Novavax shares jump after Covid vaccine maker posts surprise quarterly profit

Shares of Novavax jumped as a lot as 20% in premarket buying and selling Tuesday after the Covid vaccine maker reported a surprise second-quarter profit.

The outcomes come as Novavax works to strengthen its monetary place, notably after it raised doubts about its potential to remain in enterprise earlier this yr.

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

The Maryland-based firm’s inventory has dropped greater than 23% this yr, placing its market worth at round $650 million. 

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

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

Novavax posted a internet earnings of $58 million, or 58 cents per share, for the quarter. That compares with a internet lack of $510.5 million, or $6.53 per share, reported throughout the identical quarter final yr. 

The biotech firm generated second-quarter gross sales of $424.4 million, up from the $185.9 million from the identical interval a yr in the past. 

Novavax CEO John Jacobs advised CNBC that the corporate pulled ahead some gross sales that “might need drifted” into the third quarter from prior Covid vaccine buy agreements, recognizing these gross sales as an alternative within the second quarter. 

He famous that there shall be “little to no gross sales” within the third quarter as a result of the Food and Drug Administration will not decide on Novavax’s new Covid shot till late September. The firm can solely begin rolling out the vaccine to the general public after a possible approval from the company. 

Most of Novavax’s income within the third quarter will come from grants, in line with Jacobs. He mentioned the corporate will squeeze “a lot of the seasonal alternative” of its new shot into the fourth quarter, when the nation sometimes sees Covid circumstances and vaccinations peak. 

The firm lowered its full-year income forecast to $1.3 billion to $1.5 billion, down barely from the $1.4 billion to $1.6 billion steerage supplied in May. 

But Jacobs famous that the adjustment displays a part of a money settlement the Canadian authorities agreed to pay for forfeiting Covid vaccine doses that had been beforehand scheduled for supply.

The new steerage doesn’t embrace $100 million in money that Canada paid throughout the second quarter – an quantity that “would have been income” had the events accomplished the transaction, he mentioned.

“We’re nonetheless on observe for the income, however we might quite have it in money,” Jacobs advised CNBC. “That’s a superb factor for Novavax.” 

Novavax additionally mentioned it is persevering with to execute its international cost-cutting plan, which includes slashing 25% of the corporate’s workforce and consolidating the corporate’s services and infrastructure, amongst different efforts. 

The plan is predicted to cut back 2024 analysis and improvement in addition to promoting, common and administrative bills prices by roughly 40% to 50% in contrast with 2022.

SG&A bills often embrace the prices of selling, promoting and delivering an organization’s services and products.

The firm reported R&D bills of $258 million and SG&A bills of $162 million final yr.

Separately on Tuesday, Novavax introduced a brand new strategic partnership settlement with SK bioscience, a South Korea-based biotech producer. 

The settlement extends a earlier contract manufacturing arrangement between the 2 firms, which supplied SK bioscience with the rights to completely manufacture and commercialize Novavax’s Covid vaccine in South Korea and the non-exclusive rights to take action in Thailand and Vietnam. 

Novavax CEO Jacobs famous the corporate will obtain royalty funds for gross sales in these markets and an upfront fee of $4 million from SK bioscience.

SK bioscience may even buy $85 million in Novavax’s widespread inventory at $13 per share, reflecting a 59% premium to the previous 90-day buying and selling worth. 

The settlement additionally removes $195 million in manufacturing liabilities from Novavax’s steadiness sheet, in line with Jacobs. In trade, Novavax can pay SK bioscience $65 million in money.