Moderna's EU Vaccine Approval a Minor Win Amid Structural Challenges

What happened

The CHMP has backed EU approval for Moderna's next-generation mNexspike COVID-19 vaccine, with a final European Commission decision expected shortly. This regulatory step arrives as the company's COVID-driven revenues have plummeted from $18.4 billion in 2022 to a run-rate of about $2.2 billion by Q3 2025, reflecting a collapse in pandemic-era demand. Moderna is now structurally loss-making, with persistent negative free cash flow and rising financial risk from a recent $1.5 billion loan. Management targets breakeven by 2028 through up to 10 approvals, but this plan is optimistic given RSV underperformance, flu/combo delays, and high oncology attrition risk. While the mNexspike approval secures a near-term revenue stream, it does not address the core issues of intense competition, eroding moat, and the binary nature of Moderna's pipeline.

Implication

Securing EU approval for mNexspike ensures Moderna maintains access to a key market for seasonal COVID boosters, potentially stabilizing some sales. However, the overall COVID vaccine market is shrinking and faces stiff competition from rivals like Pfizer/BioNTech, limiting upside. Investors should view this as a minor positive in the context of Moderna's need to triple sales to about $6 billion annually by 2028 for breakeven. The company's valuation remains heavily reliant on unproven pipeline successes, such as the INT oncology program and flu/combo vaccines, which carry high execution risk. Therefore, this news does not justify a shift from the cautious 'WAIT' rating without clearer evidence of pipeline validation and cash burn improvement.

Thesis delta

The mNexspike approval was anticipated and does not materially shift Moderna's investment thesis. It confirms regulatory capability in respiratory vaccines but leaves unchanged the critical risks of sustained losses, cash burn, and reliance on binary pipeline outcomes. Thus, the core recommendation to wait for more definitive pipeline and financial progress remains unchanged.