Novavax is cutting about a quarter of its global workforce as the COVID-19 vaccine maker seeks to slash expenses while dealing with uncertain future revenue.
The company said Tuesday that it expects to trim next year’s costs for research and development as well as selling, general and administrative expenses by about 40% to 50% compared to 2022.
The company has 1,992 full-time employees. A Novavax representative said the cuts will affect about 20% of that workforce, or nearly 400 people, and some of the vaccine maker's contractors.
Novavax’s protein-based vaccine debuted long after alternatives from companies like Pfizer, Moderna and Johnson & Johnson had reached the market. Only about 88,458 doses of the Novavax vaccine have been administered in the United States, according to the Centers for Disease Control and Prevention.
That compares to more than 400 million doses of market leader Pfizer’s two-shot original vaccine and updated booster.
The COVID-19 vaccine is Novavax’s lone commercial product. It is updating that vaccine for this fall and also developing a flu shot and a coronavirus-flu shot combination.
The company said in February that it estimates that it has enough cash to fund operations for the next year, but “substantial doubt exists regarding our ability to continue as a going concern” due to uncertainty over factors like 2023 revenue.
Vaccine makers expect sales to slow this year, particularly in the first half, as they switch from supplying the U.S. government to selling their shots commercially. They forecast some improvement in the fall, when people will start seeking updated booster shots.
TD Cowen analyst Brendan Smith called Novavax’s cost-cutting moves “critical steps in the right direction.” But he noted that they come as Novavax competes with much larger vaccine makers, and while interest in boosters has sunk.
Novavax is “scaling back at a record pace right when their competitive edge requires the biggest boost,” the analyst said in a research note.
In the first quarter, Novavax Inc. total revenue sank to $81 million from $704 million in last year’s quarter. The company swung to a net loss of $294 million from net income of $203 million. That equated to a loss of $3.41 per share.
Analysts expected a loss of $3.46 per share on $87.6 million in revenue, according to FactSet.
Novavax, based in Gaithersburg, Maryland, has been around since 1987. The company said in its SEC filing that its expenses have exceeded revenues since then. The company’s accumulated deficit as of Dec. 31 was $4.3 billion.
Shares of Novavax jumped nearly $3 to 10.26 Tuesday afternoon while broader indexes slipped.
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