The pharmaceutical company, based in Cambridge, Massachusetts, said Thursday that a drop in volumes for its Covid-19 vaccine has caused sales to fall 29% to $5.1 billion in the last three months of 2022, which analysts say still surpassed expectations of $5.02 billion. to FactSet.
U.S. sales of Moderna’s original and booster Covid-19 vaccines have so far been through federal supply contracts, with the government making doses available to people for free. But Moderna is now preparing to distribute its vaccines through standard channels, with reimbursement from commercial insurers.
Moderna is in contract discussions with commercial customers for the vaccines and expects to distribute about 100 million doses in the commercial market this year, Moderna’s chief commercial officer, Arpa Garay, said on a conference call with analysts on Thursday.
Moderna is also in talks over the Covid-19 vaccine contract with federal agencies, including the Department of Defense and Veterans Affairs, Ms Garay said.
The company has not disclosed a specific commercial price for the vaccines. Moderna Chief Executive Officer Stéphane Bancel said in January that the company was considering a range of $110 to $130 per dose, which is significantly higher than the cost range of $15 to $26 per dose in the federal supply contracts. It’s a range similar to what Pfizer Inc.
has said it is considering for the Covid-19 vaccine it sells with BioNTech SE.
Some Democratic senators, including Bernie Sanders, have criticized Moderna’s pricing plans because Moderna received significant financial and scientific assistance from the federal government in designing and developing the vaccine.
Moderna said people with insurance will have no out-of-pocket costs for the vaccine, whether they get it from a doctor or pharmacy. Moderna plans to launch a patient assistance program to provide the vaccine for free to uninsured or underinsured people in the US.
“We are ready for the transition to a commercial market,” said Ms. Garay.
Moderna expects to develop a new Covid-19 booster injection later this year that better targets circulating variants, in preparation for a fall booster campaign.
The company has $5 billion in purchase deals for its Covid-19 vaccines by 2023, with the potential for additional sales opportunities in the US, Europe, Japan and other markets. Moderna reported $18.4 billion in Covid-19 vaccine sales for the full year 2022.
For the fourth quarter, Moderna’s costs skyrocketed due to higher royalties, inventory write-offs of expired Covid-19 products, a loss on firm purchase commitments and costs associated with unused production capacity.
The higher royalties stemmed from Moderna’s December agreement with the National Institute of Allergy and Infectious Diseases, or NIAID, whose researchers helped design Moderna’s Covid-19 vaccine. NIAID is part of the National Institutes of Health.
Moderna agreed to license certain NIAID patent rights related to discoveries that shaped the design of Moderna’s vaccine. Under the agreement, Moderna paid NIAID $400 million in the fourth quarter, and will pay royalties on future vaccine sales in the low singles as a percentage of sales, the company said.
Previously, Moderna had a dispute with NIAID when it filed for a US patent for a component of its Covid-19 vaccine, rejecting a NIAID request to include NIAID scientists as co-inventors. NIAID objected, and Moderna subsequently dropped the patent application, saying it would work to resolve the dispute.
Moderna’s fourth-quarter earnings fell 70% to $1.5 billion, while earnings per share fell two-thirds to $3.61. Analysts recently polled by FactSet had expected earnings of $4.60 per share.
In addition to the royalties, the cost increase was driven by excess production capacity, declining demand and a shift to Moderna’s Omicron-focused booster shot, which became available in summer 2022, the company said.
Research and development spending, meanwhile, rose 87% in the fourth quarter to $1.2 billion as the company increased its spending on clinical trials and vaccine development against respiratory syncytial virus, or RSV, seasonal flu and cytomegalovirus.
The Food and Drug Administration has granted a “breakthrough therapy designation” for an experimental cancer vaccine from Moderna, Moderna said late Wednesday. This designation means the FDA will work closely with Moderna and potentially accelerate the vaccine’s path to marketing approval.
Moderna partners with Merck & Co. development of the cancer vaccine and in studies it has been given to patients in combination with Merck’s Keytruda cancer treatment.
Moderna also plans to file for FDA approval by mid-year for its RSV vaccine, based on a recent study showing it helped prevent RSV disease in older adults. If the FDA approves, Moderna could launch the vaccine in late 2023 or early 2024.
Shares of Moderna fell 6.7% to $147.57 in Thursday trading.
Write to Peter Loftus at Peter.Loftus@wsj.com and Dean Seal at email@example.com
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