Referenews

U.S. sales of Moderna’s original and booster Covid-19 vaccines to date have been through federal supply contracts, with the government making doses available to people at no cost. But Moderna is now preparing to distribute its vaccines through standard channels, with reimbursement by commercial insurers.

Moderna is holding contract discussions with commercial customers for the vaccines, and expects to distribute about 100 million doses on the commercial market this year,

Arpa Garay,

Moderna’s chief commercial officer, said on a conference call with analysts Thursday. 

Moderna also is holding Covid-19 vaccine contract discussions with federal agencies, including the Defense Department and Veterans Affairs, Ms. Garay said.

The company didn’t disclose a specific commercial price for the vaccines. Moderna Chief Executive Officer

Stéphane Bancel

said in January the company was considering a range of $110 to $130 per dose, which is significantly higher than the per-dose cost range of $15 to $26 in the federal supply contracts. It is a range similar to what

Pfizer Inc.

has said it is considering for the Covid-19 vaccine it sells with

BioNTech

SE.

Some Democratic senators including

Bernie Sanders

have criticized Moderna’s pricing plans because Moderna received significant financial and scientific assistance from the federal government in designing and developing the vaccine.

Moderna said people with insurance will have no out-of-pocket costs for the vaccine, whether they receive it at a doctor’s office or pharmacy. Moderna plans to start a patient-assistance program to provide the vaccine at no cost to uninsured or under-insured people in the U.S.   

“We are ready for the transition to a commercial market,” Ms. Garay said.

Moderna expects to develop a new Covid-19 booster shot later this year that better targets circulating variants, in preparation for a fall booster campaign.

The company has $5 billion in advance purchase agreements for its Covid-19 vaccines for 2023, with the potential for additional sales opportunities in the U.S., Europe, Japan and other markets. Moderna reported $18.4 billion in Covid-19 vaccines sales for full-year 2022.

For the fourth quarter, Moderna’s costs shot up due to higher royalties, inventory write-downs from expired Covid-19 products, a loss on firm purchase commitments and expenses tied to unused manufacturing capacity.

The higher royalties stemmed from Moderna’s December agreement with the National Institute of Allergy and Infectious Diseases, or NIAID, whose researchers helped design Moderna’s Covid-19 vaccine. NIAID is part of the National Institutes of Health. 

Moderna agreed to license certain NIAID patent rights covering discoveries that informed the design of Moderna’s vaccine. Under the agreement, Moderna paid NIAID $400 million in the fourth quarter, and will pay royalties on future vaccine sales in the low-single-digits as a percent of sales, the company said.

Previously, Moderna had a dispute with NIAID when it filed an application for a U.S. patent covering a component of its Covid-19 vaccine, and denied a request from NIAID to include NIAID scientists among the co-inventors. NIAID objected, and Moderna subsequently dropped the patent application and said it would work to resolve the dispute.

Moderna’s fourth-quarter profit fell 70% to $1.5 billion, while per-share earnings dropped by two-thirds to $3.61. Analysts recently polled by FactSet had expected profit of $4.60 a share.

Besides the royalties, the jump in costs was driven by surplus production capacity, declining demand and a shift to Moderna’s Omicron-targeting booster shot, which became available in the summer of 2022, the company said.

Research and development expenses meanwhile soared 87% in the fourth quarter to $1.2 billion as the company spent more on clinical trials and development of vaccines against respiratory syncytial virus, or RSV, seasonal flu and cytomegalovirus.

The Food and Drug Administration has granted a “breakthrough therapy designation” for a Moderna experimental cancer vaccine, Moderna said late Wednesday. This designation means that the FDA will work closely with Moderna and potentially accelerate the vaccine’s path to marketing approval. 

Moderna is co-developing the cancer vaccine with

Merck

& Co., and in studies it has been given to patients in combination with Merck’s Keytruda cancer treatment.

Moderna also plans to apply by midyear for FDA approval of its RSV vaccine, based on a recent study showing it helped prevent RSV disease in older adults. If the FDA approves it, Moderna could launch the vaccine in late 2023 or early 2024. 

Moderna shares declined 4% to $151.61 in morning trading.

Write to Peter Loftus at Peter.Loftus@wsj.com and Dean Seal at dean.seal@wsj.com