Novavax surges after biotech company unveils job cuts, positive vaccine data
- Novavax's stock soared after the biotech company unveiled promising new Covid and flu vaccine data and a broad cost-cutting push that includes reducing 25% of its workforce.
- The announcements are a sign of hope for investors after last quarter when Novavax raised doubts about its ability to stay in business.
- The Gaithersburg, Maryland-based company is now betting on its cost controls and new shots targeting influenza and coronavirus to help it stay afloat.
- Novavax is now forecasting 2023 sales of $1.4 billion to $1.6 billion in its first-quarter earnings report.
Novavax's stock jumped around 30% on Tuesday after the biotech company unveiled promising new vaccine data and a broad cost-cutting push 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 full-year guidance.
Novavax's stock closed Tuesday at $9.52. The company's share price is down more than 7% so far this year, giving it a market value of nearly $821 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 the flu produced a strong immune response against the viruses and was well tolerated in a phase two trial. Novavax shared similar trial results on its stand-alone flu vaccine and new high-dose Covid shot.
The company's Covid vaccine is its only commercially available product after 35 years in business.
Novavax also announced a global cost-cutting plan, which will involve slashing 25% of the company's workforce. Approximately 400 full-time equivalent workers will be impacted, a Novavax spokesperson told CNBC.
The plan also involves consolidating the company's facilities and infrastructure.
Novavax expects the plan to reduce 2023 R&D and selling, general and administrative expenses by around 20% to 25% compared with those costs in 2022.
SG&A expenses usually include the costs of promoting, selling and delivering a company's products and services.
Novavax said the plan is also projected to reduce 2024 R&D and SG&A costs by approximately 40% to 50% compared with 2022.
The company reported R&D expenses of $258 million and SG&A expenses of $162 million last year.
Novavax CEO John Jacobs said on an earnings call that the job cuts were a "difficult decision," but a "necessary one to put the company on a better pathway towards financial strength and sustainability."
"Let me say that we deeply appreciate the contributions made by those employees who have been adversely impacted today," he said.
Novavax still reported a bleak first quarter that missed Wall Street's revenue 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 steep drop was due to "an emerging seasonal pattern" for Covid vaccines.
Analysts expected the company to rake in $87.6 million in revenue for the quarter, according to Refinitiv survey.
Novavax reported a net loss of $294 million, or $3.41 per share, compared with net income of $203 million, or $2.56 per share, during the first quarter of 2022. Analysts estimated 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 U.S. was rocky.
The company raced against Pfizer and Moderna to develop the first Covid vaccine early in the pandemic. But Novavax's efforts were hindered by manufacturing snags and regulatory glitches, placing the company far behind its rivals.
Novavax's shot finally won Food and Drug Administration emergency use authorization last year, but uptake has been sluggish.
The FDA in October also signed off on Novavax's Covid booster. But most Americans had already opted for Pfizer's and Moderna's updated omicron boosters by then.
Novavax's shot is the first Covid vaccine to use protein technology, a decades-old method for fighting 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 outcome: teaching your body how to fight Covid.