modern (MRNA) shares tumbled Thursday after slashing sales expectations by at least $2 billion as the waning Covid shot fired sales.
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For the year, Moderna expects $5 billion in sales from its Covid vaccine — the company’s sole product. The guidance is based on existing deals, though Moderna notes there’s potential for additional sales from the U.S., Europe, Japan, and “other key markets.”
The forecast fell far short of Wall Street’s expectations. Analysts polled by FactSet called for total sales of $7.96 billion, including $7.37 billion from the Covid vaccine Spikevax. Lee Brown, global sector head for healthcare at research firm Third Bridge, said he’s seen sales estimates approaching $8.1 billion.
To make matters worse, Moderna expects the bulk of its revenue to come in the second half of 2023. The company expects $2 billion in the first six months of the year. Brown Notes analysts had forecast sales of nearly $3 billion for the period.
Wall Street expectations may “have to decline if demand falls more than estimated beyond (Advanced Purchase Agreements) which appears to be a risk amid consensus that revenue will increasingly need to be pushed into the second half” , Brown said in a note to customers.
In this afternoon’s stock market trading, Moderna shares are down 8.3% near 145.
Moderna stock: Profits come into the light
The fourth quarter was a mixed bag for Moderna. Revenue topped expectations at $5.08 billion but fell 29.5%. Analysts were forecasting revenue of $5.02 billion. According to FactSet, Moderna also earned $3.61 per share, below forecasts for $4.60 per share. Profits plummeted 68%.
Both pitfalls were to be expected with Covid vaccinations and booster shots slowing to a crawl. To date, more than 69% of the US is fully vaccinated against the respiratory virus. About 16% of people have received one of Moderna’s updated boosters or Pfizer (PFE)/BioNTech (BNTX).
Third Bridge’s Brown noted that the drop in earnings shouldn’t come as a surprise. Moderna invests heavily in research and development. Both selling, general and administrative expenses and research and development expenses increased about 87% in the quarter.
That “squeezed profits as the company continues to invest heavily in its clinical development activities, particularly in (respiratory syncytial virus), seasonal influenza and (cytomegalovirus) programs,” he said. “Moderna also increased its marketing spend to support its commercial activities.”
Moderna’s entry into RSV
Moderna equities analysts are closely monitoring the company’s next effort beyond Covid. Late Wednesday, the Food and Drug Administration granted Moderna’s personalized cancer vaccine a breakthrough melanoma treatment in combination with note‘s (MRK) Keytruda. The designation allows the agency to speed up its review process.
The company is also working on vaccines against respiratory syncytial virus and cytomegalovirus – known by the short forms RSV and CMV. Both are common viruses, but they can be serious in infants and older adults. RSV causes cold symptoms, and CMV causes fever, sore throat, fatigue, and swollen glands. Babies born with CMV often have long-term problems.
Zhyar Said, an analyst at research firm Citeline, says the RSV vaccine will be key. Moderna is gearing up to seek FDA approval in the first half of the year. That puts it on track to rival Pfizer and GSK (GSK) when the next RSV season is expected to start in autumn.
“Although Moderna has publicized their presence in the Covid-19 market, they now appear to be transitioning into the RSV market,” he said in a note. “In the head-to-head race with GSK’s RSV vaccine, Moderna is doing well to be a key contender as data has shown a vaccine of 83.7% (efficacy).”
This vaccine also has a breakthrough designation.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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