Novavax Stock Plunges 25% As Vaccine Maker Has ‘Substantial Doubt’ About Staying In Business

Topline

Shares of Novavax fell more than 25% in after-hours trading Tuesday, following a dismal fourth quarter earnings report and a warning from the Covid vaccine maker that uncertainty over future funding for coronavirus shots has prompted “substantial doubt” about its ability to stay in business.

Novavax raised doubts about its future Tuesday as concerns grow about whether the Covid vaccine … [+] maker will ever get a significant foothold in the United States. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

Key Facts

The company’s stock price rose more than 6.8% to $9.26 before the market closed Tuesday but plummeted some 25.7% to $6.88 following the after-hours earnings report.

Novavax reported fourth quarter losses of $182 million after only posting $357 million in sales—well below expectations of $383 million.

Its statement about future financial framework was even more troubling, saying, “substantial doubt exists regarding our ability to continue” over the next year.

The company stated it believes it has enough capital to run for another year, but the forecast is of low confidence, in part because the Biden Administration is expected to stop buying Covid vaccines and distributing them to Americans for free at some point this year.

What To Watch For

Novavax will likely cut some jobs to reduce its “hot rate” of spending, CEO John Jacobs told Reuters. The company says it has more than 1,500 employees.

Crucial Quote

“We’re in the process of assessing the global footprint of Novavax, rationalizing our supply chain, rationalizing the portfolio and rationalizing the company structure and our infrastructure,” Jacobs told Reuters.

Surprising Fact

Novavax’s Covid-19 vaccine was the first product the 36-year-old company brought to the market. It was reportedly nearing collapse in 2020 before the Trump Administration awarded it a $1.6 billion contract to develop a vaccine as part of Operation Warp Speed.

Key Background

Novavax’s stock traded at more than $300 at times in 2021 as investors put high hopes in its development of a protein-based vaccine, a more traditional method compared with Pfizer and Moderna’s mRNA approach. Continued manufacturing problems led to a delay in winning regulatory approval, and by the time Novavax’s shot became available in July 2022, Americans’ initial rush to get vaccinated was long over. Novavax’s vaccine was the fourth to reach the U.S. market, entering U.S. arms more than a year after Pfizer, Moderna and Johnson & Johnson. Only about 80,000 Novavax shots have reportedly been given in the U.S., compared to hundreds of millions of Pfizer and Moderna doses. Novavax won approval in the European Union several months before its U.S. rollout, but it was still well behind competitors, and its international campaign has not been enough to overcome a slow rate of uptake in the United States.