Novavax forecasts higher-than-expected revenue; shares surge

FILE PHOTO: A woman holds a small bottle labeled with a "Coronavirus COVID-19 Vaccine" sticker and a medical syringe in front of displayed Novavax logo in this illustration

By Bhanvi Satija and Michael Erman

(Reuters) -COVID-19 vaccine maker Novavax Inc on Tuesday forecast much higher 2023 revenue than Wall Street expected and announced plans to cut a quarter of its workforce, spurring hopes of a recovery for the cash-strapped biotech, and its shares jumped 40%.

In February, the company raised doubts about its ability to remain in business, due to uncertainty about 2023 revenue, funding from the U.S. government, and pending arbitration with global vaccine alliance Gavi.

Novavax, whose COVID vaccine is its lone marketed product after 35 years in business, is relying on launching an updated COVID shot this fall to match circulating strains and cost cuts to improve its prospects.

The Maryland-based drugmaker on Tuesday also unveiled promising early data for its COVID and flu combination vaccine.

It said it now expects 2023 revenue between $1.4 billion and $1.6 billion, compared with analysts’ estimates of $831.6 million, according to Refinitiv data.

Novavax said $800 million of that was from “locked-in” overseas purchase contracts for the COVID shot that it has committed to ship this year.

Jefferies analyst Roger Song said the amount of overseas revenue flagged by the company was a surprise to the market, and the roughly $260 million to $440 million they expect in the U.S. was also encouraging.

“They seemed to be very confident about the U.S. fall campaign,” Song said.

Novavax is working to produce an update version of its protein-based vaccine in time for the fall COVID-19 booster season. Protein-based vaccines like Novavax’s take longer to produce than the messenger RNA-based versions made by Moderna and Pfizer/BioNTech.

Chief Executive John Jacobs declined to disclose the company’s U.S. pricing strategy as the country moves to a commercial marketplace for COVID products from government purchases when the pandemic was designated 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,” Jacobs said in an interview. “We’re assessing what the competitors are doing and we’d rather unveil our cards a little bit later.”

The company said it plans to layoff around 20% of its nearly 2,000 full-time employees, close to 400 jobs. The remaining job cuts will be contractors, it said.

Novavax expects the cost cuts to reduce its annual research and commercial expenses by 20% to 25% from last year.

Its cash and equivalents fell to $637 million at quarter-end from $1.3 billion as of Dec. 31.

Novavax posted a first-quarter net loss of $3.41 a share, compared with estimates for a loss of $3.46 a share.

All the COVID vaccine makers are working on COVID-flu combination shots with the aim of expanding and picking up market share in what they hope will be an annual booster market.

Data from a mid-stage trial in adults aged 50 to 80 years showed that the combination shot produced an immune response comparable to its protein-based COVID vaccine and already approved influenza shots, Novavax said. 

(Reporting by Bhanvi Satija in Bengaluru and Michael Erman in New York, Additional reporting by and Raghav Mahobe in Bengaluru; Editing by Devika Syamnath and Bill Berkrot)