The fortunes of the once highflying company have been in decline since late 2021, as it became clear that its coronavirus vaccine arrived too late for the most severe phase of the pandemic. The U.S. government staked Novavax $1.8 billion to develop its vaccine, and it won regulatory approval in July 2022 — more than a year and a half after its major competitors.
Novavax’s stock has swooned to single digits from a peak of $290, and it has racked up $3.1 billion in losses since 2020, according to data compiled by S&P Capital IQ.
Yet investors found brighter prospects Tuesday as Novavax said it would cut costs for overhead and research and development by at least 40 percent this year, and it disclosed results from a mid-stage trial of a flu vaccine, a high-dose coronavirus vaccine and a regimen that combines both shots. Novavax shares at one point rose by more than 50 percent during trading on Tuesday before closing at $9.52.
Novavax said it would trim 25 percent of its global workforce this year, which translates to a loss of roughly 400 full-time jobs in addition to contractors.
“We can’t cut our way to success but we have to stabilize ourselves financially,” John Jacobs, Novavax chief executive, said in an interview Tuesday. The study results, he added, validate the company’s technology. “We’re sitting on something we believe is very special,” he said.
Novavax is focused on readying its one approved coronavirus vaccine for the fall. Despite a slump in demand for vaccinations and two established heavyweights — Moderna and Pfizer-BioNTech — Novavax is pitching its product as the only one in the U.S. that doesn’t rely on messenger RNA technology to protect against the coronavirus. Instead, it deploys a protein to prime the body’s immune system to target the virus.
That could appeal to people who want to get vaccinated by don’t trust mRNA vaccines or have a medical reason to avoid them, experts in the field have said. Novavax’s version also doesn’t require ultracold storage like mRNA vaccines, making it easier to ship and store.
Clouding Novavax’s prospects is litigation over advance payments it received for vaccines with nearly $700 million at stake, as well as appetite for its vaccine. Timing has tripped up Novavax before and could again, analysts say.
Novavax’s spending cuts are important steps, analysts at Cowen said in a research note Tuesday, but that will only make it harder to compete against its major rivals.
“The company is in the position of scaling back at a record pace right when their competitive edge requires the biggest boost,” the analysts wrote.
