Moderna Only Owns Half of Its Own Cancer Vaccine

Hunt, Mike, and Jason walk the Cash Flow Memo across energy, the federal balance sheet, and healthcare, joined by Montana in San Diego for a deep session on cancer vaccines and how immunotherapy actually works. Nvidia’s quarter and the robotaxi launches close the show. The Cashflow Memo Key Takeaways \* The hydrocarbon squeeze has moved from crude to products: with Hormuz closed and Ukrainian drones hitting Russian refineries, the crack spread on No. 2 oil (diesel and heating oil) is running about $80 against a normal all-product spread of $20 to $25. \* Natural gas is pinned near $3.50 for both 2026 and 2027 because supply, not demand, is the problem (supply goes 100 to 118 Bcf/d from 2022 to 2027 against demand of 100 to 117), and since most of that growth is Permian associated gas priced off crude, Hunt would hold existing gas positions but add exposure through an oil stock instead. \* With the deficit estimated at $1.55 trillion this fiscal year and interest, roughly $1 trillion of defense, and $1.65 trillion of statutory Social Security effectively untouchable, Hunt expects the Fed to follow through on Jackson Hole by running the ~$6 trillion balance sheet down rather than raising Fed funds, which pushes the 10-year above its current ~4.70%. \* BioNTech ended a phase 2 colorectal cancer vaccine program that showed no benefit over monitoring after surgical resection, which alongside Moderna and Merck’s phase 3 progress narrows the thesis: cancer vaccines appear to work only in immunotherapy-sensitive tumors and only paired with a checkpoint inhibitor such as Keytruda, where Moderna splits economics 50/50 with Merck under a pre-COVID deal. \* Nvidia guided to roughly 70% year-over-year growth that management said would have been a doubling absent memory and TSMC capacity constraints, and at $186 billion of run-rate free cash flow it now sits $50 billion ahead of Apple on $360 billion of run-rate revenue versus Apple’s $470 billion, though the hosts expect it to finish third in self-driving behind Tesla and Waymo. Show Notes \[00:00:19] **This Week’s Memo** Mike sets the format: 30 minutes across energy, technology, and healthcare, built on the 20-page Cash Flow Memo. \[00:00:47] **Exhibit C: Oil, Iran, and the Product Squeeze** Iran remains a stalemate, and the energy secretary’s claim that 10 million barrels a day are getting through does not match what tanker trackers see. The constraint is products, not crude, with the crack spread on No. 2 oil near $80 against a normal $20 to $25 all-product spread. \[00:02:37] **Exhibit B: Gas Pinned at $3.50 Through 2027** Demand growth is fine at 100 to 117 Bcf/d from 2022 to 2027, but supply runs 100 to 118 and most of the growth is Permian associated gas priced off crude. Hunt would hold gas positions and add through oil. \[00:05:10] **Exhibit A: Jackson Hole and the Balance Sheet** Inflation is running 3.5% against a 2% target. Hunt’s read is that the Fed tightens by running the roughly $6 trillion balance sheet down rather than raising Fed funds, which lifts the 10-year from its current 4.70%. \[00:08:21] **Where the Deficit Fight Actually Lands** Interest is fixed, defense is just under $1 trillion and rising, and Social Security at $1.65 trillion is written into law. That leaves Medicare and Medicaid, which is why healthcare policy and healthcare investing keep converging. \[00:09:10] **Page 15: Setting Up the Cancer Vaccine Question** Pfizer, Merck, Moderna, BioNTech, and Vertex. Moderna and Merck reported phase 3 progress, and Moderna splits whatever cash flow its cancer vaccine IP generates 50/50 with Merck under a pre-COVID deal. \[00:10:24] **BioNTech Ends a Phase 2** BioNTech shut a colorectal cancer vaccine program after patients who received the vaccine post-resection showed no benefit over those simply monitored. Jason and Montana argue the screen is immunotherapy sensitivity: tumors without enough accumulated mutations never stand out to the immune system in the first place. \[00:12:40] **Keytruda: History, Mechanism, Side Effects** Approved for melanoma in September 2014, non-small cell lung and head and neck in 2015, and general solid tumors in May 2017. It is a PD-1 inhibitor that blocks the tumor’s off switch for the immune system, which is also why over 10% of patients develop thyroid disease. Tecentriq works similarly; BioNTech’s pumitamig is a newer bispecific. \[00:18:42] **From Lethal to Manageable** Montana reframes the goal: not curing cancer but converting it to a condition patients live with. ADCs, radioligand therapy, CAR T, and bispecifics all push toward better efficacy with lower toxicity. Jason sees a step change in about five years and combination therapy five years after that. \[00:22:21] **Nvidia’s Quarter and the Law of Large Numbers** Nvidia guided to roughly 70% growth next year, which management said would have been a doubling if memory makers and TSMC could supply it. \[00:23:27] **Cybercab, Waymo, and Who Wins Self-Driving** Tesla’s Cybercab is launching in Austin and Waymo just went live in San Diego with roughly 40 vehicles. Nvidia sells a development kit to traditional automakers, but only Mercedes has shipped anything worth discussing, and Mike argues the automakers outsourced their competency long ago and will have to outsource self-driving too. \[00:26:46] **Nvidia Passes Apple on Free Cash Flow** Nvidia’s run-rate free cash flow is $186 billion against Apple’s $136 billion, a $50 billion gap, on $360 billion of run-rate revenue versus Apple’s $470 billion. Download the memo at telltales.us and join us next Wednesday. 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