COVID-19 vaccine manufacturer Novavax (NASDAQ:NVAX) disclosed on Wednesday that it continues to grapple with substantial financial challenges, anticipating flat or decreased revenue for the year ahead as it endeavors to capture a greater share of the U.S. market from its larger competitors, Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). During early trading, the company’s shares plummeted by 26.3% to $4.44 as it disclosed a fourth-quarter loss that exceeded analysts’ expectations, coupled with revenue that failed to meet projections.
Chief Executive John Jacobs acknowledged that Novavax only secured a low-single-digit percentage of the U.S. market during the recent vaccination campaign, citing lower-than-anticipated demand for COVID vaccines and the delayed introduction of its protein-based vaccine compared to the mRNA-based offerings from its rivals. U.S. sales for the 2023-2024 vaccination season are projected to be less than $25 million.
“We were disappointed with that U.S. performance,” Jacobs remarked in an interview, attributing the shortfall to the company’s insufficient focus on retail pharmacy chains and the less convenient nature of its five-dose vials compared to prefilled syringes offered by competitors. Jacobs outlined plans for the upcoming year, emphasizing a shift towards prefilled syringes, broader retail availability, and improved contract negotiations to enhance competitiveness in the U.S. market.
Despite these efforts, Jacobs indicated that the company does not anticipate achieving profitability in the current year and will persist in cost reduction initiatives. Novavax anticipates reducing research and development as well as selling, general, and administrative expenses to between $700 to $800 million from over $1.2 billion in 2023.
Novavax encountered significant challenges last year, including manufacturing setbacks and regulatory hurdles, leading to doubts about its viability. Despite its initial surge in market value to over $20 billion early in the pandemic, the company’s shares have since plummeted by over 98%, resulting in a market capitalization of less than $600 million.
In response to financial challenges, Novavax has recently finalized an agreement with the international vaccine organization Gavi. Under the terms of the agreement, Novavax commits to repaying a minimum of $475 million either in cash or vaccine supplies by the conclusion of 2028. However, concerns about the company’s long-term viability persist, with Jacobs stating, “Should we have a successful year and we execute to our base plan, I think we’d be in a position where we start contemplating the lifting of that.”
Moving forward, Jacobs emphasized the importance of demonstrating effective execution in the commercial market following improvements in operational efficiency and agility within the company.
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