Moderna and Merck Revive mRNA Hopes With Melanoma Success

0:00When your options are limited, so are your opportunities. At SIBO, the global exchange that pioneered options trading, we offer more ways to move with the market. From VIX and SPX options to global market data solutions, SIBO helps investors diversify, manage risk, and stay ahead of whatever the market does next. SIBO. Life is better with options. Your investments could be too. There are risks associated with SIBO company products. Review the disclosures and disclaimers at SIBO.com slash US underscore disclaimers. Today's episode is brought to you by ChatGPT for Business. As a listener of this podcast, you're looking for ways to help teams move faster, make sharper decisions, and turn scattered context into work they can use.

0:42ChatGPT for Business can help. ChatGPT for Business gives teams a shared workspace with admin controls, permissions, and access to work and codecs in ChatGPT. This means your business can move from question to answer and code to rollout quicker. Join over 10 million business and enterprise users worldwide already using ChatGPT for work. Download the ChatGPT desktop app or contact sales to learn more. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else.

1:21So healthcare is connected, not complicated. What's that look like? cheaper prescriptions that are easier to get, and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern. on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. When we were in the early, early days of the pandemic, and we were just, it was like early 2021, and we were starting to get some vaccine discussions, and this mRNA technology came to the fore.

2:13Sam Fazelli had to explain it to us like a million times because we didn't really get it, but he was saying it's going to be really helpful in delivering a coronavirus vaccine. vaccine. He was right. And he says, don't sleep on this thing because you can use the same technology for different therapies for different parts and different things. And here you go today with this news, with hooking up with Merck on a cancer drug. The stock's up 130%. I mean, this isn't an over-the-counter pink sheet penny stock. This is a$25 billion market cap. That's now$50 billion market cap in one day. Sam Fazelli joins us here.

2:47He is the chief go-to research analyst at Bloomberg Intelligence for all things healthcare. Sam, talk to us about this, what Moderna and Merck are doing today. What's kind of the science behind it? Yeah, I mean, Paul, just to say, these are the days that I live for, right? When something goes right, even though I was really worried about this trial reading out, which is what? This trial is taking some mutations, identifying mutations in the tumors of patients who've had them removed. So you have melanoma, you're lucky enough to have been caught early, you do surgery, you debulk the tumor, you use that in their labs and their AI systems, etc., to identify what they call neoantigens, things that are more prominent in the tumor cells than not.

3:33Put that in a vaccine, mRNA vaccine, give that back to the patients, and at the same time, administer the Merck immuno-oncology drug that unleashes T cells if they find those mutations. So why were we worried? It's a new technique. It's really hard. This is a disease where you get a lot of good response, even as it is, with therapy, with the removal of the tumor, with Keytruda itself. This is against Keytruda alone, right, that immunotherapy. And they say, although we haven't seen any numbers, that it's worked out here. So I think what's going on with Moderna, I'm going to speculate here, right, is that there is some major short covering.

4:14that squeeze is quite massive right 135 percent last time i looked you're seeing a jump in other rna names arcturus biontech up 23 and a bit percent because they're all trying to do the same thing the question really is what how good is this data we'll find that in the next few months i'm pretty sure and then can you say it's going to work in other tumors and i think that's a bit of a leap of faith. It's going to take some day. Melanoma is the easiest step forward. So, but still, let's celebrate today. Sam, I'm so curious about the share movement of Moderna. Can you tell me a little bit about whether or not you feel like the share move justifies this news?

4:59We're looking at Moderna reaching its best day on record. Tell me a little bit more about how you see this moving, fitting in. Just to remember though, in the heydays of the COVID vaccines, this thing was traded at 400, I think even. I don't know, I've got the chart up here. Over 400. But those were funny days, weird days, right? Nobody knew how to size this. Here, there is speculation, a lot of conversation in our industry chat with investors, that there is short covering going on. And you might just see actually the stock's taking a little bit of a step back from the 135 % up that it reached, there will be some short covering.

5:39I think the better way to look at it and see the impact of this is maybe looking at Merck. But even there, I think there could be some short covering and some relief rally that actually maybe Merck has got the ability to get through this Keytruda patent expiry that's coming up. So availability, when do you think this new drug or this new application can be approved and get into the marketplace. I love the way that you struggled with that, Paul, because this is not a drug. It is you go in and you have to have it prepared for you. It takes weeks. They take your tumor, you go home, you get whatever therapy you get.

