Moderna reports Q4 FY22 financial results

Moderna, Inc., a biotechnology company pioneering messenger RNA (mRNA) therapeutics and vaccines, today reported financial results and provided business updates for the fourth quarter and fiscal year 2022.

“2022 was another impressive year for Moderna, with over $19 billion in revenue and significant clinical breakthroughs across our portfolio. We continue to provide our Omicron-targeting bivalent vaccines worldwide, with the latest real-world evidence highlighting the continued protection of our vaccines against hospitalization and death,” said Stéphane Bancel, Chief Executive Officer of Moderna. “Our infectious disease platform continues to progress with positive Phase 3 data in RSV for older adults. We are investing to scale Phase 3 manufacturing for personalized cancer vaccines so that we can run several Phase 3 studies simultaneously. With planned R&D investments of $4.5 billion for the year, I am excited about the new medicines we believe we will bring to patients in the coming few years.”

Moderna is also announcing that Juan Andres, currently President, Strategic Partnerships and Enterprise Expansion, will be retiring from the Company in May after more than six years.

“Juan has played a tremendous role since joining Moderna in 2017. Juan served as Chief Technical Operations and Quality Officer and led our manufacturing from an early-stage clinical development company to a commercial company. In 2020 and 2021, Juan did a historic job with his team to scale Moderna for a global commercial launch, during a pandemic. It is unbelievable that he led the team from having made less than 100,000 doses across our entire portfolio in 2019 to more than 800 million doses in 2021 of our Covid-19 vaccine globally, all during a pandemic,” said Bancel. “Very few manufacturing leaders could have led such an achievement during such a challenging time. We, and the hundreds of millions of people across the globe who received the Moderna Covid-19 vaccine, owe Juan our gratitude.”

Recent progress includes:
Respiratory Vaccines
Approved and Phase 3 trials

• Spikevax Bivalent BA.4/BA.5 authorized under EUA in the U.S. as a booster dose for all age groups from 5 months.
• RSV vaccine in older adults (mRNA-1345) met its primary efficacy endpoint and received Breakthrough Therapy Designation from FDA. mRNA-1345 demonstrated vaccine efficacy of 83.7% against RSV lower respiratory tract disease, defined by 2 or more symptoms, and 82.4% with 3 or more symptoms in older adults. mRNA-1345 was generally well-tolerated, with no safety concerns identified by the Data Safety Monitoring Board (DSMB). Based on these results, Moderna expects to submit a Biologics License Application (BLA) for mRNA-1345 to the FDA in the first half of 2023. The pediatric Phase 1 trial of mRNA-1345 is fully enrolled.
• Flu (mRNA-1010) interim analysis from Phase 3 immunogenicity and safety trial demonstrated mRNA-1010 achieved superiority on seroconversion rates for A/H3N2 and A/H1N1, superiority on geometric mean titer ratios for A/H3N2, and non-inferiority on geometric mean titer ratios for A/H1N1. Non-inferiority was not met for seroconversion rates, and geometric mean titer ratios for the influenza B/Victoria- and B/Yamagata-lineage strains. mRNA-1010 was found to be generally well-tolerated.
• The ongoing mRNA-1010 Phase 3 efficacy study (P302) conducted in the Northern Hemisphere has accrued more than 200 PCR-confirmed cases. The first per-protocol interim analysis of efficacy is expected to be reviewed by an independent DSMB before the end of the first quarter.

Latent vaccines
Phase 3 trials

• CMV vaccine (mRNA-1647) pivotal Phase 3 study, known as CMVictory, is ongoing, with enrollment more than 40% complete. CMV vaccine candidate mRNA-1647 adolescent trial dosed its first participants.

Early clinical

• First participants, adults 50 years of age or older, dosed in Phase 1/2 trial of varicella-zoster virus (VZV) candidate mRNA-1468. VZV causes chickenpox, commonly affecting children and young adults, and shingles in adults.

