Moderna’s stock plunges in premarket trading as Bancel promises company is in ‘much better place’ for FY23 deliveries

Moderna’s stock plunged more than 11% in premarket trading on Thursday as CEO Stéphane Bancel reported a drop in Covid sales and lowered his full-year sales expectations.

The chief executive now expects $18 billion to $19 billion in sales this year — as opposed to a previously anticipated $21 billion — due to delivery delays, short-term supply shortages and a “very complex third quarter from a manufacturing standpoint.”

“We’ve had quite a number of pain points with fill-finish manufacturers,” Bancel said on a Q3 call with investors. Back in September, manufacturing delays at a Catalent plant caused federal shortages of Moderna’s newly authorized bivalent booster. The company noted on Thursday that $2 billion to $3 billion worth of deliveries under advance purchase agreements have been deferred to 2023.

The good news? “We are in a much better place” for next year, Bancel said.

Arpa Garay

Moderna has a suite of 2023 contracts lined up with the US, Canada, Switzerland, Taiwan and Kuwait, which together with deferrals add up to $4.4 billion to $5.5 billion, chief commercial officer Arpa Garay said on the call. She expects a handful of additional contracts to come through, including from the US as it shifts to a commercial market.

By mid-morning, Moderna’s stock $MRNA was up 0.38%, pricing at around $149 per share.

Despite slow uptake of bivalent boosters in the US — just 7.3% of eligible Americans have rolled up their sleeves, according to CDC data — Garay anticipates the Covid vaccine market to be “as large or larger than” the flu market going forth based on analyses of hospitalizations and deaths caused by Covid and the flu over the last decade.

On the last quarterly call, Moderna said it expects Covid-19 to eventually shift to an endemic stage marked by seasonal spikes. However, Covid hospitalizations from October 2021 to September 2022 (when vaccines were widely available) were still three times higher than hospitalizations during the 2017-2018 flu season, which was an especially bad year for flu, according to Garay.

“Volume in the annual flu market is approximately 500 to 600 million doses around the world,” she said. “While we believe that volumes in the global endemic Covid market should approximate to at least 600 million doses over time, we believe it is too early to reliably predict the variables impacting the volume of doses in 2023.”

Third Bridge’s Lee Brown, however, isn’t quite as enthusiastic. “In conversations with our specialists, we’re hearing far less enthusiasm for the booster opportunity using the updated Omicron-adapted COVID-19 vaccines,” he wrote in a note to investors.

To date, just over 8.3 million doses of Moderna’s bivalent booster have been administered in the US, compared to more than 14.5 million doses of Pfizer’s booster, according to the CDC.

Pfizer saw a 66% drop in global Comirnaty sales this quarter, though CEO Albert Bourla upped the full-year vaccine guidance by $2 billion on the heels of US booster sales. Moderna’s vaccine sales fell 35% last quarter, coming in at $3.1 billion and narrowly missing expectations of $3.3 billion.

“Some would argue the slight miss was semi-expected given consensus was a bit stale and was coming down fast from $4.4B a month ago but nevertheless results were shy of consensus,” Jefferies analysts wrote in a note to investors on Thursday. “Per our preview this was likely due to new BA4/5 just getting launched and shipped in Sep at end of Q3 and some capacity issues with fill finish partner etc late in Q3.”

While Pfizer reportedly plans to quadruple the price of Comirnaty after government funding dries up, Garay deflected a question on Moderna’s vaccine pricing plans during the Q&A session.

“As we think about our pricing as we evolve from a pandemic setting to an endemic setting, the real focus for us is on ensuring that our vaccines are priced based on the value that they provide to the healthcare system and reflect the cost effectiveness guidelines that are set by public health authorities around the world,” she said.

“Yesterday’s pricing disclosure by PFE reflects positively onMRNA’s ability to reach $10B COVID-19 revenue for 2023 (our new estimates are above this number),” SVB analysts wrote in a note. “With expectations having drifted down over the last few months due to jitteriness about guidance, numbers for the next 12 months now appear more achievable, if not beatable in an upside case.”

Stephen Hoge

Looking beyond Covid-19, president Stephen Hoge laid out plans to “build out what we hope will be the best respiratory portfolio.”

That includes an RSV vaccine, which could read out Phase III data in older adults this winter, depending on number of cases, and a flu candidate with an immunogenicity readout from 6,000 participants coming in the first quarter of next year. A Phase I/II trial for Moderna’s combination Covid and flu shot is fully enrolled, and a separate combo flu, Covid and RSV shot has already begun a Phase I trial, according to the company.

In the long-term, “you’ll start to see some diversification” of the pipeline, Hoge said, including from a Merck partnership in cancer. The pharma giant recently plunked down $250 million to take that deal to the next level.

AstraZeneca, on the other hand, has returned the rights to an IL-12 program, leaving Moderna to evaluate “next steps for the program,” it said on Thursday. The duo linked arms back in 2013 in pursuit of mRNA treatments for cardiovascular, metabolic and renal diseases as well as some cancer targets, and solidified the pact in 2016 by adding in “a range of cancers.”

Don’t count M&A out, Bancel said, adding that the BD team is “very active” in reviewing opportunities and remains focused on nucleic acids.

“As I said in the past, we will remain disciplined in terms of understanding risk,” he said. “But the team is very active. We are looking at diligence on a regular basis.”

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