Modern reported a surprise third-quarter profit on Thursday, beating Wall Street estimates, as its cost-cutting efforts took effect and sales of its Covid vaccine came in higher than expected.
The biotech company posted third-quarter net income of $13 million, or 3 cents per share. That compares with a net loss of $3.63 billion, or 9.53 cents per share, in the year-earlier period.
Moderna is dramatically cutting expenses and recently announced a goal of $1.1 billion in savings by 2027 as it tries to recover from the rapid decline of its Covid business. It's the first quarter that includes sales of Moderna's respiratory syncytial virus (RSV) vaccine, its second ever commercially available product.
Before the end of the year, the company plans to apply for approval of its experimental Covid vaccine and the “next generation” combination vaccination against Covid and the flu. Moderna also expects to apply for expanded approval of its RSV vaccine this year, aimed at high-risk adults ages 18 to 59.
Moderna said on Thursday that its latest Covid vaccine had benefits after it received approval in the US three weeks earlier than the last iteration of the vaccine in 2023, allowing the biotech company to “meet demand more effectively “. The company was able to ship doses to pharmacies and healthcare providers and reach more patients' arms more quickly.
“I think the earlier start and a steeper ramp led to much higher sales of the Covid vaccine,” Moderna CEO Stéphane Bancel said in an interview. In the first week of the vaccine rollout, the company shipped twice as many products worldwide as it did in 2023, Bancel noted.
He added: “This was a big cost-cutting quarter and we will continue to do so.”
Here's what Moderna reported for the third quarter compared to Wall Street's expectations, based on an analyst survey from LSEG:
- Earnings per share: 3 cents versus an expected loss of $1.90
- Revenue: $1.86 billion versus expected $1.25 billion
Moderna posted third-quarter sales of $1.86 billion, only slightly higher than its $1.83 billion in the same period last year. The vast majority of that total came from Covid vaccinations, including $1.2 billion in U.S. sales and about $600 million in international markets.
The company's third-quarter sales also included $10 million in U.S. sales of its RSV shot, which received approval in May. Moderna said sales of that vaccine were lower than expected because it was not approved and recommended by regulators until later in the contracting season, when many vaccine distributors had already completed their orders.
Analysts had expected sales of $132 million for the RSV vaccine, according to StreetAccount estimates. Moderna's RSV shot is so far approved in the United States, the European Union, Norway, Iceland and Qatar.
The company reiterated its full-year 2024 product sales guidance of approximately $3 billion to $3.5 billion. In the most recent quarter, Moderna lowered its guidance due to lower expected sales in Europe, a “competitive environment” for respiratory vaccines in the U.S. and the potential for deferred international revenue into 2025.
Moderna shares have fallen nearly 50% this year as investors ponder the path ahead post-Covid. The company is betting on a pipeline based on its messenger RNA platform, the technology used in its Covid vaccine and RSV shot.
The biotech company currently has 45 products in development and expects to bring ten of them to market in the next three years.
Moderna is developing, among other things, an independent flu vaccination, a personalized cancer vaccine with Merck and vaccinations against latent viruses.
Third-quarter cost of sales was $514 million, down 77% from the same period last year. This includes, among other things, write-downs on unused doses of the Covid vaccine of $214 million and charges of $27 million related to the company's efforts to downsize its production site.
Research and development costs fell 2% to $1.1 billion compared to the same period in 2023. Moderna said the decline was primarily due to lower clinical development and manufacturing spending, citing lower clinical trial spending, among other factors.
Meanwhile, selling, general and administrative expenses fell 36% to $281 million in the period compared to the third quarter of 2023. SG&A expenses typically include the costs of advertising, selling, and providing a company's products and services.
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