Therapeutics
Immuno-oncology

• Personalized cancer vaccine (PCV) Phase 2 evaluating mRNA-4157/V940 in combination with KEYTRUDA®, Merck’s anti-PD-1 therapy, as adjuvant treatment for patients with high-risk melanoma reported positive topline data, showing a 44% reduction of recurrence or death versus Keytruda alone.
• The companies have received Breakthrough Therapy Designation for mRNA-4157/V940.
• As previously announced on October 12, Merck exercised its option to jointly develop and commercialize mRNA-4157/V940 pursuant to the terms of its existing Collaboration and License Agreement, and Moderna received $250 million from Merck in the fourth quarter in connection with the option exercise. The companies plan to discuss results with regulatory authorities, initiate a Phase 3 study in adjuvant melanoma in 2023, and rapidly expand to additional tumor types, including non-small cell lung cancer (NSCLC).

Rare diseases

• The Phase 1/2 Paramount study of propionic acidemia (PA) candidate (mRNA-3927) is enrolling patients in cohort 5 (0.9mg/kg). Encouraging clinical benefit has been observed to date and all eligible participants continue to opt-in to the Open Label Expansion. Next step is dose selection for the expansion arm of the Phase 1/2 study.
• Moderna’s partner, Vertex, initiated Phase 1 trial for VX-522, an mRNA therapy targeted at treating the underlying cause of cystic fibrosis (CF) lung disease for those who cannot benefit from a cystic fibrosis transmembrane conductance regulator (CFTR) modulator. VX-522 is Moderna’s first inhaled mRNA to enter the clinic.

Cardiovascular disease

• Phase 1B trial of heart failure treatment candidate, mRNA-0184 was initiated. mRNA-0184 is designed to produce the naturally occurring cardioprotective hormone relaxin.

Moderna now has 48 programs in development across 45 development candidates, of which 38 are currently in active clinical trials. The Company’s updated pipeline can be found at www.modernatx.com/pipeline. Moderna and collaborators have published more than 140 peer-reviewed publications.

Fourth quarter and full year 2022 financial results
Revenue: Total revenue for the fourth quarter of 2022 was $5.1 billion, compared to $7.2 billion in the same period in 2021, mainly due to a decrease in sales of the Company’s Covid-19 vaccines. Product sales for the fourth quarter of 2022 were $4.9 billion, a decrease of 30% compared to the same period in 2021, primarily driven by lower sales volume, compared to overall higher demand in the prior year and the related manufacturing ramp up in the fourth quarter of 2021.

Cost of Sales: Cost of sales was $1.9 billion, or 39% of product sales, for the fourth quarter of 2022, including third-party royalties of $604 million, of which $400 million related to a catch-up payment to the National Institute of Allergy and Infectious Diseases (NIAID) for a new royalty-bearing license agreement executed in December. The agreement provides for low single-digit royalties on future Covid-19 vaccine sales. Cost of sales, as a percentage of product sales, increased by 25 percentage points, from 14% in the same period in 2021. The increase was driven by increased royalties, a charge of $297 million for inventory write-downs related to Covid-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used, a loss on firm purchase commitments and related cancellation charges of $281 million, and an expense for unutilized manufacturing capacity and related contract manufacturing organization charges of $376 million. These charges, other than royalties, are driven by costs associated with surplus production capacity, overall lower demand and a shift to our most recent Omicron-targeting Covid-19 bivalent booster, mRNA-1273.222

Research and Development Expenses: Research and development expenses for the fourth quarter of 2022 increased by 87% to $1.2 billion, in comparison to the same quarter of 2021. The growth in spending was mainly due to an increase in clinical trial-related expenses, largely driven by increased clinical development activities, particularly with respect to our RSV, seasonal flu and CMV programs. The growth was also driven by the acquisition of a Priority Review Voucher and an increase in personnel-related costs due to increased headcount to support our increased research and development efforts.

Selling, General and Administrative Expenses: Selling, general and administrative expenses for the fourth quarter of 2022 increased by 87% to $375 million, in comparison to the same quarter of 2021. The growth in spending was primarily due to increased external and marketing spend, driven by commercial activities in support of the Company’s marketed products and build-out.

Effective Tax Rate: The effective tax rate was 11% for the fourth quarter of 2022, remained relatively flat, compared to 10% for the same period in 2021.

Net Income: Net income decreased by 70% to $1.5 billion in the fourth quarter of 2022, compared to the same period in 2021.

Earnings Per Share: Diluted EPS decreased by 68% to $3.61 in the fourth quarter of 2022, compared to the same period in 2021.

