Novavax (NVAX) Q2 2023 earnings report

Novavax on Tuesday reported a surprise second-quarter profit and revenue that topped Wall Street’s expectations as the corporate prepares to launch a recent Covid vaccine this fall.

Novavax posted net income of $58 million, or 58 cents per share, for the quarter. That compares with a net lack of $510.5 million, or $6.53 per share, for a similar quarter last 12 months. 

The biotech company generated second-quarter sales of $424.4 million, up from the $185.9 million from the identical period a 12 months ago. 

The corporate’s stock closed greater than 3% lower on Tuesday.

Here’s what Novavax reported compared with Wall Street’s expectations, based on a survey of analysts by Refinitiv. 

• Earnings per share: 58 cents per share, vs. a lack of $1.39 per share expected
• Revenue: $424.43 million, vs. $239.2 million expected

Novavax CEO John Jacobs told CNBC that the corporate pulled forward some revenue that “might need drifted” into the third quarter from prior Covid vaccine purchase agreements, recognizing those sales as an alternative within the second quarter. 

He noted there might be “little to no sales” within the third quarter since the Food and Drug Administration won’t make a choice on Novavax’s recent Covid shot until late September. The corporate can only start rolling out the vaccine to the general public after a possible approval from the agency. 

Most of Novavax’s revenue within the third quarter will come from grants, based on Jacobs. He said the corporate will squeeze “many of the seasonal opportunity” of its recent shot into the fourth quarter, when the nation typically sees Covid cases and vaccinations peak. 

The outcomes come as Novavax works to strengthen its financial position, particularly after it raised doubts earlier this 12 months about its ability to remain in business.

The corporate is pinning its hopes on the launch of its updated Covid shot within the U.S. industrial market this fall, a world cost-cutting push announced in May and a promising vaccine pipeline to assist it stay afloat. 

Novavax on Tuesday lowered its full-year revenue forecast to $1.3 billion to $1.5 billion, down barely from the $1.4 billion to $1.6 billion guidance provided in May. 

But Jacobs noted that the adjustment reflects a part of a money settlement the Canadian government agreed to pay for forfeiting Covid vaccine doses that were previously scheduled for delivery.

The brand new guidance doesn’t include $100 million in money that Canada paid throughout the second quarter – an amount that “would have been revenue” had the parties accomplished the transaction, he said.

“We’re still on target for the revenue, but we might relatively have it in money,” Jacobs told CNBC. “That is thing for Novavax.” 

Novavax also said it’s continuing to execute its global cost-cutting plan, which involves slashing 25% of the corporate’s workforce and consolidating its facilities and infrastructure, amongst other efforts. 

The plan is predicted to scale back 2024 research and development in addition to selling, general and administrative expenses costs by roughly 40% to 50% compared with 2022.

SG&A expenses normally include the prices of promoting, selling and delivering an organization’s services and products.

The corporate reported R&D expenses of $258 million and SG&A expenses of $162 million last 12 months.

Individually on Tuesday, Novavax announced a recent strategic partnership agreement with SK bioscience, a South Korea-based biotech manufacturer. 

The agreement extends a previous contract manufacturing arrangement between the 2 corporations, which provided SK bioscience with the rights to exclusively manufacture and commercialize Novavax’s Covid vaccine in South Korea and the nonexclusive rights to accomplish that in Thailand and Vietnam. 

Novavax CEO Jacobs noted the corporate will receive royalty payments for sales in those markets and an upfront payment of $4 million from SK bioscience.

SK bioscience will even purchase $85 million in Novavax common stock at $13 per share, reflecting a 59% premium to the past 90-day trading value. 

The agreement also removes $195 million in manufacturing liabilities from Novavax’s balance sheet, based on Jacobs. In exchange, Novavax can pay SK bioscience $65 million in money.