Covid-19 vaccine maker Novavax Inc. slashed its sales forecast and said it’s ready to cut at least another $300 million in costs next year amid sagging demand for its shots.
Novavax already announced a restructuring plan in May amid concerns about whether the company could stay in business as it faces a reversal of demand for Covid shots, its main product. As part of efforts to strengthen the company’s finances, it’s prepared to initiate a new cost reduction program to reduce 2024 expenses, Novavax Chief Executive Officer John C. Jacobs said in its third-quarter report Thursday.
Novavax shares rose 3.1% at 10:26 a.m. in New York after the company’s third-quarter loss per share and revenue were better than analysts expected.
The company has revised its fiscal year 2023 guidance to a new range of $900 million to $1.1 billion, citing the timing of product sales. Last quarter, the company expected a range of $1.3 billion to $1.5 billion. It also combined the full year 2023 with the first quarter of 2024 to reflect revenue recognition of sales associated with the 2023-2024 vaccination season.
On a call with investors, executives said they initially predicted no revenue from product sales in Q1 2024. However, due to the delayed start of the vaccination season and the anticipation of a more extended season in the US, they now expect some portion of revenue to extend into that quarter.
Lumping Q1 into 2023 guidance was an obvious attempt to improve outlook, said Max Nisen, an analyst at Bloomberg Intelligence. However, the guidance relies on continuing demand into next year which seems very unlikely based on the visible trajectory of retail demand and commentary from other vaccine makers, Nisen said.
Total revenue for the quarter slumped 75% to $187 million. Most of the sales came from grants and royalties, surpassing analysts’ expectations of $159 million.
The company’s updated vaccine recently won regulatory approval in the US and European Union amid a rocky rollout of competitors’ offerings. Unlike Pfizer Inc.’s and Moderna Inc.’s messenger RNA shots that teach cells to spark the creation of antibodies, Novavax’s shot stimulates the immune system with harmless versions of the spike protein that the virus uses to enter cells.
Novavax is one of the many vaccine manufacturers exploring the concept of combination Covid-19 shots. The company announced plans to conduct a late-stage trial for its experimental Covid-19 and flu combination shot, with the possibility of receiving accelerated approval and launching the vaccine as early as 2026.
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