Novavax Inc. (NASDAQ:NVAX) Earnings Suggest More Downside

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Novavax Inc. (NASDAQ:NVAX) shares jumped 17.24% on Wednesday but retreated 14.12% to $1.46 in after-hours trading. Share prices have been trading in a 52-week range of $1.16 to $9.23. The company has 271.91 million shares outstanding.

Novavax reported its third quarter earnings figures, indicating a net loss of $66.3 million, or $0.24 per share, compared to a net loss of $33.1 million, or $0.12 per share, for the third quarter of 2015. Revenue in the third quarter of 2016 decreased 50% to $3.2 million, compared to $6.5 million for the same period in 2015. The main driver of the drop was lower revenue under the HHS BARDA contract of $6.2 million.

In particular, this was caused by lower level of activity in the three months ended September 30, 2016, primarily resulting from the natural expiration of the HHS BARDA contract, as compared to the same period in 2015. However, it was offset by$2.6 million in revenue recorded under the BMGF grant relating to our ongoing Prepare clinical trial.

Research and development expenses increased 73% to $53.0 million, compared to $30.7 million for the same period in 2015, due toincreased costs associated with the clinical trials and development activities of our RSV F Vaccine and higher employee-related costs, including non-cash stock-based compensation.

Meanwhile, general and administrative expenses increased 50% to $13.6 million because of higher employee-related costs and professional fees for pre-commercialization activities. Novavax had $300.3 million in cash and cash equivalents and marketable securities compared to $230.7 million as of December 31, 2015.

“We have identified a clear path forward that we expect will provide us with important clinical data throughout 2017 and protect liquidity,” said Stanley Erck, President and CEO of novavax. “We have the balance sheet to execute this plan. We have resized our organization consistent with this plan and look forward to reporting data from these programs in 2017. We continue to have great confidence in our platform technology, our RSV F Vaccine and the significant commercial opportunity for an RSV vaccine for infants via maternal immunization.”

All in all, the results weren’t too good since the company also unveiled its restructuring plan, which would unfortunately involve cutting 30% of its workforce. In line with this, Novavax expects to incur one-time restructuring costs of approximately $3 million to $4 million, including severance expenses, in the fourth quarter of 2016.

Apart from that, management has initiated expense reduction measures relating to pre-commercialization activities, capital equipment investments, project specific and general research and development, and general and administrative expenses. This should result in a reduction in cash burn of $70 million to $100 million in 2017 relative to 2016.

Novavax is a clinical-stage vaccine company focused on the discovery, development and commercialization of recombinant nanoparticle vaccines and adjuvants. It operates through developing recombinant vaccines segment. Through its recombinant nanoparticle vaccine technology produces vaccine candidates to respond to both known and newly emerging diseases.

Its product pipeline focuses on a range of infectious diseases with vaccine candidates in clinical development for respiratory syncytial virus, seasonal influenza, pandemic influenza and the Ebola virus. Its lead adjuvant for human applications, Matrix-M, is in a Phase I/II clinical trial for pandemic influenza H7N9 vaccine candidate. It is also testing Matrix-M in conjunction with its EBOV vaccine candidate in a Phase I clinical trial. It is developing additional pre-clinical stage programs in a range of infectious diseases, including Middle East respiratory syndrome.

 

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With an upbringing rooted in deep ethical values, Yashu Gola knows how to put honesty and dedication into his articles. This young and dynamic financial analyst has done his graduation in IT engineering. His interests in financial writing have once brought him to our digital doorsteps. Since then, he has been an integral part of ForexMinute.com and writes the most captivating news-articles on the foreign exchange industry, cryptocurrencies, and medical marijuana trading.