Moderna, Inc. (NASDAQ:MRNA) announced earnings of $3.61 per share for the fourth quarter of 2022, falling short of our model expectation of $4.48 and the Consensus Estimate of $4.66. Profits dropped 68% throughout the quarter. Lower revenues and greater operating expenses incurred in the fourth quarter were the causes of the bottom line’s fall compared to the prior year.

The quarter’s revenues of $5.08 billion fell short of the $5.09 billion Consensus Estimate. Due to falling COVID-19 vaccine sales during the quarter, overall revenues were down 29.5% year over year. The overall revenues matched the projections made by our model.

The lower-than-expected earnings provided by management on February 23 undoubtedly contributed to the 3.4% decline in Moderna stock in pre-market trading. Shares fell as much as 8% on Thursday. In contrast to the industry’s 8.8% decline over the past year, Moderna stock has risen by a tiny 1.2%.

Quarter in Detail 

Due to reduced sales volume compared to the levels of the prior year’s quarter, product sales, which were exclusively derived from the sale of COVID-19 vaccinations, were down 30.0% year over year to $4.86 billion.

Revenues from grants and collaborations decreased from $276 million to $225 million in the same quarter last year. Agreements with a number of major pharma/biotech firms, such as Merck (NYSE:MRK) and Vertex Pharmaceuticals (NASDAQ:VRTX), provide the company with partnership revenues. 

Selling, general, and administrative costs totaled $375 million, an increase of 87% over the previous year. Increased investment in commercialization activities to promote the company’s marketed products is responsible for the positive outcome.

The amount spent on research and development increased by 87% to $1.2 billion over the same period last year. Higher clinical expenditures and personnel-related charges were the main causes of the considerable increase.

In comparison to $17.0 billion as of September 30, 2022, the corporation had $18.2 billion in cash and cash equivalents at the conclusion of the quarter.

Full Year Results

Moderna reported 2022 revenue of $19.3 billion, an increase of 4.3% from the previous year.

The company reported earnings of $20.12 for the entire year, a 29% decrease from the previous year.

2023 Guidance

Moderna updated its forecast for product revenue in 2023. Based on confirmed advance purchase agreements and contract deferrals, management anticipates that COVID vaccine sales will bring in at least $5.0 billion in 2023. However, according to management, this amount does not reflect product sales in the US or recent contracts signed with key markets in Europe, Japan, and other regions. The business anticipates first-half 2023 product sales of about $2.0 billion.

The corporation projected combined R&D and SG&A costs of $6 billion in 2022, with R&D spending of $4.5 billion. It anticipates capital expenses to be close to $1 billion.

Updates on the Pipeline

Moderna currently has 48 programs that are actively being developed, 38 of which are being studied in clinical trials.

In its pipeline, Moderna is working on three late-stage candidates for the development of cytomegalovirus (CMV) vaccines, respiratory syncytial virus (RSV) vaccines, and influenza vaccines, namely mRNA-1647, mRNA-1345, and mRNA-1010.

Management revealed last month that the crucial phase III ConquerRSV research assessing mRNA-1345 met its key efficacy objectives. Based on this finding, management anticipates submitting mRNA-1345 for regulatory approval in the first half of 2023.

Moderna released conflicting interim data earlier this month from a major phase III research assessing the immunogenicity and safety of mRNA-1010 in adults. While the vaccination appeared to be effective against the influenza A virus, it had no effect on the influenza B virus. To decide what to do next, management is presently awaiting results from another ongoing late research on mRNA-1010. A choice should be made before the end of the first quarter of 2023.

Data from the phase IIb KEYNOTE-942 research testing Moderna and partner Merck’s personalized cancer vaccine (PCV) candidate as adjuvant therapy in melanoma patients were released last December. Results from the trial revealed that the PCV candidate significantly and clinically meaningfully decreased the risk of disease recurrence or mortality by 44% when used in combination with Merck’s top-selling medication, Keytruda. This information will be used by Moderna and Merck to launch late-stage research in adjuvant melanoma later this year.

Moderna also disclosed that its partner Vertex had started a phase I study testing VX-522, an experimental mRNA-based treatment for the cystic fibrosis (CF) indication, along with its financial findings. While Moderna is in charge of mRNA and lipid nanoparticle process development and manufacturing, Vertex Pharmaceuticals is in charge of directing the preclinical and clinical development of treatments. In addition, Moderna is entitled to milestone payments and royalties on the sales of potential Vertex collaboration products.

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