Moderna Profit Falls Amid Charges for Unused Covid-19 Vaccines

Moderna Profit Falls Amid Charges for Unused Covid-19 Vaccines #Moderna #Profit #Falls #Charges #Unused #Covid19 #Vaccines Welcome to Lopoid

Moderna Inc.

sales rose 9% in the second quarter, but costs tied to a surplus of Covid-19 vaccine doses contributed to a profit decline.

The Cambridge, Mass.-based biotechnology company’s revenue came in at $4.75 billion in the period ended June 30, topping Wall Street analyst expectations, driven almost entirely by sales of its messenger RNA-based vaccine, branded as Spikevax.

But the pace of Moderna’s year-over-year sales growth slowed significantly in the second quarter. The company’s first-quarter revenue was more than triple the year-earlier period. Moderna first introduced its Covid-19 vaccine in late 2020 and it is the company’s only product.

At the same time, Moderna’s profit fell 21% to $2.2 billion due to charges tied to expired vaccine doses and changes to purchase commitments.

These included a $499 million inventory write-down for unused doses that have exceeded or are expected to exceed their approved shelf lives. The company also incurred a $184 million loss on firm purchase commitments, and a $131 million expense for unutilized external manufacturing capacity.

Moderna Chief Executive

Stephane Bancel

said much of the costs arose from reduced orders by Covax, the international initiative to vaccinate lower-income countries, led by the World Health Organization and other groups.

“This is primarily linked to Covax’s reduced orders,” Mr. Bancel said in an interview. “This was very disappointing because we signed a contract with Covax. We made very big investments” and then Covax said it didn’t need some of the doses, he added.

A spokesperson for Gavi, the Vaccine Alliance, a nonprofit organization that helps run Covax, couldn’t immediately be reached.

Moderna also attributed some of the costs to the deferral of deliveries to other customers, particularly the European Union.

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In recent months, governments, drugmakers and vaccination sites have discarded tens of millions of unused Covid-19 vaccine doses amid sagging demand, a sharp reversal from the early days of the mass-vaccination campaign, when doses were scarce.

Still, Mr. Bancel said the company has advance purchase agreements representing around $21 billion in sales for the year, which will include Covid-19 booster shots. The company said it expects sales to accelerate in the last quarter of the year from the current quarter, driven by the timing for approval of Moderna’s updated Covid-19 vaccines and the related manufacturing ramp-up.

Shares of Moderna rose 4.3% in premarket trading. As of Tuesday, the stock is down almost 37% so far this year.

Moderna is the latest drugmaker to post quarterly sales gains due to continued demand for its Covid-19 products, following similarly positive readouts from

Pfizer Inc.

and

Abbott Laboratories.

Eli Lilly

& Co. is slated to provide its quarterly update Thursday.

Overall for the second quarter, Moderna reported net income of $2.2 billion, or $5.24 a share, down from $2.78 billion, or $6.46 a share, in the same period a year ago. Wall Street analysts had been expecting earnings of $4.70 a share for the quarter, according to FactSet.

Moderna also said its board has approved a new share-repurchase program for $3 billion.

Since the start of the Covid-19 pandemic in 2020, the scientific understanding of its transmission and prevention has evolved. WSJ’s Daniela Hernandez explains what strategies have worked for stemming the spread of the virus and which are outdated in 2022. Illustration: Adele Morgan

Write to Peter Loftus at peter.loftus@wsj.com and Will Feuer at will.feuer@wsj.com

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