Moderna takes hefty $1.3B COVID write-off, scales back manufacturing as sales shrink

The days of booming COVID-19 vaccine sales, which sent Moderna into the ranks of pharma's top companies, have passed. Now, the company is coping with low demand and taking inventory write-downs for “excess and obsolete” stock of its only marketed product.

Moderna’s third-quarter earnings report featured an array of financial losses and various charges. In total, the company recorded a net loss of $3.6 billion, $3.1 billion of which was tied to “resizing and tax allowances." The drugmaker pulled down quarterly sales of $1.8 billion, which beat analysts' consensus expectation of $1.45 billion.

But Moderna's costs were a crucial hindrance for the quarterly performance. For example, the company took a $1.3 billion inventory write-down attributed to “excess and obsolete” COVID vaccine stock.

In addition, the company paid $500 million for a "contract manufacturing wind-down cost" and $100 million in cancellation fees.

For the full year, Moderna forecasts cost of sales to come out to approximately $5 billion, which includes charges of some $1.6 billion over the third and fourth quarters attributed to a “proactive resizing” of its manufacturing footprint.

The company says it made significant progress on those efforts during the third quarter and hopes the resizing will lead to a more predictable quarterly cost of sales.

“Despite the immediate financial impact, we are confident that this strategic move will improve the efficiency of our manufacturing operations and establish a strong foundation for improved margins going forward,” Chief Financial Officer Jamey Mock noted on the company’s third-quarter earnings call.

Moderna isn’t alone in taking sizable write-downs thanks to COVID vaccine overstock. Fellow mRNA player Pfizer reported $5.6 billion in charges during its third quarter, $900 million of which was attributed to its vaccine Comirnaty and $4.7 billion of which stemmed from antiviral Paxlovid.

Pfizer also took a revenue hit from a lack of COVID sales, reporting a 42% decrease to $13.23 billion for the third quarter.

Meanwhile, Moderna is projecting full-year sales of its mRNA shot Spikevax of “at least” $6 billion due to high hopes of performing well in the commercial vaccine market.