6:15And in the meantime, they're trying to identify what's different in your tumor to develop this vaccine for you. So it's a personalized new antigen therapy, INT. So individualized new antigen therapy. So what do we call this? So it's got to be funky manufacturing. I'm pretty sure they'll fix it and figure it out. This is Merck we're dealing with, not just Moderna alone. So that's how this works. And how will it be priced? I don't know. I'm pretty sure depending on the efficacy benefit or the benefit magnitude, they'll price it accordingly. I wouldn't be surprised if it comes back at, I don't know,$300 ,000,$400 ,000,$500 ,000 a year.

6:55$300 ,000,$400 ,000,$500 ,000? Yep. That's what these drugs are being launched at these days. I can't tell you for a fact because the company has never talked about that. So what, I mean, when you talk about a number like that, how does insurance play into that? Don't you have to get insurance to buy off on this too? Yeah, it's very hard for insurance. Insurance can start not paying up for your GLP-1 because the benefit is so far away. But in cancer, they tend to just accept it. Right. And that is a conversation that pharma companies need to have. At what point do you stop constantly raising the bar on the price?

7:31Right now, let's be honest and fair here. They are making significant difference to people's ability to live with cancer and live longer. So here the question is, I don't I don't know that's the price they're going to come out with, but I wouldn't be surprised, especially given how complicated it is to produce this. Stay with us. More from Bloomberg Intelligence coming up after this. looking for more investing options meet SIBO the exchange that pioneered options trading with exclusive trading products like VIX and SPX options SIBO can help you trade in any market environment there are risks associated with SIBO company products review the disclosures and disclaimers at SIBO.com slash us underscore disclaimers quick one before you jump back in you're listening for ways to help teams move faster make sharper decisions and turn scattered context into work they can use chat GPT for business can help chat GPT for business gives teams a shared workspace with admin controls, permissions, and access to work and codecs in ChatGPT.

8:28This means your business can move from question to answer and code to rollout quicker. Join over 10 million business and enterprise users worldwide already using ChatGPT for work. Download the ChatGPT desktop app or contact sales to learn more. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again.

9:07Bags, notebooks, tools, and tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time. Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. 4certain. You're listening to the Bloomberg Intelligence Podcast.

9:44Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Get back to earnings here. Luxury goods maker Estee Lauder put up some pretty good numbers. The stock is up 16 percent today, which is a good day. It's still down about six percent year to date, but certainly having a good day today. We check in with Deb Aiken. She covers all the luxury companies for Bloomberg Intelligence. and she's based in London here. What's going on with Estee Lauder, Deb? What'd you take away from their quarterly report?

10:21Hi. I think that this is the first time that we get a clear indication and confidence that the profit recovery growth program that they set about a couple of years ago under the CEO, Stéphane Delafeverie, is really coming to fruition. So in fiscal 26, They have booked the top end of the 1.7 billion attributed to the plan overall. And starting fiscal 27, they're looking towards the top end of 1.2 billion. It was 1 to 1.2 billion. They're looking towards the top end in terms of that accumulating over the coming year for savings. Now, that included things like streamlining, general savings and 10 ,000 job cuts.

11:06and the market is expecting and believing now that we can start to see some of that coming through. We looked at the 4Q. There's clear acceleration on the 4Q. Their constant currency came in at 5%, a couple of percent ahead of the market. In particular, half of their business is skincare and that achieved 7 % growth. But not only that, we saw the op margin running from 8.2 towards 19%. And so a big rise there, and that's going to help them to deal with the rest of businesses with fragrance and makeup and really get those growth rates up to markets 3 % to 5%. So they're focusing 27 % on 3 % to 5%, but we think they'll get towards the top end of that.

11:51Consensus is on 4%. They upgraded operational outlook for 2027. And the EPS was well ahead. And I think when we look at 2027 already, we expect about 5 % upgrade on EPS and with some contribution running into 2028 as well. Deborah, we're seeing the fourth consecutive quarter of organic growth for Estee Lauder. Could you break down a little bit in terms of how much you perceive this to be a true demand recovery versus the effects of restructuring? So actually, if I look at the top line and the organic growth and the way that that is made up, they're getting, you know, they're reporting market share growth by value.

