Shares of Moderna Inc (NASDAQ:MRNA, ETR:0QF). plummeted nearly 20% on Thursday after the company revised its 2024 financial forecasts downward, attributing the move to slowing sales and intensifying competition for its vaccines.
Moderna’s second-quarter earnings revealed a reduction in its projected product sales for this year from $4 billion to an anticipated range of $3 billion to $3.5 billion. The company attributed this adjustment to various factors, including lower-than-expected COVID-19 vaccine sales in Europe, deferred government contracts, and increased competition from other vaccine manufacturers.
The announcement triggered a stock sell-off and “raises doubt about hitting profitability and cash burn goals,” Jefferies analyst Michael Yee wrote in a research note on Thursday.
Vaccine sales decline
Moderna enjoyed substantial financial success in recent years through its COVID-19 vaccine. However, sales have dramatically declined as COVID-19 became an endemic disease, shifting more business to the commercial market and making large government contracts more elusive.
The earnings report indicated that most US contracts for Moderna's COVID-19 vaccine are finalised, with ongoing efforts to secure a deal in the European Union.
Despite this, the company anticipates "very low EU sales" in 2024 based on current discussions. For other regions, contract deferrals into 2025 are expected to further impact revenue.
Moderna is now looking to its newly approved respiratory syncytial virus (RSV) vaccine, Mresvia, to drive sales growth. Yee highlighted Mresvia as the "swing factor" for the company, though Moderna has lowered expectations due to competition from GSK and Pfizer (NYSE:PFE). GSK also adjusted its vaccine sales forecast this week, citing seasonal trends and predicting increased demand later this year as infections typically rise.
Moderna CFO Jamey Mock stated on a conference call, "This year is not turning out as we expected. We were third to market this year, some of the contracts have already been negotiated, and we only are participating in the second half."
Yee projects that GSK will maintain market leadership due to "superior efficacy" in testing, with Moderna and Pfizer vying for the remaining market share. Mock expressed optimism about securing a "more fair market share" next year as the company expands access to more retail chains.
Return to sales growth
Looking ahead, Moderna anticipates a return to sales growth in 2025 and 2026, relying on the long-term potential of Mresvia and a combination flu and COVID-19 vaccine that recently passed late-stage testing and could be available in the US next year. Additionally, investors are closely monitoring Moderna's development of a cancer vaccine in collaboration with Merck & Co.
In the interim, Moderna is focused on cost-cutting measures, including investments in artificial intelligence to enhance operational efficiency. The company reported a 19% reduction in selling, general, and administrative expenses compared to the same period last year. Total revenue for the April to June period was $241 million, down from $344 million in the second quarter of 2023.
Despite this week’s results, Moderna CEO Stéphane Bancel remains positive.
"During the second quarter, we marked the approval of our second mRNA product and significantly lowered our operating costs. We remain focused on execution for the 2024-25 COVID season and the launch of our RSV vaccine in the US," Bancel said.
"With continued positive Phase 3 data across our respiratory portfolio, we are using our mRNA platform to address significant unmet medical needs and advance public health. Our platform is poised to reach millions globally this year and we are excited by its continued positive impact on patients."