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Novavax (NVAX) Q1 Earnings Lag, Stock Up 28% on Upbeat '23 View
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Novavax, Inc. (NVAX - Free Report) incurred a loss of $3.41 per share for first-quarter 2023, which was wider than the Zacks Consensus Estimate of a loss of $3.38 but narrower than our model estimate of $3.58. In the year-ago quarter, NVAX posted earnings of $2.56 per share.
Revenues in the quarter amounted to $80.9 million, down 88.5% year over year. The downside in total revenues was caused by the emerging seasonal demand pattern for COVID vaccines. While total revenues missed the Zacks Consensus Estimate of $82.5 million, it beat out on our estimate of $75.9 million.
Quarter in Detail
Novavax is currently marketing different versions of its protein-based COVID-19 vaccine — one marketed in partnership with the Serum Institute of India (Serum) under the trade name Covovax and another version produced by Novavax that is marketed under the trade name Nuvaxovid. In the United States, the vaccine is marketed as Novavax COVID-19 Vaccine, Adjuvanted.
During the quarter, the company recorded net reversal of $7.5 million of product sales against product sales of $585.6 million in the year-ago quarter. The reported product sales figure included a $65.0-million revenue reversal associated with doses delivered last year that were scheduled for future replacement.
Grant revenues declined 12.0% year over year to $87.4 million for the same period.
Novavax recorded $1.0 million of revenues from royalties and adjuvant sales to license partners, a substantial decline from the year-ago quarter’s revenue of $19.0 million.
In the reported quarter, research and development (R&D) expenses were $247.1 million, down 35.6% year over year. The downside was primarily caused due a reduction in clinical and manufacturing spendings during the quarter.
Selling, general and administrative (SG&A) expenses were up 17.2% year over year to $112.5 million. The rise in expenses was driven by activities to support the commercialization of Novavax’s COVID-19 vaccine program.
As of Mar 31, 2023, Novavax had $637.0 million of cash and cash equivalents compared with $1.34 billion as of Dec 31, 2022. This substantial fall in cash balance is on account of reduction in outstanding current liabilities by $541.0 million.
Initiates Cost Reduction Plan
Alongside its Q1 earnings, management announced its global restructuring and cost-reduction plans to curb cash burn and extend the existing cash runway. Per this plan, it aims to reduce 25% of its existing workforce.
The undertaking of the above plan will help the company reduce its combined R&D and SG&A expenses. Management expects to reduce combined expenses by around 40-50% in 2024 and 20-25% in 2023, compared with the expenses incurred in 2022.
2023 Guidance
Management issued fresh guidance for full-year 2023. Novavax expects to record total revenues between $1.4-$1.6 billion. This guidance includes product sales, which are expected to be between $1.06-$1.24 billion. Grant revenues are forecasted in the range of $340-$360 million. The Zacks Consensus Estimate for full-year 2023 revenues stood at $766.2 million.
Post the announcement for raised revenue guidance, share price surged 27.8% on Tuesday. Per management, the increased revenue guidance is backed by advance purchase agreements (APAs) signed by Novavax with ex-U.S. countries, committing dose delivery schedules of approximately $800 million in 2023.
In the year so far, Novavax’s stock has lost 7.4% compared with the industry’s 5.5% fall.
Image Source: Zacks Investment Research
In 2023, management expects to incur combined R&D and SG&A expenses in the range of $1.3-$1.4 billion. These projected figures exclude a one-time restructuring charge of $10-$15 million to be incurred by the company in connection with the ongoing restructuring plan, as employee severance and benefit costs. The company expects to incur the majority of this restructuring charge in second-quarter 2023.
Recent Updates
Management is focused on delivering an updated COVID-19 vaccine for the upcoming 2023 fall vaccination season, which is consistent with public health recommendations. The company recently completed enrolment in part 2 of the late-stage strain change study and top-line data from the same is expected in mid-2023. Based on this data, Novavax expects to file a biologics license application (BLA) with the FDA in second-half 2023.
This February, the company reached a modified agreement with the U.S. government for up to 1.5 million additional doses of its COVID vaccine for delivery in 2023, with initial delivery supplied in five-dose vials in first-quarter 2023.
In a separate press release, Novavax also announced positive topline results from a phase II study evaluating three vaccine candidates — COVID-19-influenza combination (CIC), stand-alone influenza and high-dose COVID vaccines. Results from the study showed that all three vaccines were well-tolerated and demonstrated preliminary robust immune responses compared with authorized comparators. The company will evaluate these results, to decide whether to advance these candidates to phase III studies. It intends to enter into strategic collaborations and/or available financing alternatives to finance the late-stage development of these candidates.
