Covid-19 vaccine maker Novavax on Tuesday raised doubts about its ability to remain in business and announced plans to slash spending as it works to prepare for a fall vaccination campaign.
The company said there is significant uncertainty around its 2023 revenue, funding from the U.S. government, and pending arbitration with global vaccine alliance GAVI. But its cash flow forecast indicates it has sufficient capital to fund operations over the next year.
The company lost $182 million, or $2.28 per share, in the fourth quarter on weaker-than-expected sales of $357 million. Analysts had expected sales of $383 million, according to Refinitiv data.
"If we execute on our operating plan, we'll be in a very strong position not only at the end of this year, but going into next year," Novavax's new Chief Executive John Jacobs, who joined the company in late January, said in an interview. Novavax had $1.33 billion of cash on hand at the end of 2022.
However, Jacobs cautioned that there are risks in the near term to that operating plan, including the fact that protein-based vaccines like Novavax's take longer to produce than their messenger RNA-based competitors.
Companies will need to change their vaccine each year to match circulating strains as required by regulatory agencies, including the U.S. Food and Drug Administration.
"We don't know what the strain selection is yet from FDA. We don't know what global health authorities may want from a regulatory standpoint on how the new vaccine needs to look," Jacobs said. "The sooner we know that the more clarity we have on our path forward."
The CEO said the company has been spending at a "hot rate," and plans to cut back, likely including job cuts.
"We're in the process of assessing the global footprint of Novavax, rationalizing our supply chain, rationalizing the portfolio and rationalizing the company structure and our infrastructure," he said.
Jacobs did not give a target for how deep spending or job cuts would be. Novavax has more than 1,500 employees, according to its website.
Novavax is looking at all options that properly value its technology, pipeline and manufacturing capabilities on three continents, from partnerships to licensing deals to "different types of deals that could be much more significant," the CEO said.
Novavax was founded in 1986, but the Covid-19 vaccine is its first commercially available product. The rollout of Novavax's shot was plagued by manufacturing snags, regulatory delays and sluggish uptake.
As the company worked to develop the shot, its shares traded as high as $330, a more than $20 billion market value. They have since lost more than 97% of their value, trading at around $9.30 a share.
Jacobs said outside of the U.S., Novavax has $2 billion worth of signed contracts with governments that the company intends to collect on. He said the company was in ongoing discussions with those governments to collect on those deals through 2024.
In the U.S., where the Novavax vaccine was authorized in July 2022, only around 80,000 of its shots have been administered. The company hopes to take advantage of a shift away from government contracts into the commercial market that is expected to happen this fall.
Jacobs said that while Novavax's vaccine may take longer to manufacture than its rivals from Pfizer/BioNTech and Moderna, he believes FDA regulators want a protein-based option this fall for U.S. citizens.
"They made it very clear that they see it as critical in the United States to have options on the different types of vaccines," he said.