Novavax Pulls Trigger on Restructuring, Slashes 25% of Workforce
By Alex Keown
May 9, 2023
Embattled by post-COVID-19 vaccine development headwinds, Novavax is slashing 25% of its workforce and consolidating its global infrastructure in an effort to reduce its financial expenditures and prepare for future growth.
Novavax Chief Executive Officer John Jacobs, who took over the company reins at the beginning of the year, called the job cuts a difficult but necessary decision for the company’s future. In a May 9 conference call with investors, Jacobs said the restructuring was a decisive action the company needed to take in order to while retaining capabilities needed to drive results and value in the future. The restructuring and cost reduction plan is expected to reduce the company’s annual expenses by approximately 40% to 50% compared to 2022, he said.
“The decision was necessary to better align the company’s global infrastructure and scale with commercial opportunities for our vaccines,” Jacobs said.
At the end of 2022, Novavax employed approximately 2,000 employees across the globe. A 25% headcount reduction amounts to 500 job losses. Approximately 80% of the impacted jobs are full time employees, Chief Financial Officer Jim Kelly noted during the call. Kelly echoed Jacobs and said the “decisive actions” announced today are necessary as the company establishes a path toward longtime financial health.
Novavax is the latest in a string of layoffs across the life sciences sector. This month, N.C.-based Aceragen announced an 80% reduction in headcount, Emergent BioSolutions laid off about 5% of its employees earlier this year, as did Philadelphia-based Century Therapeutics, which culled about 25% of its staff.
The cuts at Novavax were not unexpected. In March, the company announced its intentions to cut spending to preserve its cash runway while preparing for the fall vaccination season. At the time, Novavax hinted the fall vaccination season could be a make-or-break period for the company.
When Jacobs took over earlier this year, he said he was committed to placing the Gaithersburg-based company in a strong position so it will be able to continue to develop vaccines that will have a positive impact on global health.
During the call, Jacobs outlined his top three priorities for Novavax. The company’s first priority will be to deliver an updated and competitive COVID vaccine for the 2023 fall vaccination season. Secondly, Jacobs said the company must reduce its rate of spend and manage its cash flow in order to evolve its scale and structure. Lastly, the company intends to leverage its technology platform and portfolio to drive additional value beyond its protein-based Nuvaxovid vaccine.
“Combined with our focus on revenue generation from Nuvaxovid and management of our current liabilities, these measures should strengthen our cash position and our potential for the long-term growth and stability of Novavax,” Jacobs said. He added he believes the core business is robust and the strategy is the correct one in order to achieve its strategic goals.
The Nuvaxovid vaccine was authorized for use by the FDA in July 2022, well after mRNA-based vaccines were approved in the United States. Nuvaxovid’s road to approval was rocky. The company faced multiple development and manufacturing delays.
The vaccine is Novavax’s primary revenue driver. Jacobs said the company anticipates vaccine earnings of between $1.06 billion to $1.24 billion this year. Total revenue for the first three months of fiscal year 2023 was $81 million, a significant decline from $704 million for the same period in 2022. Jacobs said that difference reflects a shift to a seasonal demand pattern for the COVID-19 vaccine. In anticipation of the fall season, the U.S. government struck an agreement for an additional 1.5 million additional doses of Novavax’s COVID vaccine this year.
When the U.S. government ended the public health emergency in May 2022 that signaled a change in the market. Since its authorization last year, Nuvaxovid’s use has been expanded as a booster shot, which could enable a broader uptake in the long-term commercial market. The company is working with global regulatory agencies on strain selection guidance for the fall.
In addition to the restructuring, Novavax also announced positive topline data from a Phase II trial assessing a COVID-Influenza Combination (CIC) vaccine, standalone influenza, and high-dose COVID vaccine candidate. The preliminary topline immune responses for all three vaccine candidates were robust versus authorized comparators, Jacobs said. He said the data are encouraging and further validate the value of Novavax’s technology platform.
“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 three priorities,” Jacobs said.
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Alex Keown is a freelance journalist who writes about a variety of subjects including the pharma, biotech, and life science industries. Prior to freelancing, Alex has served as a staff writer and editor for several publications.