12:42So including volume plus price ability for their brands to raise price in mainland China, in Korea, in Japan and Western Europe in the fourth quarter, the rest over the full year. And then also volume growth is positive in the US. And I think with what they have planned, the way they're focused and restructuring, that they'll get that back to value growth too. So, being able to command pricing in the US. So, it's them. But also, if we look at the US, one of the big things we've talked about has been the drag across these luxury goods type companies, the beauty premium companies on travel retail.

13:17And they're saying travel retail is clearly coming back in mainland China and other areas across Asia. It's also moving to the east and to the west. So we're seeing some of that travel retail also doing well coming from the Americas into Europe. And that is helping to absorb about one and a half to two percent of growth being shaped from the top line from Middle East for all of these companies. So it's some company contribution and also some market synergies and contribution that are coming through. Hey, Deb, about 30 seconds left. Are the Chinese consumers, are they traveling or are they buying mainly in China, maybe Japan a little bit?

14:00Are they traveling to Europe and to the US? We've certainly seen some of the movement to Europe, not to what it was pre-2019, but certainly better than last year. And we expect that to continue. There's supposed to be some level of momentum in the second half. for the U.S. less so. Some are starting to travel and there's expectation that that will pick up more in 2027. Stay with us. More from Bloomberg Intelligence coming up after this. Quick one before you jump back in. You're listening for ways to help teams move faster, make sharper decisions and turn scattered context into work they can use.

14:41ChatGPT for Business can help. ChatGPT for Business gives teams a shared workspace with admin controls, permissions, and access to work and codecs in ChatGPT. This means your business can move from question to answer and code to rollout quicker. Join over 10 million business and enterprise users worldwide already using ChatGPT for work. Download the ChatGPT desktop app or contact sales to learn more. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression.

15:22Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again. Bags, notebooks, tools, and tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time. Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last.

15:58Explore the possibilities at 4imprint.com. 4imprint. 4certain. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

16:42Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

17:29I mean, Target, ripping it. Craig Trudell joins us. We're not talking about autos, despite what the title says on my screen. We're going to talk about just some general news here and Target earnings. Talk to us, Craig. What did the company report here, and why is the street so bullish on this name? Yeah, I think this is a pretty clear story of a relatively new CEO, a company that has been really challenged for a few years and has gone through some real issues in terms of sales. Having a clear strategy to turn that around and showing some traction, and putting up the numbers to get Wall Street more comfortable with it.

18:01I think you mentioned sort of Target and how, you know, this is a company that sort of built a reputation for its home goods and, you know, sort of more discretionary items that may be lost out as the consumer, you know, prioritized, you know, the items that were sort of musts, you know, groceries. So to see the company sort of making a more concerted push in that department as of, you know, just in the last few months, even, it seems to be paying some dividends here. Craig, back to school shopping, right? Immediate test for the second half of the year, holiday even bigger. What would show you, what stat would show you that this turnaround is complete versus in terms of like all of these events that happen in the back half of the year?

18:50Yeah, yeah. I mean, I do think it was interesting for all the optimism about the results this morning, we are seeing a bit of a slowdown from one quarter to the next in terms of sales increase. So the outlook for the full year, they bumped that up a percentage point to 5%. I do think that this is still a story where it remains to be seen just how established this turnaround is, but it is going to be really important that the company keep this momentum up. and it's not going to be easy, right? I mean, we're hearing from other big box retailers this week, Home Depot and Lowe's in particular come to mind.

19:29I think Home Depot of those two, you know, had much better, you know, results than Lowe's did this morning. And yet both of them had some real consistent things to say about kind of the state of the American consumer that, you know, big home improvement projects, for example, are things that the conditions of that, as Home Depot put it, are just frozen. So, you know, the consumer may not have the sort of latitude to sort of splash out on back to school like maybe they did years ago. What I've learned just reading about retailers like a Target or Walmart is how important management is. I mean, man, I mean, so talk to us about this new guy, the new CEO, maybe what he is doing here.

