Moderna plans US$3 billion buyback with Covid shot-market shifting

Moderna wrote down US$499 million worth of expired shots in the quarter — a hint that demand is falling short of supply.

(Aug 3): Moderna Inc posted stronger-than-expected second-quarter results and said it would buy back US$3 billion of its stock, while indicating that the marketplace for Covid-19 vaccines is entering a new phase.

The company reiterated in a statement on Wednesday that it has US$21 billion in advance purchase orders lined up for its coronavirus shot in 2022, in line with its earlier statements.

At the same time, however, Moderna wrote down US$499 million worth of expired shots in the quarter — a hint that demand is falling short of supply.

Shares of Moderna, which have rallied in recent weeks but remain well below last summer’s peak, were up 3.9% in premarket trading in New York.

Two years after the Covid vaccines from Moderna and rival Pfizer Inc were first introduced to an eager world, there are signs that the market for shots is maturing.

Fewer people are rolling up their sleeves for additional doses, even amid the emergence of more-transmissible virus variants.

Only about 31% of Americans eligible for a fourth shot have received one, according to data compiled by the Centers for Disease Control and Prevention.

For now, Covid shots remain a boon for Cambridge, Massachusetts-based Moderna. Second-quarter sales reached US$4.75 billion, the company said, smashing Wall Street’s expectations of US$4.02 billion. And adjusted earnings were US$5.24 a share, topping analysts’ estimates of US$4.54 a share.

But Moderna also noted a loss of firm vaccine purchase commitments in the quarter totaling US$184 million, and it recorded a US$131 million expense related to unused manufacturing capacity. The company attributed the charges to reduced interest from Covax, the group that has been working to get shots to lower-income countries, and slow deliveries in Europe.

Moderna anticipates moving into the endemic phase next year, where demand for shots will vary based on the season, the company said in its earnings presentation. That will likely mean selling vaccines to private buyers in the US, such as pharmacies, rather than the US government, said Arpa Garay, Moderna’s chief commercial officer.

Booster pact

Both Moderna and Pfizer are developing new formulations to target emerging strains of the novel coronavirus. Last week, Moderna said it secured a US$1.74 billion contract with the US government for 66 million doses of a booster shot designed to ward off both the original virus and the Omicron BA.4/5 strain.

Moderna will start delivering fall boosters in September, the company said. It anticipates making more deliveries in the fourth quarter as it scales up manufacturing for the bivalent boosters and secures regulatory authorizations.

US regulators cleared Moderna’s vaccine for children under 6 years old in June. The US exercised an option to buy another 4 million pediatric shots, executives said on the company’s earnings call on Wednesday.

US officials can still purchase another roughly 230 million doses for Moderna under the terms of current purchase agreements.

Moderna said it will use some of its war chest to buy US$3 billion of its shares, on top of the US$3 billion buyback it announced in February. Moderna has about US$18.1 billion in cash, equivalents and investments. That will help the company diversify beyond Covid, with more than 40 projects in the pipeline.

Moderna’s research costs ballooned to US$710 million in the quarter, a roughly 70% increase from a year earlier. The company attributed the increase to clinical trial expenses, personnel and consulting services.