Moderna Reports Disappointing Financial Results

Moderna, a leading biotechnology company, recently released its financial results for the quarter, which fell significantly short of Wall Street expectations. The company's sole product, a Covid-19 vaccine, experienced a more drastic decline in demand than anticipated.

Net Loss and Factors: Modern's net loss for the quarter amounted to $3.6 billion, surpassing the anticipated loss of $728 million projected by analysts from FactSet. This substantial loss was primarily attributed to noncash charges associated with the reduction in its Covid-19 vaccine manufacturing program and a tax valuation allowance.

Post-Pandemic Reset: In light of these results, CEO Stéphane Bancel acknowledged that the company is undergoing a post-pandemic reset. Bancel emphasized the need to streamline costs as Moderna adjusts to an evolving landscape.

"We've built this big machine for the pandemic to save as many lives as we could," stated Bancel. "Now as we move into endemic, the company structure is not adapted for that type of volume. Nobody knew what was going to happen after the pandemic in terms of volume."

Revised Vaccine Market Estimates: Moderna now projects that the U.S. market for Covid-19 vaccines this fall will consist of a minimum of 50 million doses, scaling back from its previous estimate of 50 to 100 million doses in August.

Restructuring for Future Success: The restructuring costs incurred in the third quarter, which involve terminating manufacturing partnerships and an inventory write-down totaling $1.3 billion, are expected to position the company for profitability.

Projections and Challenges: Moderna's press release stated that the company anticipates breaking even by 2026, which is sooner than expected. Currently, Wall Street analysts predict a loss of $1.90 per share in 2026, with profitability not anticipated until 2027, according to FactSet.

Although Moderna's outlook remains optimistic, the reported numbers for the third quarter of 2023 were disappointing. The company reported a diluted loss of $9.53 per share, compared to the expected loss of $1.93 per share projected by FactSet analysts.

Sales Figures

Sales for the quarter reached $1.8 billion, surpassing the FactSet analyst consensus estimate of $1.4 billion. However, the cost of sales was notably higher at $2.2 billion, compared to the estimated $754 million from FactSet. The company disclosed that the cost of sales included a substantial inventory write-down of $1.3 billion.

Market Performance

Moderna shares have experienced a decline of over 57.6% thus far this year, as indicated by the market close on Wednesday. The company aims to introduce its second product, a respiratory syncytial virus vaccine, in the coming year. Remarkably, Moderna has made significant progress in reducing its manufacturing costs for Covid-19 during the third quarter.

Revised Expectations

Moderna now expects sales to reach a minimum of $6 billion this year, which falls slightly short of the FactSet consensus estimate of $6.9 billion. Additionally, the company anticipates a cost of sales totaling $5 billion for the year, surpassing the FactSet consensus estimate of $3.7 billion.

Looking ahead to 2024, Moderna's projections are also lower compared to Wall Street expectations. The company foresees revenue of approximately $4 billion, significantly below the current FactSet analyst consensus estimate of $6.1 billion. Moderna's CEO, Bancel, explained that the decrease in anticipated sales for 2024 is due to revenue shifts from the third quarter of 2022 to 2023.

Competing in the Market

According to Bancel, Moderna's share of the Covid-19 vaccine market in the U.S. has seen an increase this year, rising from 36% to 45% compared to last year. He stated, "I think people can see that we can compete against established players in the commercial setting."

Future Projects and Competition

Moderna is currently focused on developing a range of products, including an mRNA influenza shot, a combination flu and Covid-19 shot, and a cancer treatment in collaboration with Merck (MRK).

Other companies are also advancing in the field of mRNA products. Pfizer (PFE) has released Phase 1/2 data on a combination influenza and Covid-19 mRNA vaccine. GSK (GSK) is actively working on mRNA-based Covid-19 and influenza vaccines, while Sanofi (SNY) has mRNA-based influenza and RSV vaccines in development.

Overall, Moderna is determined to strengthen its position in the market and continue innovating in the field of mRNA-based therapies.