Five weeks into his job as the new CEO as Novavax, John Jacobs raised the possibility on Tuesday afternoon that the company may not survive 2023.
“Uncertainty,” was used often during Novavax’s fourth quarter conference call, so much so that the company did not provide guidance on its expected revenue in 2023.
Novavax will slash spending to stay afloat while still making a last-ditch effort to find a niche in the market with its traditional, protein-based COVID-19 vaccine.
The company has enough capital to operate for the next 12 months, chief financial officer John Trizzino said, adding that the “plan is subject to significant uncertainty.” The company closed 2022 with $1.33 billion of cash on hand.
The primary areas of concern, Trizzino explained, are the company’s funding from the U.S. government, pending arbitration with vaccine alliance Gavi and future revenues, which will be heavily dependent on Novavax’s ability to deliver an updated version of its COVID-19 shot for the fall vaccination season.
Novavax was a rags-to-riches story early in the pandemic when it scored a $1.6 billion grant from the government to develop a COVID-19 vaccine. But the company's efforts were hindered by manufacturing, development and regulatory glitches.
The government did not extend its funding to the company beyond December 2023, leaving $416 million of funding “at risk,” said Trizzino. The CFO added that Novavax is “discussing mitigation options with the government to realize the full amount outstanding.”
As for Gavi, a loss in arbitration could require (PDF) Novavax to return $700 million it received for vaccine doses before the vaccine relief organization canceled a contract.
“Substantial doubt exists regarding our ability to continue as a going concern through one year from the date that these financial statements are issued,” the company said in its presentation.
With the news, Novavax shares plummeted 25% in after-hours trading. The company’s value has taken a beating over the last two years as its shares, once priced at $290 have fallen to $6.82.
After reporting disappointing sales of $357 million in the fourth quarter, Novavax came up just shot of $2 billion in revenue in 2022, failing to approach the $4 billion to $5 billion revenue window of guidance the company provided in May.
Timing was never on Novavax’s side in 2022. By the time the company gained an FDA approval for its long-awaited shot in July, demand for COVID-19 vaccines was plummeting. By the time the FDA signed off on Novavax’s booster in October, updated vaccines from Pfizer and Moderna had been authorized for several weeks.
This year, Novavax hopes to have a variant-adapted booster ready in time to be competitive. The company plans to educate practitioners and potential recipients on the advantages of vaccination with a traditional shot, execs said Tuesday.
The company also said it is looking to collect $2.1 billion in potential vaccine revenue tied to advance purchasing contracts with countries outside the U.S. this year and in 2024.
To unlock the potential of its portfolio, Jacobs also hinted that the company will be open to new business development strategies, such as “out-licensing, partnering and co-promotion,” Jacobs said.
To focus on these initiatives, Novavax has created a new executive position, chief strategy officer, which will be filled by Elaine O’Hara. O'Hara joins from Sanofi, where she had served as chief commercial officer for vaccines in North America.