Currently, Novavax has a Zacks Rank #3 (Hold). Some better-ranked stocks in the overall healthcare sector are Allogene Therapeutics (ALLO - Free Report) , Athira Pharma (ATHA - Free Report) and Ligand Pharmaceuticals (LGND - Free Report) . While Ligand sports a Zacks Rank #1 (Strong Buy) at present, Allogene and Athira Pharma carry a Zacks Ranks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the estimate for Ligand’s 2023 earnings per share has increased from $4.15 to $4.16. During the same period, the earnings estimate per share for 2024 has increased from $4.28 to $4.58. In the year so far, the shares of Ligand have risen 16.6%.
Ligand Pharmaceuticals beat earnings estimates in two of the last four quarters, while missing the mark on the other two occasions. On average, the company’s earnings witnessed an earnings surprise of 21.50%. In the last reported quarter, LGND delivered an earnings surprise of 121.36%.
In the past 60 days, the estimate for Allogene’s 2023 loss per share has improved from $2.56 to $2.31. During the same period, the loss estimate per share for 2024 has narrowed from $2.53 to $2.20. In the year so far, the shares of Allogene have fallen 1.0%.
Allogene Therapeutics beat earnings estimates in three of the last four quarters, while missing the mark on one occasion. On average, the company’s earnings witnessed an earnings surprise of 5.08%. In the last reported quarter, ALLO delivered an earnings surprise of 7.94%.
In the past 60 days, the estimate for Athira’s 2023 loss per share has improved from $2.88 to $2.64. During the same period, the loss estimate per share for 2024 has narrowed from $5.22 to $4.76. In the year so far, the shares of Athira have lost 10.1%.
Athira Pharma beat earnings estimates in three of the last four quarters, while missing the mark on one occasion. On average, the company’s earnings witnessed an earnings surprise of 5.17%. In the last reported quarter, ATHA delivered an earnings surprise of 12.86%.
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Novavax (NVAX) Q1 Earnings Lag, Stock Up 28% on Upbeat '23 View
Novavax, Inc. (NVAX - Free Report) incurred a loss of $3.41 per share for first-quarter 2023, which was wider than the Zacks Consensus Estimate of a loss of $3.38 but narrower than our model estimate of $3.58. In the year-ago quarter, NVAX posted earnings of $2.56 per share.
Revenues in the quarter amounted to $80.9 million, down 88.5% year over year. The downside in total revenues was caused by the emerging seasonal demand pattern for COVID vaccines. While total revenues missed the Zacks Consensus Estimate of $82.5 million, it beat out on our estimate of $75.9 million.
Quarter in Detail
Novavax is currently marketing different versions of its protein-based COVID-19 vaccine — one marketed in partnership with the Serum Institute of India (Serum) under the trade name Covovax and another version produced by Novavax that is marketed under the trade name Nuvaxovid. In the United States, the vaccine is marketed as Novavax COVID-19 Vaccine, Adjuvanted.
During the quarter, the company recorded net reversal of $7.5 million of product sales against product sales of $585.6 million in the year-ago quarter. The reported product sales figure included a $65.0-million revenue reversal associated with doses delivered last year that were scheduled for future replacement.
Grant revenues declined 12.0% year over year to $87.4 million for the same period.
Novavax recorded $1.0 million of revenues from royalties and adjuvant sales to license partners, a substantial decline from the year-ago quarter’s revenue of $19.0 million.
In the reported quarter, research and development (R&D) expenses were $247.1 million, down 35.6% year over year. The downside was primarily caused due a reduction in clinical and manufacturing spendings during the quarter.
Selling, general and administrative (SG&A) expenses were up 17.2% year over year to $112.5 million. The rise in expenses was driven by activities to support the commercialization of Novavax’s COVID-19 vaccine program.
As of Mar 31, 2023, Novavax had $637.0 million of cash and cash equivalents compared with $1.34 billion as of Dec 31, 2022. This substantial fall in cash balance is on account of reduction in outstanding current liabilities by $541.0 million.
Initiates Cost Reduction Plan
Alongside its Q1 earnings, management announced its global restructuring and cost-reduction plans to curb cash burn and extend the existing cash runway. Per this plan, it aims to reduce 25% of its existing workforce.
