Steep loss in Moderna stock as sinking Covid vaccine demand drives it down.

• Demand for Moderna's Covid shots decreased, resulting in a third-quarter loss for the company.
• Wall Street's expectations were surpassed by Moderna's total revenue during the specified timeframe.
• Moderna will hold an earnings call with investors at 8:00 a.m. ET.

On Thursday, the company recorded a significant loss for the third quarter due to unused doses of its Covid vaccine and announced plans to reduce production of the shot.

Shares of Moderna closed 6% lower on Thursday.

Despite declining demand for its vaccine, Moderna's revenue for the period exceeded Wall Street's expectations. However, its forecast for next year was lower than what analysts had predicted.

Based on a survey of analysts by LSEG, formerly known as Refinitiv, Moderna's third-quarter performance exceeded Wall Street's expectations.

• The actual loss per share was $9.53, which is significantly higher than the $1.93 per share that analysts had predicted.
• Revenue: $1.83 billion vs. $1.40 billion expected

In the most recent quarter, Moderna recorded a net loss of $3.63 billion, which amounts to $9.53 per share. This is in contrast to the net income of $1.04 billion, or $2.53 per share, reported in the previous year.

The loss incurred by the company was mainly due to $3.1 billion in non-cash charges related to tax allowances and manufacturing changes, which resulted in $1.4 billion in charges during the third quarter. Moderna CEO Stéphane Bancel stated that the resizing aimed to make the company's Covid vaccine profitable by 2024 and beyond.

During an earnings call on Thursday, Moderna CFO Jamey Mock stated that the company is reducing its manufacturing capacity and commitments with several third-party vendors, as well as cutting back on purchase commitments for raw materials for products.

Bancel stated on CNBC's "Squawk Box" on Thursday that as we transition from a pandemic to an endemic, it is crucial to resize the company.

The quarter's cost of sales was $2.2 billion, with a $1.3 billion charge for expired vaccines and a $500 million contract manufacturing wind-down cost, among other expenses.

In the third quarter of 2022, Moderna recorded $3.36 billion in total revenue, while its Covid shot sales dropped 44% from the same period a year ago.

Moderna maintained its projection of at least $6 billion in Covid-19 vaccine sales for the year, but did not specify a range for that forecast. In August, the company predicted its vaccine would generate between $6 billion and $8 billion in revenue in 2023.

Covid vaccine questions

The company's guidance assumes that Covid vaccine trends will be consistent with last fall, but acknowledged that U.S. vaccination rates are still the "largest remaining variable to sales for the year."

According to Bancel, it appears that this season is following a similar path to last year, with December being a bit of a concern, but overall, the weekly data suggests that they are slightly ahead of schedule.

This fall, Moderna's Covid vaccine has captured 45% of the U.S. market share, an increase from the 36% market share it held in 2022.

Bancel stated that the company anticipates the U.S. market for Covid shots to be at least 50 million doses this fall, which aligns with the previous year and will likely be repeated in 2024.

Moderna CCO Arpa Garay stated during the earnings call that our assumption is that everyone who receives their booster in 2023 will also receive it in 2024 and beyond. Garay added that the company anticipates a "some increase in the overall Covid market" as patients become more aware of the need for annual vaccine recommendations.

In 2024, Moderna anticipates approximately $4 billion in sales, with the majority of these sales occurring in the second half of the year, primarily driven by global Covid-19 vaccine sales and the launch of its vaccine against respiratory syncytial virus (RSV). Wall Street analysts had predicted $6 billion in sales for the following year.

Moderna expects to return to organic sales growth by 2025, according to the company.

Sales of Covid-related products from Moderna and its competitors have decreased significantly as the world moves on from the pandemic and relies less on protective vaccines and treatments.

Moderna aims to redirect investor attention from Covid-19 to a portfolio of new vaccines. The company is currently working on vaccines for various respiratory diseases and plans to launch a range of new jabs targeting cancer, heart disease, and other health conditions by 2030.

Bancel stated to CNBC that they plan to launch up to 15 products in the next five years, with a significant number of them coming in 2024 and 2025. This, he said, is the key to driving growth again through product development.

Moderna's experimental vaccine against respiratory syncytial virus (RSV) is included in the lineup. The company filed for full approval of the shot for adults aged 60 and above in July and anticipates a decision from regulators in 2024.

Moderna aims to secure approval for a combination vaccine against Covid and the flu by 2025. The vaccine has shown promising results in a mid-stage clinical trial and is expected to provide greater convenience to patients and healthcare providers.

The pipeline includes Moderna's personalized cancer vaccine, a flu vaccine, and a highly anticipated shot being developed with Merck to target different tumor types.