial amount of additional information, including detailed insights on immunogenicity and possibly even correlates of protection, which will allow us to form hypotheses regarding any shortcomings. As we approached the trial, we had high expectations that a strong pentamer neutralizing antibody response, which was absent in previous intismeran vaccines, would be crucial in preventing infection with a CMV vaccine. The challenge of preventing infection from the herpes virus, specifically CMV, was significant and a high target. Ultimately, we believed this was the only vaccine that could potentially match our target profile for preventing congenital CMV. Based on the information we have so far, it appears that pentamer neutralizing antibodies were not the key factor needed for a significant improvement in preventing CMV infection. We will analyze the data as it becomes available in the upcoming months, and we look forward to publishing our findings and discussing them at medical conferences, hoping that the broader field can identify the next steps in CMV vaccine development. Ultimately, pentamer alone was insufficient.

I shift gears over to the pipeline. I want to ask about your norovirus program. Are you surprised at all by the low case accruals here? Or is this kind of anticipated? And do you believe this offers any sort of reflection on the commercial opportunity or potential demand for the product should it be approved?

Thank you for your question, Cory. Predicting epidemiology and norovirus is still a developing area. We initially designed the study as a potential two-season study, which we expected would be necessary, similar to what happens with flu vaccines and other respiratory vaccines based on case accrual. We believe we are improving our ability to predict the epidemiology, where to site the trials, and to ultimately accrue cases that align with the vaccine composition. We are hopeful that with this additional second season, which was always a possibility, we will be able to gather enough cases to conduct that interim analysis and demonstrate the vaccine's efficacy. As for the commercial target product profile moving forward, we do not believe there has been any change. What is most important is to develop a highly effective vaccine for preventing norovirus, a global health concern. We believe the health economic benefit of preventing severe to moderate norovirus infections will be evident, especially for those at higher risk, such as individuals in long-term care facilities. We remain confident in that target product profile and believe the epidemiology challenges from the last season can be addressed with the second season of enrollment.

Great. Congrats on the progress. Maybe, Jamey, can you just talk about what gives you confidence that you can reiterate your cash breakeven guide for 2028? I appreciate you're making some fantastic progress in terms of managing the OpEx and the CapEx, but still your cash cost at the midpoint this year is $4.6 billion. So I think in order to breakeven in 2028, you really need your top line to reflect quite materially from here. So can you just talk about that? I mean it looks like COVID is still declining. RSV, maybe it's one and done for now. CMV did not make it. INP initially is going to be just for adjuvant melanoma. So what are the near-term products that you think can really inflect the top line in the foreseeable future? And then maybe second, Stéphane, quickly, I think a few media outlets have reported that Moderna is working on potential large deals with pharma. So wondering if you can comment on that. And then maybe bigger picture, what's your latest thinking on DD these days?

Thanks, Luca. There’s a lot to discuss. We know it's a key concern for everyone, and we plan to share more details at Analyst Day. I want to highlight a couple of points. When we commit to breaking even, it involves both improving revenue and reducing costs. On the cost reduction front, as I mentioned earlier in response to Salveen's question, we see significant opportunities. I'll provide updates on our 2026 and 2027 framework at Analyst Day, but we still have a lot of work to do in that area. Regarding revenue, we anticipate growth from geographic expansion, our strategic partnerships, and new product introductions. We will present a more detailed view during Analyst Day, but we remain committed to this plan. It's essential to recognize that both revenue growth and cost reduction are integral to our strategy, and we are confident in our approach.

Thank you, Jamey. And on the deal side, as we spoke about in several of our last calls, we really want to get products like the latent vaccine like EBV, for example, to patients. As we've said, part of our prioritization of our portfolio, we do not want to fund a Phase III by ourselves. So we are talking to pharma companies. We are talking to financial sponsors. As you know, we have a partnership with Blackstone that we did on flu, mRNA-1010. So those discussions are ongoing. When we have something to communicate, we will.

This is Greg on for Tyler. It looks like mNEXSPIKE is already taking the slight majority of your COVID vaccinations over Spikevax. So how do you expect the split between these two vaccines to continue to evolve? And I'd also be interested to hear what feedback you're hearing from pharmacists and other clinicians about mNEXSPIKE so far?

Thank you for the questions. We're very pleased with the launch. It has become our leading product in the COVID franchise, surpassing our expectations positively. This speaks to the product's profile, the clinical data, and the overall momentum in the market, especially towards higher-risk populations. This is partly due to changes in recommendations in the United States aimed at higher-risk individuals and those over 65. We are continuing to enhance that medical story, and the data has been presented at medical meetings. We aim to build momentum behind the mNEXSPIKE brand as our leading product in the franchise. Spikevax will always have its place, as it is the only approved product for pediatrics ages 6 months to 4 years. This is a crucial demographic, particularly for those with high-risk factors or underlying conditions. We anticipate that a portion will continue to use Spikevax, but over time, we hope older adults and higher-risk populations will increasingly turn to mNEXSPIKE. This aligns with the feedback we're receiving. Many of our major clients, including health systems and pharmacies, are considering and utilizing the products in this way. We will collaborate with governments worldwide as we prepare to launch mNEXSPIKE outside the U.S. for the upcoming season, and we expect to see continued growth in that brand as part of our overall franchise. As mentioned, we will always have both products available. I don't have specific guidance on the split since ultimately this decision is made by healthcare providers and customers based on what is most suitable for their patients.

How is the U.S. COVID vaccine demand tracking this season compared to your projections? What about the season outside the U.S.? Also, could you provide some insight into the potential annual revenue contribution from the manufacturing sites in the U.K., Canada, and Australia?