The undertaking of the above plan will help the company reduce its combined R&D and SG&A expenses. Management expects to reduce combined expenses by around 40-50% in 2024 and 20-25% in 2023, compared with the expenses incurred in 2022.
2023 Guidance
Management issued fresh guidance for full-year 2023. Novavax expects to record total revenues between $1.4-$1.6 billion. This guidance includes product sales, which are expected to be between $1.06-$1.24 billion. Grant revenues are forecasted in the range of $340-$360 million. The Zacks Consensus Estimate for full-year 2023 revenues stood at $766.2 million.
Post the announcement for raised revenue guidance, share price surged 27.8% on Tuesday. Per management, the increased revenue guidance is backed by advance purchase agreements (APAs) signed by Novavax with ex-U.S. countries, committing dose delivery schedules of approximately $800 million in 2023.
In the year so far, Novavax’s stock has lost 7.4% compared with the industry’s 5.5% fall.
Image Source: Zacks Investment Research
In 2023, management expects to incur combined R&D and SG&A expenses in the range of $1.3-$1.4 billion. These projected figures exclude a one-time restructuring charge of $10-$15 million to be incurred by the company in connection with the ongoing restructuring plan, as employee severance and benefit costs. The company expects to incur the majority of this restructuring charge in second-quarter 2023.
Recent Updates
Management is focused on delivering an updated COVID-19 vaccine for the upcoming 2023 fall vaccination season, which is consistent with public health recommendations. The company recently completed enrolment in part 2 of the late-stage strain change study and top-line data from the same is expected in mid-2023. Based on this data, Novavax expects to file a biologics license application (BLA) with the FDA in second-half 2023.
This February, the company reached a modified agreement with the U.S. government for up to 1.5 million additional doses of its COVID vaccine for delivery in 2023, with initial delivery supplied in five-dose vials in first-quarter 2023.
In a separate press release, Novavax also announced positive topline results from a phase II study evaluating three vaccine candidates — COVID-19-influenza combination (CIC), stand-alone influenza and high-dose COVID vaccines. Results from the study showed that all three vaccines were well-tolerated and demonstrated preliminary robust immune responses compared with authorized comparators. The company will evaluate these results, to decide whether to advance these candidates to phase III studies. It intends to enter into strategic collaborations and/or available financing alternatives to finance the late-stage development of these candidates.
Novavax, Inc. Price
Novavax, Inc. price | Novavax, Inc. Quote
Zacks Rank and Stocks to Consider
Currently, Novavax has a Zacks Rank #3 (Hold). Some better-ranked stocks in the overall healthcare sector are Allogene Therapeutics (ALLO - Free Report) , Athira Pharma (ATHA - Free Report) and Ligand Pharmaceuticals (LGND - Free Report) . While Ligand sports a Zacks Rank #1 (Strong Buy) at present, Allogene and Athira Pharma carry a Zacks Ranks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the estimate for Ligand’s 2023 earnings per share has increased from $4.15 to $4.16. During the same period, the earnings estimate per share for 2024 has increased from $4.28 to $4.58. In the year so far, the shares of Ligand have risen 16.6%.
Ligand Pharmaceuticals beat earnings estimates in two of the last four quarters, while missing the mark on the other two occasions. On average, the company’s earnings witnessed an earnings surprise of 21.50%. In the last reported quarter, LGND delivered an earnings surprise of 121.36%.
In the past 60 days, the estimate for Allogene’s 2023 loss per share has improved from $2.56 to $2.31. During the same period, the loss estimate per share for 2024 has narrowed from $2.53 to $2.20. In the year so far, the shares of Allogene have fallen 1.0%.
Allogene Therapeutics beat earnings estimates in three of the last four quarters, while missing the mark on one occasion. On average, the company’s earnings witnessed an earnings surprise of 5.08%. In the last reported quarter, ALLO delivered an earnings surprise of 7.94%.
In the past 60 days, the estimate for Athira’s 2023 loss per share has improved from $2.88 to $2.64. During the same period, the loss estimate per share for 2024 has narrowed from $5.22 to $4.76. In the year so far, the shares of Athira have lost 10.1%.
Athira Pharma beat earnings estimates in three of the last four quarters, while missing the mark on one occasion. On average, the company’s earnings witnessed an earnings surprise of 5.17%. In the last reported quarter, ATHA delivered an earnings surprise of 12.86%.