A health worker prepares a dose of the Novavax vaccine as the Netherlands Health Services Organization begins the Novavax vaccination program on March 21, 2022 in The Hague, Netherlands.
Patrick Van Katwijk | Getty Images
Share price of Novavax jumped about 30% on Tuesday after the biotechnology company unveiled promising new vaccine data and an extensive cost-cutting campaign that includes major layoffs.
The announcements are a sign of hope for investors after last quarter, when the company raised doubts about its ability to stay in business and decided not to provide a full-year guidance. Novavax’s stock price is now up about 6% so far this year, giving it a market value of nearly $950 million.
Novavax is now betting on its cost controls and new vaccines to help it stay afloat, forecasting 2023 sales of $1.4 billion to $1.6 billion, according to its first quarter earnings report.
The Gaithersburg, Maryland-based company said its combination vaccine targeting Covid and influenza produced a strong immune response against the viruses and was well tolerated in a phase two trial. Novavax has shared results from similar trials of its standalone flu vaccine and its new high-dose Covid vaccine.
The company’s Covid vaccine is its only commercially available product after 35 years in business.
Novavax also announced a comprehensive cost reduction plan, which will involve cutting 25% of the company’s workforce. About 400 full-time equivalent workers will be affected, a Novavax spokesperson told CNBC.
The plan also includes the consolidation of the company’s facilities and infrastructure.
Novavax expects the plan to reduce 2023 R&D and sales, general and administrative expenses by approximately 20% to 25% compared to those costs in 2022.
SG&A expenses generally include the costs of promoting, selling, and delivering a company’s products and services.
Novavax said the plan should also reduce R&D and SG&A costs in 2024 by around 40-50% compared to 2022.
The company reported R&D spending of $258 million and SG&A spending of $162 million last year.
Novavax CEO John Jacobs said on an earnings call that the job cuts were a “difficult decision”, but “necessary to put the company on a better path to financial strength and sustainability”. .
“Let me say that we deeply appreciate the contributions made by the employees who were wronged today,” he said.
Novavax still reported a dismal first quarter that missed Wall Street’s earnings estimates.
The company posted first-quarter sales of $81 million, down from the $704 million it reported for the same period a year ago. Novavax said the sharp decline was due to “an emerging seasonal pattern” for Covid vaccines.
Analysts had expected the company to make $87.6 million in revenue for the quarter, according to the Refinitiv survey.
Novavax reported a net loss of $294 million, or $3.41 per share, compared to net income of $203 million, or $2.56 per share, in the first quarter of 2022. Analysts estimated that the company would post a net loss of $3.46 per share, the Refinitv survey said.
Novavax’s road to launching its Covid vaccine in the United States has been rocky.
The company raced against Pfizer And Modern to develop the first Covid vaccine at the start of the pandemic. But Novavax’s efforts have been hampered by manufacturing snags and regulatory issues, putting the company far behind its rivals.
Novavax’s vaccine finally won emergency use authorization from the Food and Drug Administration last year, but adoption has been slow.
The FDA in October also sign on the Novavax Covid booster. But most Americans had already switched to updated omicron boosters from Pfizer and Moderna by then.
Novavax’s vaccine is the first Covid vaccine to use protein technology, a decades-old method of combating viruses used in routine vaccinations against hepatitis B and shingles.
The shot works differently than its mRNA-based counterparts from Pfizer and Moderna but achieves the same result: teaching your body to fight Covid.
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