Full year 2022
Revenue: Total revenue was $19.3 billion for the full year 2022, compared to $18.5 billion in 2021. Total revenue increased in 2022, primarily due to increased sales of the Company’s Covid-19 vaccines. Product sales for 2022 were $18.4 billion, an increase of 4%, compared to 2021, primarily driven by a higher average selling price due to customer mix.

Cost of Sales: Cost of sales was $5.4 billion, or 29% of the product sales for 2022, including third-party royalties of $1.1 billion. Cost of sales, as a percentage of product sales, increased by 14 percentage points, from 15% in 2021. The increase was mainly due to a charge of $1.3 billion for inventory write-downs related to Covid-19 products that have exceeded or are expected to exceed their approved shelf-lives prior to being used, a loss on firm purchase commitments and related cancellation charges of $725 million, and an expense for unutilized manufacturing capacity and related contract manufacturing organization charges of $776 million. These charges are driven by overall lower demand, in particular from low-income countries, a shift in product demand to our Omicron-targeting Covid-19 bivalent boosters and costs associated with surplus production capacity.

Research and Development Expenses: Research and development expenses increased by 65% to $3.3 billion for 2022, compared to 2021. The growth in spending in 2022 was mainly due to increases in clinical trial expenses, clinical manufacturing expenses, personnel-related costs, and consulting and outside services, largely driven by the Company’s late-stage clinical studies for the RSV, seasonal flu and CMV vaccine programs, as well as continued development of the Company’s pipeline.

Selling, General and Administrative Expenses: Selling, general and administrative expenses increased by 100% to $1.1 billion for 2022, compared to 2021. The growth in spending in 2022 was mainly due to increases in consulting and outside services, marketing expense, and personnel-related costs, primarily attributable to the Company’s continued corporate expansion, particularly in the commercial area and to a lesser extent, in support functions.

Provision for Income Taxes: The effective tax rate was 13% for 2022, compared to 8% for 2021. The increase in 2022 was primarily due to the benefit recorded in 2021 related to the release of the valuation allowance on the majority of our deferred tax assets.

Net Income: Net income decreased by 31% to $8.4 billion for the full year 2022, compared to 2021.

Earnings Per Share: Diluted EPS decreased by 29% to $20.12 for the full year 2022, compared to 2021.

Cash Position: Cash, cash equivalents and investments as of December 31, 2022 and December 31, 2021 were $18.2 billion and $17.6 billion, respectively.

Net Cash Provided By Operating Activities: Net cash provided by operating activities was $5.0 billion for the full year 2022, compared to $13.6 billion for the same period in 2021. Net cash provided by operating activities decreased in 2022, primarily attributable to revenue recognized from deferred revenue in excess of customer deposits received and increased income tax payments, partially offset by higher collection of receivables.

Cash Used for Purchases of Property, Plant and Equipment: Cash used for purchases of property and equipment was $400 million for the full year 2022, compared to $284 million for the same period in 2021. The increase was primarily driven by the Company’s continued business expansion of its manufacturing and research facilities.

Cash Used for Repurchases of Common Stock: Cash used for repurchases of common stock was $3.3 billion for the full year 2022. Moderna did not conduct share repurchases prior to the fourth quarter of 2021. From the end of the third quarter of 2021 to the end of the fourth quarter of 2022, the Company repurchased 27 million shares, reducing the number of common shares outstanding from 405 million to 385 million, more than offsetting 7 million shares of common stock issued in connection with equity compensation over this period.

2023 financial framework
Advance Purchase Agreements (APAs): The Company has Covid vaccine sales of approximately $5 billion currently contracted for 2023 delivery, with potential additional sales opportunities in the United States (endemic private and government markets), Europe, Japan, and other key markets. The Company expects product sales in the first half of 2023 of approximately $2.0 billion.

Cost of Sales: Cost of sales for the full year are expected to be in the range of 35-40% of sales, which includes approximately 5% of sales for combined royalties to Cellscript and NIAID.

Research & Development (R&D) and Selling, General & Administrative (SG&A) Expenses : Full-year expenses are expected to be approximately $6.0 billion, with approximately $4.5 billion in R&D.

Income Tax Provision: The Company expects a negligible provision for income taxes in 2023.

Capital Expenditures: The Company expects capital investments for 2023 of approximately $1.0 billion.
MB Bureau