Novavax Inc shares surged Tuesday after the COVID-19 vaccine producer announced plans to cut expenses that include a roughly 25% workforce reduction.
The company said it plans to slash next year’s research and development costs, along with selling, general and administrative expenses, by 40% to 50%. Novavax had just under 2,000 employees as of February 21, according to an SEC filing.
The announcement came alongside the company’s first quarter results, which missed on revenue but beat on earnings.
Novavax reported revenue of $81 million, down significantly from $704 million a year earlier and short of the analyst-expected $87.6 million. Earnings swung to a loss of $3.41 per share, slightly narrower than the Street projection of $3.46.
Investors are bullish on the cost cutting, sending shares more than 40% higher Tuesday morning to $10.60.
The steep revenue decline is due to the fact Novavax’s protein-based COVID-19 vaccine is its only commercial product. In February, Novavax estimated it had enough money to fund operations for the next fiscal year, but noted substantial doubt exists regarding our ability to continue as a going concern.”
The company is updating its COVID-19 vaccine for this fall and is developing a flu shot and coronavirus-flu combination shot.
Novavax’s COVID-19 vaccine hit the market later than those from Pfizer, Moderna and Johnson & Johnson (NYSE:JNJ) had reached the market. Only about 88,458 doses of the Novavax vaccine have been administered in the US, compared to 400 million Pfizer doses, according to the Centers for Disease Control and Prevention.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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