Moderna's stock tumbled on Monday after the biotechnology company issued a dismal revised sales forecast for 2025, cutting its revenue expectations by $1 billion. Shares of Moderna plunged more than 20% by mid-morning, marking one of the company’s steepest one-day declines as investor confidence waned over the future of its vaccine portfolio.
The Cambridge, Massachusetts-based company now anticipates 2025 revenue ranging between $1.5 billion and $2.5 billion, significantly lower than the previous forecast of $2.5 billion to $3.5 billion issued just four months ago. This gloomy outlook was underscored by Chief Financial Officer Jamey Mock's acknowledgment of numerous uncertainties impacting sales, particularly those associated with COVID-19 and respiratory syncytial virus (RSV) vaccines.
Moderna, renowned for its pivotal role during the COVID-19 pandemic, is now shifting its approach as the virus is increasingly being treated as endemic rather than a public health emergency. The company’s initial booming sales figures have dramatically dropped, and for 2024, Moderna reported product sales of between $3 billion to $3.1 billion, falling short of its prior guidance.
One significant hurdle for Moderna has been the intense competition within the COVID-19 vaccination market. Mock noted how the company’s share of the U.S. retail market for COVID shots fell from 48% at the end of 2023 to 40% by the year's end. This decline highlights the fierce rivalry with other pharmaceutical companies, including Pfizer and Novavax, who are also aggressively marketing their respective vaccines. The recent co-commercialization agreement between Sanofi and Novavax to promote the latter's COVID vaccine is expected to intensify this competition.
Another factor contributing to Moderna's struggles is the waning interest among consumers for vaccinations. According to Jefferies analyst Michael Yee, demand for COVID vaccinations dropped by approximately 8% near the end of 2024 compared to the previous year, leaving many to question Moderna’s ability to sustain profitability as vaccination rates continue to decline.
Moderna is also grappling with the disappointing performance of its newly launched RSV vaccine, mResvia, which was anticipated to be a stepping stone toward diversification but has been selling “minimal” quantities. CEO Stéphane Bancel conceded, "We were also too optimistic about our ability to break onto the market...,” as the company adjusts its strategy.
To navigate through these challenges, Moderna has announced aggressive cost-cutting initiatives, aiming to slash $1 billion from its expenses this year amid projections of burning through over $3 billion of cash by 2025. The company has already trimmed its cash operating cost by over 25% compared to 2023, and plans to implement another $500 million reduction next year. Mock elaborated, “We are taking the right amount of cost to preserve our cash.”
Despite the reduction in revenue expectations and stock performance, analysts remain cautiously optimistic about Moderna's long-term potential, mainly focusing on its extensive pipeline, which includes several vaccine candidates. Moderna plans to seek approval for multiple products, leveraging its messenger RNA platform, which has shown promise for innovative therapies beyond just COVID-19.
Yet, uncertainty looms over Moderna's future. William Blair analyst Myles Minter described the company's latest developments as "a tough update" and mentioned the need to prove its capabilities as it ventures beyond COVID-19 products. Other analysts also express skepticism, with some stating there appears to be "no inflection in sight" for the company through 2025.
Looking forward, the upcoming months will be pivotal for Moderna. Apart from the continuing development of its RSV and COVID vaccines, the company is preparing for anticipated results from trials related to its cytomegalovirus (CMV) vaccine. The company aims to make progress on its potential approvals starting late this year, but it remains to be seen how successful these efforts will be.
Overall, Moderna’s revised sales forecast and subsequent stock drop reflect the harsher realities of operating within the biotechnology sector post-pandemic, highlighting the necessity for rapid adaptation and strategic cost management to regain market trust and consumer interest.