While new polls show flatlining concern about the pandemic among Americans, Moderna's COVID-19 vaccine business continues quietly churning in the background. But amid a recent decline in vaccine demand, the company has written off a sizable chunk of inventory.
In its second-quarter results announcement, Moderna said it wrote off $499 million in inventories "related to COVID-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used." In addition, the company took a $184 million charge because of changes in prior purchase commitments, and it recorded an expense of $131 million for "unutilized external manufacturing capacity."
As the pandemic receded earlier this year, media headline after headline documented falling COVID-19 vaccine demand. As one example, Moderna last month reached a deal with European officals to delay vaccine deliveries. The boosters orginially supposed to be delivered in late 2022 will now come in 2023.
For its part, Moderna on Wednesday said the second-quarter charges were "driven by a substantial reduction of our expected deliveries to COVAX and deferral of deliveries to other customers, particularly to the European Union." For accounting purposes, Moderna recorded the charges under its "cost of sales" category of expenses.
Still, Moderna is running a highly profitable business. In the second quarter, the company generated sales of $4.7 billion, a 9% increase, and pulled down net income of $2.2 billion.
Looking forward, Moderna continues to expect strong COVID-19 vaccine sales. Last week, the company inked a $1.74 billion deal to provide 66 million doses of its new bivalent booster candidate aimed at the omicron variant.
In addition, Moderna said it's already inked 2023 vaccine supply orders with the U.K., Canada, Australia, Kuwait and Taiwan. It's discussing other potential orders with officials around the globe, execs said Wednesday.
As for 2022, Moderna is standing by its COVID-19 vaccine revenue projection of $21 billion.
Outside of the company’s only available product, Moderna is testing its mRNA vaccine tech against diseases such as flu and Zika virus. Four programs are currently in phase 3 development, including a flu mRNA vaccine and a COVID-plus-flu shot.