Moderna cuts forecast, misses estimates as orders delayed
Moderna earnings offered a preview into the future of Covid-19 vaccine sales, and so far it doesn’t look pretty.
The company cut its vaccine sales forecast for the year and gave its first hint at 2023 as interest in immunization fades amid the fading pandemic concerns. While analysts were largely anticipating a disappointing quarter, the miss comes only days after rival Pfizer raised its vaccine guidance for the year.
Moderna now has purchase agreements for a total of $18 billion to $19 billion of Covid-19 vaccine for 2022, down from the previous guidance of $21 billion, because some deliveries were delayed to next year by “short-term supply constraints,” according to a statement Thursday. The vaccine maker said it’s signed advanced purchase agreements worth $4.5 billion to $5.5 billion for next year, including up to $3 billion of deferred deliveries from this year.
“It’s exactly what we worried about with 2022 shots bleeding into 2023,” Bloomberg Intelligence analyst Sam Fazeli said. “The question is how much more can they add in 2023 to be able to match consensus, which we have been saying for a while is too optimistic. The success of the current booster campaign is critical for future years, and it’s not going that well.”
Third-quarter profit excluding some items was $2.53 a share, while analysts had estimated $3.59. Revenue of $3.36 billion missed the average estimate of $3.74 billion. Moderna wrote down $333 million of expired inventory and lost $209 million from unused external manufacturing capacity, in part because customers are more interested in newer formulations that target Covid the latest variants.
Shares of Moderna slumped 7.5% in trading before U.S. markets opened. They’ve plunged 42% this year through Wednesday’s close. Pfizer fell 1.5% before the open, and American depositary receipts of its German partner BioNTech dropped 5%.
Supply was limited in the U.S. this fall when one of Moderna’s contract manufacturing facilities came under scrutiny from U.S. regulators. Next year will be pivotal for the Covid-19 vaccines market: The U.S. government will wind down its purchasing program, meaning Moderna will need to compete with Pfizer to sell vaccines directly to providers and other health groups.
On a conference call with analysts, Moderna executives emphasized the ongoing need for Covid-19 vaccines. They outlined scenarios where demand for Covid shots mirrors that of the flu vaccine, which could result in a global market up to $32 billion. Moderna conceded variables like consumers’ appetite for more shots could influence volume next year.
Moderna anticipates signing more contracts in the months ahead with customers such as the European Union, Japan, Australia, and countries in Asia and Latin America, Chief Commercial Officer Arpa Garay said on the call. The company is also in discussions with Covax, the World Health Organization-backed group working to get shots to expand access around the globe.
Meanwhile, Moderna’s costs are soaring. Operating expenses ballooned to $2.2 billion, blowing past analysts’ estimates of $1.52 billion. The company is pursuing 48 programs, including 35 candidates that are in human trials. Among the most closely watched opportunities are vaccines for other respiratory illnesses such as RSV, an increasingly competitive field with giants like Pfizer and GSK in the race.
Moderna expects to soon share data on its vaccines for flu and respiratory syncytial virus, or RSV. Should they be positive, the company could introduce the shots as soon as next year.
Moderna’s selling, general and administrative expenses jumped 65% from the yearago quarter to $278 million. The company attributed the increase to its rapid hiring and spending in preparation for entering the commercial market.