By
Godfrey Benjamin
October 4th, 2023
In Tuesday’s post-trading session, biotech firm Novavax saw its stock surge following “significant measures” taken to operate more efficiently.
Novavax Inc (NASDAQ: NVAX) recently experienced a stock surge following several key announcements by the biotech company. On Tuesday, NVAX jumped 30% on news that Novavax had promising new Covid and flu vaccine data. Furthermore, the Maryland-based company also announced cost-cutting measures, including a 25% staff downsizing.
Novavax’s announcements offer a ray of hope to investors after the preceding quarter when the company doubted its ability to remain competitive. At the time, vaccine developers refrained from providing full-year guidance due to the uncertainty of its future. However, it now banks on sweeping cost control actions and new influenza and Covid vaccines to remain profitable. The Novavax stock surge also came along with the company’s first-quarter report.
Novavax Stock Surge Propelled by Bright Optics in Latest Quarterly Report
In its Q1 2023 earnings report, the company forecasted full-year sales of between $1.4 billion and $1.6 billion.
On Tuesday, Novavax shares closed at $9.52, ending with a market capitalization of approximately $821 million. The company’s share price is down by more than 7% year-to-date.
In the first-quarter report, Novavax President and Chief Executive Officer John C. Jacobs touched on the company’s agenda, saying:
“Today, we outlined significant measures intended to reduce spending, extend our cash runway, and operate more efficiently. Combined with our focus on revenue generation from Nuvaxovid™ and management of our current liabilities, these measures should strengthen our cash position and our potential for the long-term growth and stability of Novavax.”
Jacobs added that Novavax also made “significant progress on other key priorities”, including efforts to deliver updated Covid vaccines for the Fall season. Furthermore, the biotech platform’s chief executive also pointed out:
“We [recently] announced positive Phase 2 data that we believe supports the further development of our combination COVID-influenza, standalone influenza, and high-dose COVID vaccines.”
After 35 years of business, Novavax’s Covid antidote remains its only commercially available product.
In a media session, a Novavax spokesperson noted that its staff downsizing would affect nearly 400 full-time equivalent employees. The shakeups also involve strengthening the firm’s facilities and infrastructure. These measures may help Novavax become more profitable and likely see a potential stock surge.
Although Jacobs admitted that reducing the company’s workforce is a “difficult decision”, the CEO deemed the action necessary. He says downsizing helps Novavax better align its infrastructure and scale to “the endemic Covid opportunity”. In conclusion, Jacobs opined that the biotech firm is encouraged by the progress made in the last quarter to take on substantial challenges ahead. Furthermore, the Novavax chief executive added that the company remains determined to continue executing its top priorities.
Novavax Q1 2023 at a Glance
For the first quarter of 2023, Novavax realized total revenue of $81 million, which was way off the $704 million recorded in Q1 2022. The company ascribed the considerable gulf in earnings to an “emerging seasonal demand pattern for Covid vaccines”. Furthermore, Novavax explained that Q1 2023 product sales include a $65 million revenue reversal from doses delivered last year that are scheduled for future replacement.
Meanwhile, the first-quarter cost of sales for 2023 came in at $34 million versus $15 million in the first three months of 2022. However, the latest sales cost included $20 million for surplus, outdated, or expired inventory and firm purchase commitment losses.
