Moderna is at a crossroads as demand for vaccine wanes
Analysts split on company’s prospects after COVID
Plunging sales of Moderna’s breakthrough COVID-19 vaccine have touched off a Wall Street debate about the future of a biotech company once seen as the brightest star in the Massachusetts drug-making firmament.
Sales of Moderna’s messenger RNA vaccine fell 91 percent in the first quarter from a year earlier, a dramatic illustration of waning demand for protection from the virus that caused a global pandemic. The Cambridge company’s earnings report, posted Thursday, continued a downward trend for sales of the biotech’s vaccine, Spikevax.
Nonetheless, Moderna’s shares surged more than 12.5 percent on the Nasdaq exchange, apparently because the revenue drop wasn’t as sharp as many investors had anticipated. Sales of Spikevax, Moderna’s only marketed product, plummeted to $167 million from $1.9 billion last year. That actually beat analysts’ predictions of $97.5 million.
“The stock is eliciting some head scratching” among skeptics who think the stock is overvalued and question if the company can meet the same success with follow-on products, said Mani Foroohar, an analyst with Boston investment bank Leerink Partners who is among the doubters.
Barely known to most people five years ago, Moderna became a household name early in the pandemic. It raced New York-based phar
maceutical giant Pfizer in the hopes of becoming the first drug maker to get a COVID vaccine cleared for emergency use in the United States.
Pfizer won the sprint by a week, getting its shot cleared on Dec. 11, 2020. Nonetheless, Moderna’s vaccine proved a blockbuster — as did Pfizer’s — and turned several of the biotech’s executives and founders into billionaires, including chief executive Stéphane Bancel and board chairman and company cofounder Noubar Afeyan.
Moderna has built a robust pipeline of vaccine candidates for other infectious diseases. They all harness messenger RNA to stimulate an immune response. In an interview last year, Bancel predicted Moderna would be one of the world’s largest drug makers within the coming decade. “We are not a one-trick pony,” he said.
Even as its COVID vaccine sales tumble, most of those who track Moderna remain in the bullish camp, anticipating huge demand for future products — including a vaccine for respiratory syncytial virus, a combination COVID and influenza vaccine, as well as experimental vaccines to boost existing cancer treatments developed by partner Merck.
“Moderna is investing and preparing for multiple launches of new products ahead,” said biotech analyst Michael Yee, managing director at the Jefferies investment bank, who has issued a “buy” rating on the company’s shares. “Uptake and sales could help drive a better outlook to future growth again and diversify away from just COVID.”
In the bearish camp are analysts such as Foroohar of Leerink Partners, one of a handful of Moderna stock watchers who have issued “sell” ratings, expecting the company will underperform. Among the open questions, he notes, is the outcome of patent infringement litigation against Moderna brought by Canada’s Arbutus Biopharma, which makes a drug delivery product.
“This [messenger RNA] technology was in the right place at the right time, and the pandemic was the killer app,” said Foroohar, but he thinks it will be challenging for Moderna to repeat the feat it achieved with Spikevax on an aggressive timetable.
Moderna isn’t the only vaccine maker suffering from a post-pandemic revenue decline. Pfizer on Wednesday also reported falling demand for its COVID products: its rival mRNA vaccine called Comirnaty that it marketed with the German biotech BioNTech, and the antiviral pill Paxlovid for treating the illness.
Pfizer said it expects $8 billion in combined sales for Comirnaty and Paxlovid this year. Revenue for those products fell to $12.5 billion in 2023, down 78 percent from the peak of $57 billion in 2022.
Moderna is the largest homegrown drug maker in Massachusetts by head count, with more than 4,400 employees in the state of as late 2023, according to a company spokesperson. The firm said it expects the Food and Drug Administration will approve its RSV vaccine this month, in time for the US vaccine campaign in the fall.
Moderna is also preparing for the launch of an updated version of Spikevax soon.
“As we anticipate the launches of our Spikevax 2024-2025 formula and RSV vaccine, we are exercising financial discipline,” including using artificial intelligence to “further streamline operations and enhance productivity,” said Bancel.
Moderna has laid off employees within its manufacturing unit as it seeks to cut costs. Last month the 14-year-old biotech announced a partnership with artificial intelligence company OpenAI to automate many of its operations.
Despite plunging sales of its COVID vaccine, Moderna reported a smaller-than-expected net loss of $1.18 billion, or $3.07 per share, for the first quarter. That compares with net income of $79 million, or 19 cents per share, reported for the same period a year ago.
Bancel nonetheless predicted an excellent year for Moderna and its mRNA vaccines. The company has 10 experimental vaccines in late-stage clinical trials, including shots for seasonal flu and cytomegalovirus, or CMV, a common virus that can affect babies during pregnancy and cause birth defects.
The firm said it has also made progress with experimental vaccines against Epstein-Barr virus, Varicella-Zoster virus, and norovirus.
Moderna is also working on therapeutic vaccines to treat cancer. They include vaccines that would be combined with Merck’s oncology drug Keytruda to treat patients with bladder cancer, kidney cancer, and one of the most common forms of skin cancer.
“With 10 late-stage programs, and additional new programs advancing toward pivotal studies, we continue to expect numerous product milestones this year,” Bancel said.
Moderna is nearing completion of its move to a new global headquarters in Cambridge, a 462,000-square-foot complex at 325 Binney St. in Kendall Square. Previously, the biotech was based at 200 Technology Square and occupied a few buildings nearby. The company is planning a grand opening of the new headquarters on June 26.