With sluggish sales in Europe and the United States compounded by intensified competition, Moderna lowers its full-year sales forecast, leading to a sharp drop of 21%

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, higher than the expected $132 million, compared to $344 million in the same period last year. The sales of the COVID-19 vaccine saw a 37% year-on-year decline.

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 expenses due to reduced production scale. Q2 research and development expenses increased by 6% year-on-year to $1.2 billion, mainly due to the rise in 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: Expected full-year revenue to be between $3 billion and $3.5 billion, previously expected to be $4 billion.

Following the financial report, concerns from investors about intensified competition in the vaccine market and Moderna's future sales decline caused Moderna's stock to drop by over 21% during Thursday's trading.

Moderna Faces Intensified Competition in the Vaccine Market and Government Budget Constraints

Moderna's revenue and loss figures exceeded Wall Street 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 revenue forecasts is the expected seasonal transition in the COVID-19 vaccine market, with most patients expected to receive vaccinations in the fall and winter. However, Moderna saw "good vaccine sales in the spring" in the U.S. as elderly individuals were advised to receive the latest round of COVID-19 vaccines.

Additionally, Moderna is facing an anticipated sales decline in the European market, intense competition in the U.S. respiratory vaccine market, and the possibility of delaying some international revenue until 2025, leading to a significant reduction in the full-year sales forecast.

As global pandemic conditions improve and the demand for protective vaccines and treatments significantly decreases, Moderna's demand for the COVID-19 vaccine has also been severely impacted. Following its approval in May, Moderna launched a new vaccine product in the U.S. for the elderly - the new respiratory syncytial virus (RSV) vaccine 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 having already launched their respective products. Bancel stated in a media interview:

"Whether it's the RSV vaccine or the new crown 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 ability 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 potential combined vaccine for COVID-19 and influenza that could be approved as early as 2025. In addition, 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 in 2025 through the launch of new products and achieve a balanced budget in 2026