Demand for COVID vaccines is falling fast, and Moderna is feeling the chill.
The mRNA biotech expects to generate just $200 million to $300 million in sales from its COVID vaccine Spikevax in the second quarter, a steep decline from prior periods.
For reference, the company pulled down $4.5 billion in the same period in 2022 and $1.8 billion in the first quarter of this year.
But as the new immunization season begins later this year, Moderna expects to see $3 billion in second-half sales based on its existing contracts. That would take its full-year haul to somewhere around $5 billion, the company projects.
Moderna’s mRNA rival Pfizer, in its own report on Tuesday, also projected “significantly lower” sales from COVID products in the second quarter of 2023 versus the first quarter.
Moderna’s total annual sales haul could eventually grow beyond its $5 billion estimate because the company has yet to sign new contracts in the U.S. for the upcoming 2023-24 vaccination season. Moderna still expects to realize additional sales across the globe this year, including in the U.S., Chief Commercial Officer Arpa Garay said during the company’s first-quarter earnings call Thursday.
The FDA has scheduled an advisory committee meeting in June to help decide on the new coronavirus strains to be included in COVID shots this fall. Moderna has already started contracting negotiations with the U.S. government and commercial players based on preliminarily selected strains, and contracts could start flowing in over the next few weeks, Garay said.
But for now, because of lower demand, Moderna took $378 million in charges related to the COVID shot in the first quarter. These include inventory write-downs from unused doses, surplus manufacturing capacity and the cancelation of purchase agreements.
As a result, Moderna's cost of sales rose to 43% of product sales, compared with 17% in the first quarter of 2022.
Looking forward, Moderna expects even more costs associated with the switch to a commercial market in the U.S. In response, Moderna plans to charge its updated shot at a list price between $110 to $130 and will provide “differentiated discounts” to different payers, Garay said.
To help boost Spikevax’s position in the commercial market, Moderna is taking an “omnichannel approach,” using tailored digital messaging to reach healthcare providers, Garay said. The company will mainly focus its direct-to-consumer promotion in the fall, she added.
“We believe there’s an opportunity to continue to provide education both to staff as well as to patients,” Garay said. “And we believe there is an opportunity to harmonize and simplify the vaccination process for patients who are going in to get their flu vaccines.”
Despite the potential for new COVID contracts, the slow start this year means Moderna likely won’t see the same $18.4 billion level of sales it received in 2022.
Based on Modern’s current rate of cash burn, SVB Securities analysts in a Wednseday note figured the company will need at least $10 billion in revenue this year to support its profit margin target of 35% to 40%, which the analysts called “a herculean task.”
Meanwhile, Moderna is looking for new sources of revenue. After a positive readout detailed in January, Moderna plans to launch its RSV vaccine, mRNA-1345, in 2024.
Moderna has already started talking with payers and is building its commercialization capabilities to make a push as soon as the RSV vaccine is approved, Garay said. It's also started manufacturing certain components of the vaccine and prefilled syringes.
But Moderna will be playing catch-up if it can launch an RSV shot. The FDA on Wednesday approved GSK’s Arexvy as the world’s first RSV vaccine for adults over 60. And Pfizer is closely behind with an FDA target decision also set for May.
Plus, Moderna is still a commercialization greenhand compared with those two Big Pharma firms, which have well-established vaccine infrastructure beyond the pandemic setting.
Still, Moderna hopes to grab “a large share” of the adult RSV market as quickly as possible, Garay said. She touted the Moderna vaccine’s efficacy as “at the high end of the competitive landscape.” Plus, there have been no reported Guillain-Barré syndrome cases associated with the shot.
Editor's note: The story has been updated with additional comments from an SVB Securities note.