Moderna Inc. shares moved lower Thursday, after the COVID vaccine maker posted far weaker-than-expected third-quarter earnings and lowered full-year sales guidance by up to $3 billion.
The stock was last down 2%, although that was well off pre-market losses that reached as much as 14%.
The Cambridge, Mass.-based biotech
MRNA,
posted net income of $1.043 billion, or $2.53 a share, for the quarter, down from $3.333 billion, or $7.70 a share, in the year-earlier period. Revenue fell to $3.364 billion from $4.969 billion a year ago.
Both numbers were below the FactSet consensus, which called for EPS of $3.30 and revenue of $3.527 billion.
Moderna said its third-quarter revenue was hurt by a decline in sales of the COVID vaccine, as well as lower sales volume due to the timing of market authorizations for its bivalent COVID booster and the related manufacturing time ramp-up.
The Food and Drug Administration authorized the company’s bivalent booster in August and demand shifted toward that shot, which targets newer omicron variants, as well as the original virus. But take-up of the booster has proved slow and supply was crimped by a manufacturing snafu. The company switched to five-dose vials from 10-dose vials requiring different packaging.
Cost of sales came to $1.1 billion, or 35% of product sales, including a $333 million charge for inventory write-downs relating to COVID products that exceeded their shelf life prior to being used. The company also took an expense on unused manufacturing capacity of $209 million and a loss of firm purchase commitments and related cancellation charge of $102 million, driven by the shift in product demand to the bivalent booster.
The company said advanced purchase agreements, or APAs, for delivery this year are now expected to total $18 billion to $19 billion of product sales, down from guidance of $21 billion that it provided when it reported second-quarter earnings. The FactSet consensus is for full-year sales of $21.3 billion. It blamed the shortfall on “short term supply constraints.”
On a conference call with analysts, executives outlined how they expect the commercial market for the COVID vaccine to develop as the world transitions to an endemic phase, or one in which COVID is still present but is no longer overwhelming healthcare systems. The company based its estimates on the flu vaccine market looking back over the last 10 flu seasons.
The annual flu market ranges from 500 million vaccine doses to 600 million, but COVID vaccine uptake will depend on a variety of factors, including medical need, viral evolution, public health authority recommendations and consumer motivation to vaccinate.
“With the continued higher medical burden of COVID relative to flu, we expect the endemic COVID vaccine market could be as large or larger than flu market volumes over time,” Chief Commercial Officer Arpa Garay told analysts, according to a FactSet transcript.
But Lee Brown, global sector lead analyst for healthcare at Third Bridge, said conversations with specialists have revealed far less enthusiasm for the booster opportunity.
“Most Americans are now expected to delay or skip the new COVID-19 booster shots with a recent poll highlighting that two-thirds of American adults do not plan on getting a COVID vaccine soon,” he said. “Previously, consensus estimated the number of annual COVID-19 shots would approximate the number of annual flu shots, but now the U.S. market could be as low as one-third the size of the flu market.”
Moderna’s COVID vaccine is its first approved product, although it has 48 programs in development across 45 development candidates, 35 of which are in active trials.
Key trials include vaccines aimed at flu and respiratory syncytial virus, or RSV, a seasonal illness that has hit young children in the U.S. especially hard this year and filled hospitals and emergency rooms. The company expects a data readout on those in the first quarter of 2023.
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The company is also working on a personalized cancer vaccine in combination with Merck’s
MRK,
Keytruda.
Chief Financial Officer James Mock told analysts the company is in “multiple active discussions” on potential outside investments or collaborations to harness its mRNA technology.
For 2023, the company has APAs of $4.5 billion to $5.5 billion, while the FactSet consensus for 2023 sales is for $9.4 billion. The company is expecting APAs to grow as it awaits sales from key markets, including the U.S. EU, Japan and Australia, as well as regional sales in Latin America, Asia Pacific, the Middle East and from the World Health Organization-backed Covax program, which aims to deliver vaccine to lower-income countries.
Shares have fallen 42% in the year to date, while the S&P 500
SPX,
has fallen 21%.
