How Moderna Makes Money

Its COVID-19 vaccine is generating soaring product sales

Moderna Inc. (MRNA) is a biotechnology company that develops medicines based on messenger ribonucleic acid (mRNA), a single-stranded molecule that transfers genetic information to the cellular machinery responsible for making proteins that help to sustain life. Moderna has seen its product sales explode after developing and winning government approval for an mRNA vaccine to protect against COVID-19. Overall, the company develops medicines for infectious diseases, immuno-oncology, cardiovascular diseases, and other diseases. The company primarily generates revenue through product sales, grants, and collaboration agreements.

The biotechnology and pharmaceutical industries require unusually high levels of investment to fund the development of intellectual property and proprietary products. Moderna's major rivals include Pfizer Inc. (PFE), German-based BioNTech SE (BNTX), Johnson & Johnson (JNJ), U.K.-based AstraZeneca PLC (AZN) and GlaxoSmithKline PCL (GSK), German-based CureVac (CVAC), Belgium-based eTheRNA Immunotherapies NV, and others.

Key Takeaways

  • Moderna is a biotechnology company that develops mRNA-based medicines.
  • Its new COVID-19 vaccine is producing soaring sales and now comprises the vast majority of total revenue.
  • Moderna has reached a preliminary agreement with the government of Kenya to build an mRNA facility with the goal of producing 500 million doses of vaccines each year.
  • Moderna's board of directors recently authorized a new share buyback program of up to $3 billion.

Moderna's Financials

Moderna announced in late February financial results for Q4 of its 2021 fiscal year (FY), which ended Dec. 31, 2021. The company reported net income of $4.9 billion, a significant improvement from the net loss of $272 million in the year-ago quarter. Revenue was up nearly thirteen-fold to $7.2 billion. The increase in revenue was driven entirely by product sales, which are discussed in more detail below.

Moderna's product sales have soared since its vaccine against COVID-19 first received emergency use authorization (EUA) from the U.S. Food and Drug Administration (FDA) in December 2020. In late January 2022, Moderna's vaccine received full approval from the FDA for use in individuals 18 years of age and older. The vaccine is now being marketed as Spikevax.

Moderna's Business Segments

Moderna operates as a single business segment focused on the discovery, development, and commercialization of mRNA medicines. The company provides a breakdown of this business segment by revenue into three separate categories: product sales; grant revenue; and collaboration revenue. Moderna does not break out profits. We take a closer look at these three categories below.

Product Sales

Moderna first began recording product sales in Q4 FY 2020 after its COVID-19 vaccine received emergency approval from the FDA and Health Canada in December 2020. Currently, all revenue from product sales is derived from supply agreements for the COVID-19 vaccine with the U.S. government, other international governments, the African Union, and Gavi, the Vaccine Alliance. Sales of COVID-19 generated $6.9 billion in product sales revenue in Q4 FY 2021, up nearly 35-fold compared to the year-ago quarter. Product sales account for about 96% of Moderna's total revenue.

Grant Revenue

Moderna also generates revenue through grants with various government-sponsored and private organizations. The company has contracts with the Biomedical Advanced Research and Development Authority (BARDA), the U.S. government's Defense Advanced Research Projects Agency (DARPA), the Bill & Melinda Gates Foundation, and other organizations. Moderna recognizes revenue from these contracts as it performs services related to the contract arrangements and when funding is committed. The company's grant revenue fell 23.2% year over year (YOY) to $262 million in Q4 FY 2021, comprising nearly 4% of total revenue.

Collaboration Revenue

Moderna has formed strategic alliances with AstraZeneca, Merck & Co. Inc. (MRK), and Vertex Pharmaceuticals Inc. (VRTX) to discover, develop, and commercialize potential mRNA medicines. These collaboration arrangements include research, licenses, development services, and commercialization of certain products and product candidates. These arrangements generate revenue through upfront fees, commercial milestone payments, licensing fees, option exercise fees, royalties, and other types of payments. The company generated $14 million in collaboration revenue in Q4 FY 2021, down 53.3% from the year-ago quarter. Collaboration revenue accounts for a tiny fraction of total revenue.

Moderna's Recent Developments

On March 7, 2022, Moderna announced that it has entered into a memorandum of understanding with the Kenyan government to establish an mRNA manufacturing facility in Kenya. The company plans to build a state-of-the-art mRNA facility with the goal of producing up to 500 million doses of vaccines each year.

On Feb. 24, 2022, Moderna announced in its earnings press release for Q4 FY 2021 that its board of directors has approved a new share repurchase program for $3 billion. The company's previous buyback program of $1 billion announced in August 2021 was fully utilized as of the end of January 2022.

On Feb. 17, 2022, Australia's Therapeutic Goods Administration (TGA) provisionally approved Moderna's COVID-19 vaccine for use in children aged 6-11 years, meaning the vaccine is now approved in Australia for individuals 6 years of age and older. Moderna said this was the first regulatory approval for its vaccine for this age group.

Article Sources

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  1. Moderna Inc. "The Science and Fundamentals of mRNA Technology."

  2. Moderna Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 98.

  3. Moderna Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 100.

  4. Moderna Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 49.

  5. Moderna Inc. "Form 8-K dated Feb. 24, 2022," Page 13.

  6. Moderna Inc. "MODERNA REPORTS FOURTH QUARTER AND FISCAL YEAR 2021 FINANCIAL RESULTS AND PROVIDES BUSINESS UPDATES."

  7. U.S. Food and Drug Administration. "Spikevax and Moderna COVID-19 Vaccine."

  8. Moderna Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 122.

  9. Moderna Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 123.

  10. Moderna Inc. "Form 8-K dated Feb. 24, 2022," Pages 8 and 13.

  11. Moderna Inc. "Form 10-K for the fiscal year ended December 31, 2021," Pages 130-132.

  12. Moderna Inc. "MODERNA ANNOUNCES MEMORANDUM OF UNDERSTANDING WITH THE GOVERNMENT OF THE REPUBLIC OF KENYA TO ESTABLISH ITS FIRST MRNA MANUFACTURING FACILITY IN AFRICA."

  13. Australian Government, Department of Health: Therapeutic Goods Administration. "Moderna's COVID-19 vaccine (SPIKEVAX) provisionally approved for use in individuals 6 years and older."

  14. Moderna Inc. "THERAPEUTIC GOODS ADMINISTRATION OF AUSTRALIA AUTHORIZES MODERNA'S COVID-19 VACCINE IN CHILDREN (6-11 YEARS)."

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