May 9 (Reuters) – COVID-19 vaccine maker Novavax Inc on Tuesday projected much higher revenues in 2023 than Wall Street projected and announced plans to cut a quarter of its workforce, spurring hopes of a recovery for cash-strapped countries. biotech, and its shares jumped 40%.
In February, the company raised doubts about its ability to continue in business, due to uncertainty about 2023 revenue, funding from the US government, and a pending arbitration with the global vaccine alliance, Gavi.
Novavax, whose COVID vaccine is the only product to market after 35 years in business, is counting on releasing an updated COVID shot this fall to match circulating strains and lower costs to improve its prospects.
Also on Tuesday, the Maryland-based drugmaker revealed promising early data for a combination COVID-19 flu vaccine.
It said it now expects 2023 revenue of between $1.4 billion and $1.6 billion, compared to analyst estimates of $831.6 million, according to Refinitiv data.
Novavax said $800 million of that was from third-party procurement contracts “confined” for the COVID dose it has committed to ship this year.
Roger Song, a Jefferies analyst, said the amount of overseas revenue the company identified was a surprise to the market, and the roughly $260 million to $440 million in the US was also encouraging.
“They seemed very confident about the US fall campaign,” Song said.
Novavax is working on an updated version of its protein-based vaccine in time for the fall COVID-19 booster season. Protein-based vaccines like Novavax take longer to produce than messenger RNA-based versions made by Moderna (MRNA.O) and Pfizer (PFE.N)/BioNTech (22UAy.DE).
CEO John Jacobs declined to disclose the company’s pricing strategy in the US as the country transitions to a commercial market for COVID products from government procurement when the pandemic has been designated a public health emergency.
“It’s clearly a really competitive market. We came in as a late follower with a couple of competitors that are already well established in the US market,” Jacobs said in an interview. “We evaluate what competitors are doing and would prefer to reveal our cards a little later.”
The company said it plans to lay off about 20% of its roughly 2,000 full-time employees, roughly 400 jobs. She said the remainder of the job cuts would be for contractors.
Novavax expects the cost reductions to reduce its annual research and commercial expenses by 20% to 25% from last year.
Cash and cash equivalents fell to $637 million at the end of the quarter, from $1.3 billion on Dec. 31.
Novavax posted a first-quarter net loss of $3.41 per share, compared to estimates of a loss of $3.46 per share.
All COVID vaccine makers are working on COVID-flu composite shots with the goal of expanding and gaining market share in what they hope will be an annual strengthening market.
Data from a mid-stage trial in adults ages 50 to 80 showed that the combination vaccine produced an immune response similar to the protein-based COVID vaccine and already approved influenza vaccines.
Additional reporting by Bhanvi Satija and Raghav Mahobe in Bengaluru; Editing by Devika Siamnath
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