Despite efforts to spare employees by scaling back R&D and reducing operating costs by roughly $1.5 billion over the next two years, it appears Moderna’s previous cost-cutting efforts haven’t gone deep enough.
Now, the Massachusetts-based mRNA specialist is taking its downsizing scheme a step further with plans to shrink its global workforce by about 10%. By the end of the year, the company expects to employ “fewer than 5,000 colleagues,” CEO Stéphane Bancel said in a July 31 memo to employees addressing the decision.
At the end of 2024, Moderna employed roughly 5,800 full-time workers, according to the company’s latest annual report (PDF).
“This decision was not made lightly,” Bancel said in the letter, which was sent to all Moderna staffers Thursday and published on the company’s website.
“It impacts teammates and friends who have dedicated themselves to our mission and who have helped build Moderna,” he continued. “I want to express, on behalf of the entire Executive Committee and on behalf of patients you have served, our deepest thanks for everything you have contributed.”
Bancel stressed that “every effort was made to avoid affecting jobs,” citing the company’s ongoing strategies to reduce R&D spending and cut back on operating costs.
“But today, reshaping our operating structure and aligning our cost structure to the realities of our business are essential to remain focused and financially disciplined, while continuing to invest in our science on the path to 2027,” the CEO said, noting that more details on the layoffs will be given at the company’s town hall Friday.
He reiterated that Moderna will soldier on, noting the company has now secured approvals for three of its products and expects up to eight more regulatory green lights in the next three years.
“We are sharpening our focus, becoming leaner, and staying ambitious in oncology, rare diseases and latent viruses,” Bancel said.
The update, which was referred to in the title of the memo as a “difficult but necessary step,” comes as Moderna faces existential threats to its business from several angles.
On the commercial front, sales of Moderna’s original COVID-19 vaccine, Spikevax, have declined sharply in the transition from a pandemic to an endemic market. The company’s other main product, mRESVIA, a respiratory syncytial virus vaccine, has struggled to gain traction against competitor prophylactics from GSK and Pfizer.
Meanwhile, Moderna scored an FDA nod for a next-generation COVID-19 vaccine, dubbed mNEXSPIKE, in June, but the green light came with restrictions. The shot has been endorsed in all adults ages 65 and older, but patients between the ages of 12 and 64 must have at least one underlying risk factor for severe COVID—such as asthma, diabetes or COPD—to qualify for the vaccine.
As COVID juggernauts Pfizer and Moderna were seeking a soft post-pandemic landing, there was initially much speculation that the market for annual COVID vaccines could resemble that for flu shots.
Despite the limited approval of mNEXSPIKE, the fact that the nod came at all was likely something of a relief for Moderna, given ongoing uncertainties about a potential anti-vaccine agenda at the FDA under Department of Health and Human Services Secretary Robert F. Kennedy Jr.
Moderna has already brandished the cost-cutting axe several times in recent months as it attempts to reverse its decline.
After pledging at the J.P. Morgan Healthcare Conference in January to reduce its annual spend this year by $1 billion and by a further $500 million next year, Moderna amplified those efforts in May, laying out a plan to curb its GAAP operating costs by $1.4 billion to $1.7 billion between 2025 and 2027.
The update came as Moderna reported first-quarter revenues of just $100 million, compared to a $1 billion net loss.
Elsewhere, Moderna recently shelved plans to build an mRNA drug substance plant in Japan after giving “careful consideration” to the “current business environment.” And, last September, the company said it aimed to cut $1.1 billion from its R&D spend by 2027, citing the need for a “more selective and paced approach” to drug development.
As of the company’s latest update on the cost-cutting plan in May, Moderna was sticking by its revenue projection of $1.5 billion to $2.5 billion for all of 2025. Moderna is due to report on its second-quarter earnings Friday morning.