Yes, I'll break it down by the U.S., outside the U.S., and the manufacturing contribution. Our revised guidance for the U.S. is between $1 billion and $1.3 billion. We expect vaccination rates to decrease by 20% to 40%, which aligns with our initial expectations for the year. We're currently halfway through the season and feel confident about our U.S. range. For international revenue, we've increased the lower end of our guidance from $500 million to $600 million, with the total now ranging from $600 million to $700 million, thanks to confirmed contracts and deliveries. As we approach the end of the year, the main variables are delivery timing, which may affect whether some revenue will be recognized in the first quarter of 2026 or remain in the fourth quarter of 2025. Some markets depend on vaccination rates, but we are comfortable with our range outside the U.S. Regarding our strategic partnerships, the deliveries for the U.K. partnership have been pushed outside this year, leading us to lower the high end of our guidance from $2.5 billion to $2.2 billion, with no expected revenue this year and growth anticipated in 2026. Half of our international revenue came from Canada in the third quarter, which is operating well. We expect Australia to generate revenue in the fourth quarter and the U.K. in the first quarter of next year. We are optimistic about potential revenue growth from our strategic partnerships moving into next year.

I have two for you. So the first one on the cost reduction and just looking at the 2028 breakeven target. I was curious if your pipeline evaluation process has evolved just to look at maximizing ROI on your R&D investments. Then on the rare disease platform, what's the capacity in this T.A. to add more programs? It does seem like it could be quicker to get the proof-of-concept data, but I just maybe wanted to compare that to oncology and how you guys are thinking about it.

Thank you for your questions. Regarding R&D, we previously mentioned that we would postpone further Phase III investments in our infectious disease pipeline until we reach cash breakeven in 2028. Consequently, we will see a significant reduction in our R&D spending compared to last year, this year, and next year as the large Phase IIIs for flu, COVID, CMV, and norovirus wind down. We have consistently held this stance in our pipeline development. Our focus is on optimizing cash and investments rather than purely maximizing ROI. We believe we have several promising Phase II programs, such as a vaccine for EBV, which addresses infectious mononucleosis and potentially multiple sclerosis, but we are not advancing with investment at this time. While we believe the ROI is favorable, we will wait to invest until we have demonstrated that we can break even with our current products. This reflects our ongoing portfolio development approach. In our oncology area, however, we see opportunities to make investments within our previous guidance, like with the intismeran program or 4359, both of which offer attractive ROI that align with our breakeven targets for 2028. This principle also applies to our rare disease efforts. We have two programs, PA and MMA, progressing toward their potential registrational studies, with PA already fully enrolled. We see significant potential in this platform, given the large number of diseases our technology may address. However, we aim for discipline and are not prioritizing additional investments in rare diseases until we advance PA and MMA through these studies and ideally achieve our breakeven goals for 2028. The cash investment required to advance these programs is relatively low. As you mentioned, we might consider adding a third or fourth program as we gain more confidence over the next couple of years, but this will have to be balanced with further investments in oncology, such as the 4359 programs or potentially restarting pivotal investments in our infectious disease portfolio. We will make those decisions in the future, and there is no strategic direction on that front at the moment.

Just wanted to probe a little bit more on the R&D cuts, perhaps kind of in contrast to Salveen's question, perhaps a little bit more forward-looking. As you think about the efficiencies that you've garnered and the new approach, are there more cuts that you can make going forward to that R&D plan? Or would that require actually stopping of programs or changing your prioritized list of assets that you have in the pipeline?

Yes. Thank you for the question. We do expect further reductions in costs. We've previously communicated how we were moving towards breakeven. Today's cash costs for 2025, while they are better than our guidance, they are not done. We expect further reductions in our GAAP costs for R&D over the coming year and two, purely based on the sunsetting of our existing prioritized investments. We believe those reductions will happen without further program stops, and we will continue to do investment in the early-stage space as well, which, as you know, is a less cash-intensive, capital-intensive area. At this point, we believe we can continue to drive efficiencies and further cost reductions in our R&D investment in the coming years simply by completing the work that we had started several years ago in our infectious disease vaccines portfolio.

This is John on for Myles. So maybe a follow-up to an earlier question on the CMV program. I know that you're still going through the data, but I was wondering if you could speak to any read-through from the CMV trial missing to any of your other latent vaccine studies or if you view the CMV miss as an isolated event?

Thanks for the question. CMV was unique in our pipeline in that it is the only pivotal study, a Phase III study that we are running against a latent virus and the only one that was going after prevention of infection. We do believe that prevention of infection was unfortunately the only way to try and demonstrate a potential for the vaccine against congenital CMV, but it was by far the highest bar. Vaccines generally don't prevent infection; they prevent diseases from the viruses. Even in the case of CMV, we still believe that there's an opportunity for mRNA-1647 to have an impact in patients undergoing bone marrow transplant, where they are already infected but see a reactivation of their CMV that can have serious potential morbidity and mortality. For that reason, we think there's an opportunity for a vaccine to help control that reactivation, even a vaccine against CMV. I would say we don't have other programs in our late-stage or prioritized pipeline that have a similar read-through or correlation from the CMV results because we are not trying to prevent infection with any of them. We're trying to prevent diseases. In the case of CMV, we see a potential opportunity in an indication like bone marrow transplantation CMV reactivation, where the target product profile is going against prevention of a disease, not prevention of infection.

Well, thank you, everybody, for joining today. We look forward to talking to many of you in the coming days and weeks, and we look forward to seeing many of you here on campus on November 20 for Investor Day. Have a great day. Thank you.