Moderna sets sights on 2025 for return to growth after COVID slump

Moderna says it has successfully resized its manufacturing operations to counteract dwindling sales of COVID-19 vaccine Spikevax.

Boston-based firm Moderna reported $1.8 billion in Spikevax sales for its third quarter, which is down 44% year-on-year. The firm’s costs of good (COGS) associated with its COVID-19 vaccine doubled from $1.1 billion in 2022 to $2.2 billion this year.

In September 2023, the firm announced it was addressing the increasing costs of goods from underutilized COVID vaccine capacity by reducing its manufacturing network.

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During its Q3 earnings call this week, CEO of Moderna, Stephane Bancel told shareholders, “It was important for us to resize our manufacturing footprint as the world has moved from a pandemic to an endemic setting. I am pleased that our manufacturing and finance team were able to move fast and resize our manufacturing, so that we can go back to 75% to 80% gross margin levels.”

The manufacturing footprint reduction included decreasing its partnerships with various third-party vendors, reconsidering raw material inventory levels, scaling back on purchase commitments for raw materials that are not likely to be used before expiration, and of course, reducing overall capacity.

The resizing efforts resulted in a cost of $1.6 billion. The majority of this is expected to be realized in this quarter.

“The $1.4 billion charge in Q3 consists of inventory write-downs of $0.9 billion and CMO wind-down costs and cancellation fees of $0.5 billion. The Q4 charge is related to CMO wind-down costs. 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,” said Jamey Mock, chief financial officer at Moderna.

In the height of the pandemic, Spikevax brought in $7.7 billion in sales in 2021 and $18.4 billion in 2022. However, with COVID-19 being established as an endemic, the company looks to different messenger RNA (mRNA) vaccines to bring in revenue.

Back to growth

While Moderna’s shares were down 10% premarket following the report, the firm predicted product sales of at least $6 billion for 2023 and projected $4 billion in sales for 2024. Moreover, it said it expects to return to growth in 2025.

Optimism surrounding the company’s return to growth is placed on having “up to 15 product launches in the next five years,” said Stephen Hoge, president of Moderna. In addition, Moderna is preparing to launch an RSV vaccine in the US (subject to regulatory review and approval) in 2024.

“In 2024, we’ll launch RSV, but it’s most likely […] in the second half year sales, and then we’ll have a full year in 2025, so that’ll provide growth,” said Mock.

“We will also come to market with a combination of flu and COVID [vaccine] in 2025. Again, depends on timing, but by 2026, we should have a full portfolio.”