Modern on Thursday published a sudden loss for the third quarter as it posted a big write-down due to unused doses of the Covid vaccine, its only marketable product, and unveiled plans to scale back vaccine production.
Moderna shares closed down 6% on Thursday.
Moderna’s total revenue for the period beat Wall Street expectations, even amid plummeting demand for its plan. Its outlook for next year, however, was lower than analysts had predicted.
Here’s what Moderna reported for the third quarter compared to what Wall Street expected, based on a survey of analysts from LSEG, formerly Refinitiv:
- Loss per share: $9.53. That may not be comparable to the $1.93 per share that analysts are expecting.
- Income: $1.83 billion vs. $1.40 billion expected
Moderna posted a net loss of $3.63 billion, or $9.53 per share, for the quarter. That compares with net income of $1.04 billion, or $2.53 per share, reported in the year-ago period.
The company said the loss was mainly due to $3.1 billion in mostly non-cash charges related to tax credits and changing its manufacturing footprint. The resizing, which led to $1.4 billion in charges during the third quarter, aims to make the company’s Covid vaccine profitable in 2024 and beyond, Moderna Chief Executive Stéphane Bancel said in a statement.
Moderna’s stock has fallen sharply this year.
The effort includes reducing production capacity and commitments with several third-party suppliers and cutting raw material purchase commitments for products, Moderna CFO Jamey Mock said during an earnings call Thursday.
“During the pandemic, we were obsessed with scaling production to make as many doses as we could to help as many people as we could. And now that we’re moving into an endemic environment, it’s important to scale the company.” Bancel said on CNBC’s “Squawk Box” Thursday.
Cost of sales for the quarter totaled $2.2 billion. This included a $1.3 billion charge for vaccines past their useful life and $500 million in contract manufacturing costs, among other costs.
The biotech company posted sales of $1.83 billion for the third quarter, with sales of the Covid plunger down 44% from the same period a year ago. Total revenue fell sharply from the $3.36 billion Moderna recorded in the third quarter of 2022, when Covid cases continued to trend higher in the US
Moderna reiterated its current full-year outlook for at least $6 billion in Covid vaccine sales, but did not provide a range for that forecast. In August, Moderna said it expected revenue of $6 billion to $8 billion in 2023.
Questions about the Covid vaccine
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The company said its guidance assumes Covid vaccine trends will be consistent with last fall, but noted that vaccination rates in the U.S. are still the “biggest remaining sales variable for the year.”
“We think this season looks — and we have to be careful with December — but it looks to be on track with last year. A little bit ahead of last year if you look at the weekly data,” Bancel told CNBC.
Notably, Moderna said its Covid vaccine has won 45% of the US market share so far this fall, up from the 36% market share it captured in 2022.
Bancel added that the company expects the US market for Covid vaccines to be at least 50 million doses this fall, which is consistent with last year and is “something we’re repeating again in 2024.”
“We assume that everyone who has gotten their booster in 2023 will at least get their booster in 2024 and beyond,” Moderna CCO Arpa Garay said during the earnings call. Garay added that the company expects to see “some growth in the overall Covid market” as patients become more understanding of annual vaccine recommendations.
Moderna expects about $4 billion in sales in 2024, mostly in the second half of the year, mainly due to global sales of its Covid vaccine and the launch of its vaccine against respiratory syncytial virus, or RSV. Wall Street analysts had expected $6 billion next year.
Mock said the company expects 2024 sales to be the “low point” for the company. Moderna expects to return to organic sales growth by 2025.
Moderna and its rivals Pfizer and Novavax All have seen sales of their Covid-related products plummet as much of the world moves away from the pandemic and becomes less dependent on protective vaccines and treatments.
Moderna hopes to shift investors’ focus away from Covid and towards a range of new vaccines. The company is developing shots that target other respiratory diseases and has said it hopes to offer a range of new vaccines targeting cancer, heart disease and other conditions by 2030.
“We’re talking about 15 products over the next five years and several of them in ’24 and ’25,” Bancel told CNBC. “That’s how we drive growth again, the products.”
The line includes Moderna’s experimental vaccine against respiratory syncytial virus, or RSV. The company in July filed for full approval of the shot for adults age 60 and older and is awaiting a decision from regulators in 2024.
Moderna also hopes to win approval for its combination vaccine targeting Covid and influenza in 2025. This vaccine recently showed positive initial results in a mid-stage clinical trial and is expected to bring greater convenience to patients and healthcare providers.
The pipeline also includes Moderna’s personalized cancer vaccine, a long-awaited vaccine being developed with Merck to target different tumor types, along with an influenza vaccine.