Novavax’s stock soars after positive COVID and flu trial data and news of plan to lay off 25% of workforce

Novavax had warned in February that it may not be able to remain in business

The Novavax COVID vaccine is the company’s only approved product.

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Novavax Inc.’s stock soared Tuesday after the biotech company reported positive results from a trial of three flu and COVID vaccines and unveiled a restructuring that will see it part with a quarter of its staff.

The move put the stock on track for its biggest one-day gain in more than two years as worries raised by the company’s “going-concern” warning from earlier this year appeared to ease.

For more, see: Novavax stock sheds a quarter of its value as vaccine maker’s business in ‘substantial doubt’

Still, its first-quarter earnings, also released Tuesday, showed the pressure the company is under as the U.S. switches to a commercial COVID-vaccine market.

Novavax’s NVAX, -6.06% COVID vaccine is its only approved product. It came to market far later than rivals developed by Moderna MRNA, +0.10% and by Pfizer PFE, -0.26% and BioNTech BNTX, -0.27% due to manufacturing and regulatory snafus. The vaccine is a traditional protein-based one and was expected to gain traction with people who were wary of the newer mRNA technology used in the Moderna and Pfizer vaccines, but the late arrival to market meant uptake has remained low.

“Novavax remains focused on our top priority of delivering an updated, competitive COVID vaccine consistent with public health recommendations for the 2023 Fall vaccination season,” the company said Tuesday.

Novavax posted a loss of $293.9 million, or $3.41 a share, for the quarter, compared with earnings of $203.4 million, or $2.56 a share, in the year-earlier period. Revenue fell to $80.9 million from $703.9 million.

The FactSet consensus was for a loss of $3.46 per share and revenue of $87.6 million.

The company also announced a restructuring plan that includes shedding 25% of its global workforce as it works to reduce spending, extend its cash runway and manage liabilities. Novavax had 1,992 full-time employees as of Feb. 21, 2023, according to its 10-K annual report filing with the Securities and Exchange Commission, suggesting that about 498 jobs will be cut.

The company is also planning to cut its combined research and development and sales, general and administrative costs by about 40% to 50% in 2024 compared with 2023. That includes consolidating plants and infrastructure.

It expects those combined costs to be down 20% to 25% in 2023 versus 2022.

“Though we still have substantial challenges ahead of us in 2023, we are encouraged by the progress we have made in the last quarter and are determined to continue executing on our top priorities,” Chief Executive John C. Jacobs said in a statement.

In a separate release, Novavax said a trial of a vaccine targeting both COVID and flu, a second stand-alone vaccine for flu and a third high-dose COVID vaccine all produced robust immune response in a Phase 2 trial and showed a reassuring preliminary safety profile.

“The stand-alone influenza vaccine candidate achieved statistically significant hemagglutination inhibition (HAI) antibody responses 31 to 56% higher for all four strains compared to Fluad,” said the company.

The highest-dose stand-alone COVID vaccine achieved statistically significant neutralization responses that were about 30% higher than Novavax’s prototype COVID vaccine.

The stock is up 5.8% in the year to date, while the S&P 500 SPX, -0.32% has gained 8%.