modern The company posted a surprise third-quarter profit on Thursday, smashing Wall Street estimates as cost-cutting efforts continued and Covid vaccine sales rose higher than expected.
The biotech company reported net income of $13 million, or 3 cents per share, in the third quarter. This compares to a net loss of $3.63 billion, or 9.53 cents per share, reported in the year-ago period.
Moderna is cutting costs, recently announcing a goal of achieving $1.1 billion in cost savings by 2027 as it seeks to recover from a rapid decline in its business due to COVID-19. This is the first quarter that includes sales of Moderna’s second commercial product, the respiratory syncytial virus (RSV) vaccine.
Before the end of the year, the company plans to apply for approval for its experimental “next generation” Covid vaccine and a combination shot targeting Covid and flu. Moderna plans to apply for expanded approval of its RSV vaccine this year for high-risk adults aged 18 to 59.
Moderna said on Thursday its latest Covid vaccine gained an advantage after being approved in the US three weeks earlier than the last shot in 2023, allowing the biotech company to “meet demand more effectively”. The company was able to ship doses to pharmacies and health care providers and get them into the arms of more patients faster.
“I think the early rollout of the Covid vaccine and the steeper slope drove our sales volumes much higher,” Moderna CEO Stéphane Bancel said in an interview. During the first week of the vaccine rollout, the company shipped twice as many doses globally as it would in 2023, Bancel noted.
“This was a big cost-saving quarter and we will continue to do so,” he added.
Below is a comparison of what Moderna reported for the third quarter and what Wall Street expected, based on LSEG’s analyst survey.
- Earnings per share: 3 cents vs. expected loss of $1.90
- revenue: $1.86 billion vs. Expected $1.25 billion
Moderna reported third-quarter sales of $1.86 billion, slightly higher than the $1.83 billion it reported in the same period a year ago. Most of that total came from Covid shots, 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 was approved in May. Moderna said sales of its shot were lower than expected as it was approved and recommended by regulators late in the contracting season, when many vaccine distributors had already placed orders.
Analysts expected sales of the RSV vaccine to reach $132 million, according to estimates compiled by StreetAccount. Moderna’s RSV shot has so far been approved in the United States, European Union, Norway, Iceland and Qatar.
The company reaffirmed its 2024 annual product sales target of approximately $3 billion to $3.5 billion. Last quarter, Moderna sharply lowered its outlook, citing expected sales declines in Europe, a “competitive environment” for its respiratory vaccine in the U.S. and a possible delay in international sales to 2025.
Moderna’s stock has fallen nearly 50% this year as investors consider the way forward post-Covid. The company is betting on a pipeline built on its messenger RNA platform, the technology used in coronavirus vaccines and RSV shots.
The biotech company currently has 45 products in development and expects to bring 10 of them to market within the next three years.
Moderna is developing a standalone flu shot, a customized cancer vaccine with Merck, and a latent virus shot.
Cost of sales in the third quarter was $514 million, a 77% decrease compared to the same period last year. This includes $214 million in amortization costs for unused COVID vaccine doses and $27 million in costs related to the company’s efforts to reduce its manufacturing footprint.
Research and development costs decreased by 2% compared to the same period in 2023, reaching $1.1 billion. Moderna said the decline was mainly due to lower clinical development and manufacturing costs, primarily due to lower spending on clinical trials.
Meanwhile, selling, general and administrative expenses for the period decreased 36% to $281 million compared to the third quarter of 2023. SG&A expenses typically include the costs of promoting, selling, and delivering a company’s products and services.
