Shares of Novavax rose 5% in premarket trading Tuesday after the 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 biotech company raised doubts about its ability to stay in business and decided not to provide full-year guidance.
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 that targets both 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 lone marketed 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 20% of the company’s 2,000 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 SG&A expenses by around 20% to 25% compared with those costs in 2022. The company reported R&D expenses of $258 million and SG&A expenses of $162 million last year.
The plan is also projected to reduce 2024 R&D and SG&A costs by approximately 40% to 50% compared with 2022.
“Novavax is focused on significantly reducing our expenses while retaining the key capabilities needed to execute our operating plans,” the company said in the release.
Novavax still reported a bleak first quarter that missed Wall Street’s estimates.
The biotech company posted first-quarter sales of $81 million, down from the $704 million it reported during 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 to a net income of $203 million, or $2.56 per share, during the first quarter of 2022. Analysts estimated the company would post a loss of $3.46 per share, the Refinitv survey said.
Novavax shares are down 27% for the year through Monday’s close, putting the company’s market value at roughly $643 million.
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 approval 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 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.