On Tuesday, Novavax Inc, a COVID-19 vaccine manufacturer, predicted a revenue for 2023 that exceeded Wall Street's expectations and disclosed its intention to reduce its workforce by 25%, leading to expectations of a resurgence for the financially struggling biotech and causing its shares to soar by 40%.
In February, the company expressed concerns about its viability, citing uncertainties surrounding 2023 revenue, funding from the U.S. government, and an ongoing arbitration process with the global vaccine alliance Gavi.
After 35 years in operation, Novavax, which solely relies on its COVID vaccine as its sole marketed product, is placing its hopes on launching an upgraded COVID shot in the upcoming autumn. This updated vaccine aims to align with the prevailing strains of the virus, while the company also intends to implement cost-cutting measures to enhance its outlook.
On Tuesday, the pharmaceutical company based in Maryland also disclosed encouraging preliminary data for its COVID and flu combination vaccine. Furthermore, it announced a revised revenue projection for 2023, estimating a range between $1.4 billion and $1.6 billion, surpassing analysts' expectations of $831.6 million, as reported by Refinitiv data.
Novavax specified that $800 million of the projected revenue was attributed to prearranged international purchase agreements for the COVID vaccine, which the company has committed to delivering this year.
According to Jefferies analyst Roger Song, the disclosed amount of overseas revenue by Novavax came as a surprise to the market, while the projected revenue of approximately $260 million to $440 million in the U.S. was also seen as positive. Song noted that Novavax appeared to be highly confident about the upcoming fall campaign in the United States.
Novavax is currently engaged in the development of an updated version of its protein-based COVID-19 vaccine to align with the fall booster season. However, protein-based vaccines, such as the one produced by Novavax, require a longer production timeline compared to the messenger RNA-based vaccines manufactured by Moderna and Pfizer/BioNTech.
As the United States transitions from government purchases to a commercial marketplace for COVID products, Chief Executive John Jacobs refrained from revealing Novavax's pricing strategy for the country. This comes at a time when the pandemic has been classified as a public health emergency.
"Obviously, it's a really competitive marketplace. We're coming in as a late follower with two competitors that were entrenched in the U.S. market already. We're assessing what the competitors are doing and we'd rather unveil our cards a little bit later," Jacobs said in an interview.
The company announced its intention to lay off approximately 20% of its workforce, which amounts to around 400 jobs out of its nearly 2,000 full-time employees. The remaining job cuts will primarily affect contractors.
Novavax anticipates that these cost-cutting measures will lead to a 20% to 25% reduction in its annual research and commercial expenses compared to the previous year.
As of the end of the quarter, Novavax's cash and equivalents declined from $1.3 billion as of December 31 to $637 million. In the first quarter, Novavax reported a net loss of $3.41 per share, slightly better than the estimated loss of $3.46 per share.
In an effort to expand their market presence and tap into the potential annual booster market, all COVID vaccine manufacturers are actively developing COVID-flu combination vaccines.
According to Novavax, preliminary data from a mid-stage trial involving adults aged 50 to 80 years demonstrated that the combination vaccine generated an immune response on par with both its protein-based COVID vaccine and the approved influenza shots currently available.