Novavax plans to slash costs by another $300 mn amid sagging demand
By Fiona Rutherford
Covid-19 vaccine maker Novavax Inc cut its sales forecast and said it is prepared to cut at least another $300 million in costs next year amid declining demand for its vaccines.
Novavax already announced a restructuring plan in May, amid concerns over whether the company could survive as it faces a reversal in demand for Covid shots, its main product. As part of efforts to strengthen the company’s finances, it is prepared to initiate a new cost-cutting program to reduce costs through 2024, Novavax Chief Executive Officer John C. Jacobs said Thursday in its third-quarter report.
Shares of Novavax rose 3.1% at 10:26 a.m. in New York after the company’s third-quarter loss per share and revenue were better than analysts expected.
The company revised its guidance for fiscal 2023 to a new range of $900 million to $1.1 billion, citing the timing of product sales. Last quarter, the company expected a range of $1.3 billion to $1.5 billion. It also combined full year 2023 with the first quarter of 2024 to reflect revenue recognition of revenue associated with the 2023-2024 vaccination season.
On a call with investors, executives said they initially did not forecast revenue from product sales in the first quarter of 2024. However, due to the delayed start of the vaccination season and the expectation of a longer season in the US, they now expect to lose some of the turnover. extend to that quarter.
The lumping of expectations for the first quarter of 2023 was an obvious attempt to improve the outlook, said Max Nisen, an analyst at Bloomberg Intelligence. However, the guidance is contingent on continued demand into next year, which seems highly unlikely based on the visible trajectory of retail demand and commentary from other vaccine makers, Nisen said.
Total revenue for the quarter fell 75% to $187 million. Most of the revenue came from grants and royalties, surpassing analyst expectations of $159 million.
The company’s updated vaccine recently won regulatory approval in the U.S. and European Union, amid a rocky rollout of competitors’ offerings. Unlike Pfizer Inc.’s messenger RNA injections. and Moderna Inc., which teach cells to make antibodies, Novavax’s injection stimulates the immune system with harmless versions of the spike protein that the virus uses to enter cells.
Novavax is one of several vaccine makers exploring the concept of combined Covid-19 shots. The company announced plans to conduct a late-stage trial for its experimental combination shot against Covid-19 and flu, with the possibility of gaining accelerated approval and bringing the vaccine to market as early as 2026.