Weak sales in Europe and the United States compounded by intensified competition, Moderna lowers its full-year sales forecast, plunging 21% at one point | Financial Report Insights

Biotechnology giant Moderna reported better-than-expected Q2 performance, but significantly lowered its full-year sales forecast, leading to a more than 21% drop in its stock price during Thursday's trading.

On Thursday, August 1st, Moderna released its financial report for the second quarter of 2024.

1) Key Financial Data

Revenue: Q2 revenue decreased by 37% year-on-year to $241 million, exceeding expectations of $132 million, compared to $344 million in the same period last year. Sales of the COVID-19 vaccine decreased by 37% year-on-year.

Net Loss: Q2 net loss was $1.28 billion, compared to a loss of $1.38 billion in the same period last year.

Earnings Per Share: Q2 loss per share was $3.33, better than the expected loss of $3.39 per share.

Operating Costs and Expenses: Q2 operating costs decreased by 84% year-on-year to $115 million, including $55 million in costs due to reduced production scale. Q2 research and development expenses increased by 6% year-on-year to $1.2 billion, mainly due to increased personnel costs from an increase in staff numbers. Meanwhile, sales, general, and administrative expenses (SG&A) decreased by 19% year-on-year to $268 million.

2) Outlook

Revenue: Full-year revenue is expected to be between $3 billion and $3.5 billion, down from the previous expectation of $4 billion.

Following the financial report, concerns from investors about intensified competition in the vaccine market and future sales decline for Moderna led to a more than 21% drop in Moderna's stock price during Thursday's trading.

Moderna Faces Dual Pressures of Intensified Vaccine Market Competition and Government Budget Constraints

Moderna's revenue and loss figures were better than Wall Street's expectations, and CEO Bancel expressed satisfaction with this, stating, "The company has made progress in cost reduction, and we are very pleased with the progress we have made in sales and cost control."

Bancel also mentioned that part of the reason for lowering the revenue forecast is the expectation that the COVID-19 vaccine market will transition to a seasonal pattern, with most patients receiving vaccinations in the fall and winter. However, Moderna saw "good vaccine sales in the spring" in the United States, as older adults were advised to receive the latest round of COVID-19 vaccines.

Additionally, Moderna is facing an expected sales decline in the European market, intense competition in the U.S. respiratory vaccine market, and the potential delay of some international revenue until 2025, leading to a significant reduction in the full-year sales forecast As the global pandemic eases, the demand for protective vaccines and treatments has significantly decreased. Moderna's demand for its COVID-19 vaccine has also been severely hit. After receiving approval in May, Moderna has started rolling out a new vaccine product for the elderly in the United States - a new respiratory syncytial virus (RSV) vaccine called mRESVIA, which is Moderna's second commercial product after the COVID-19 vaccine.

However, the RSV vaccine market is highly competitive, with Pfizer and GSK already having launched their respective products. Bancel stated in a media interview:

"Whether it's the RSV vaccine or the COVID-19 vaccine, market competition has become more intense. mRESVIA is the third RSV vaccine to enter the market after Pfizer and GlaxoSmithKline, the latter of which dominated the market last year."

Bancel also mentioned that due to tight government budgets and existing supply contracts, Moderna faces challenges in the European market. Some countries informed Moderna last week that due to budget constraints, they do not have the capacity to purchase vaccines beyond current demand, as they have already signed large contracts with Pfizer and BioNTech, limiting their ability to purchase more vaccines. Additionally, the ongoing Russia-Ukraine conflict further exacerbates the pressure on government budgets.

Currently, Moderna has 45 products in development, with 5 in late-stage trials. This includes a combination vaccine for COVID-19 and influenza that could potentially be approved as early as 2025. Furthermore, Moderna is also developing standalone influenza vaccines, personalized cancer vaccines in collaboration with Merck, and vaccines for latent viruses, among other products.

Looking ahead, despite the challenges, Moderna still expects to restore sales growth by 2025 through new product releases and achieve a balance between revenue and expenses in 2026