Moderna slashes billions from its sales forecast after a quarter of 'pain points'

When Moderna reached a deal with the European Commission to delay some shipments of its COVID-19 vaccine to 2023, the company wasn’t certain how the development would affect sales projections for the shot.

Now, with Moderna’s third-quarter financial performance in the books, it’s becoming clear.

On Thursday, the company said it deferred between $2 billion and $3 billion in vaccine sales to 2023. As a result, Moderna has slashed its annual sales projection for Spikevax from $21 billion to a range of $18 to $19 billion.

Third quarter sales of the shot, at $3.12 billion, came in below Wall Street’s expectations. The figure represented a 35% decrease from the third quarter of last year and 31% decline from the second quarter of this year.

The results are particularly disappointing for the company considering that earlier this week Pfizer reported third quarter sales of its COVID vaccine at $4.4 billion, compelling the company to bump up its annual sales projection from $32 billion to $34 billion.

In addition to an overall decrease in demand, Moderna has been plagued by “short-term supply constraints,” CEO Stephane Bancel said on a conference call.

In September, early in its roll out of new booster shots, the company was coming up short. At a Catalent plant in Indiana, millions of Moderna doses were withheld as the contract manufacturer cleared up issues that cropped up during an FDA inspection.

“We had to deal with a very complex third quarter from a manufacturing standpoint—manufacturing not one product but two,” Bancel added. “We’ve had quite a number of pain points. We are working through a lot of those issues. There are many lessons to be learned that we are working on that will put us in a better place for 2023.”

As for the rest of 2022, Moderna is counting on a rebound propelled by its omicron-adjusted booster.

“We anticipate that product sales will be higher in the fourth quarter of 2022 than in the third quarter as we continue to deliver against our supply contracts for booster vaccines,” chief financial officer Jamey Mock said.

What does 2023 hold for the sales prospects of the vaccine? Moderna chief commercial officer Arpa Garay said there are “a number of variables” that prevent the company from coming up with a figure. As a floor for vaccine sales—accounting for signed contracts and supply deferrals from 2022—Moderna said it is guaranteed to reach between $4.5 and $5.5 billion. There also are options that can be exercised and potential contracts under negotiation that could raise the figure.

Going forward, Moderna said it expects the COVID-19 vaccine market to replicate the current market for flu shots. Based on discussions with healthcare executives however, Third Bridge analyst Lee Brown casts doubt on that assumption.

"We’re hearing far less enthusiasm for the booster opportunity using the updated omicron-adapted COVID-19 vaccines," Brown wrote. "Previously, consensus estimated the number of annual COVID-19 shots would approximate the number of annual flu shots, but now the U.S. market could be as low as one-third the size of the flu market.”   

Moderna dodged a question about what it plans to charge once the United States goes to a commercial model for vaccines, likely in the first quarter of next year.

The company also reported a charge of $333 million in the quarter for inventory write-downs related to COVID products that exceeded their shelf life. That figure is down from the $499 million it wrote off in the second quarter of this year.