20:11Yeah, I mean, I do go back to this grocery story. I think it's going to be interesting to see how that plays out in particular, because, you know, you don't necessarily think of Target as being your sort of go to grocer. And, you know, they're trying to. I don't think about Walmart until Jen Bartasch about 10 years ago said, no, the number one supermarket in this country is huge. I didn't know that. Absolutely. Not in New York. We wouldn't know. Yes. Yeah. And Walmart and Costco, you know, these are two names that have really sort of, you know, kind of taken over that space. And it is interesting to me that Target is both sort of leaning more into that segment of their business and yet sort of taking kind of half steps.

20:51They're not wanting to necessarily make the value play that you've seen Walmart make and sort of consistently made over the years. Whether or not they can sort of walk this fine line of building that business, but also doing so profitably, that seems to be the play here that Fidelke is making. and it's interesting to see the street buy into it. Has Target, in your opinion, actually turned the corner on their recovery? Or do we need a couple more quarters? Do investors need a couple more quarters to really prove that turnaround has happened? Yeah, I think looking at just this year and even just this is a couple quarters now of real serious traction, I think the thing that's, of course, going to be challenging is to kind of keep that going after what was a very extended slump, right?

21:44So this is a company that it's not just coming out of just a couple of back quarters. This was a few years. And this wasn't just issues of product fit or things like that. I think there was also some real questions about sort of overall brand damage, right? the handling of some of the sort of cultural zeitgeist moments of the last few years. Some people don't come back immediately to a brand after that damage is done. I'm seeing some reporting from the BBC that Target has revealed it's received almost$1 billion in tariff refunds. Wow. A, that's a big number. B, are other retailers seeing that too?

22:25That is another sort of fly in the ointment is a negative. But this is something that's very much in the mix. And, you know, even just last quarter, I think, we were starting to see some of this flow through. And it is making a meaningful difference for retailers, you know, and to see the sort of puts and takes across these companies in terms of, you know, how they sort of account for this and what their expectations are going forward for still having more to come in terms of what they're able to bring to bear. That happened quickly. I would have thought that it would have taken years to get that money back.

22:59like it does for me and anybody else who tries to get a refund. Yeah. And it may be the case, too, that we have sort of more more refunds to speak of. Right. And that there are more and more challenges to these various elements of the Trump tariff, you know, attempts here. Stay with us. More from Bloomberg Intelligence coming up after this. Quick one before you jump back in. You're listening for ways to help teams move faster, make sharper decisions, and turn scattered context into work they can use. ChatGPT for Business can help. ChatGPT for Business gives teams a shared workspace with admin controls, permissions, and access to work and codecs in ChatGPT.

23:41This means your business can move from question to answer and code to rollout quicker. Join over 10 million business and enterprise users worldwide already using ChatGPT for Work. Download the ChatGPT desktop app or contact sales to learn more.

24:22tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time. Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. for imprint for certain. Let's talk about healthcare for a second. It doesn't always work the way people expect it to.

24:57If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

25:31Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's get back to earnings here.

26:09Lowe's, they reported earnings. They cut its outlook for the full year after posting results that missed Wall Street estimates, showing how a stubbornly weak housing market is eroding the home improvement retailer's performance, having not improved my home at all. I would know a hammer from a screwdriver. I'm the last person to talk to that, so I'll return to the pros. Lindsey Dutch, consumer, hardline senior analyst at Bloomberg Intelligence. Lindsey, talk to us about Lowe's. What are they saying about their business and their consumer? Hi, Paul. Thanks for having me. Yeah, Lowe's results came in a little bit different than what we saw from Home Depot yesterday.

26:47You know, we saw weaker than expected sales, and that was really on sort of a weak DIY consumer. People like you not looking to improve their homes. Pro spending was solid, but, you know, same-store sales, 0.2 % increase, you know, very minimal when Lowe's was really expecting sort of an acceleration in that second quarter from first quarter, and it didn't materialize. In your opinion, right, so tell me a little bit more about this bifurcation between Home Depot and Lowe's. Why one reporting better than expected sales? Why under pressure for the other? Yes, I actually think this is one of the most interesting things that came out of getting more details on the results from the earnings call this morning.