Struggling Novavax (NVAX) Pink Slips 30% of Workforce and Retools Pipeline After Trial Flop
11/10/2016 6:49:19 AM
November 10, 2016
By Mark Terry, BioSpace.com Breaking News Staff
In the wake of a failed Phase III clinical trial, Gaithersberg, Md.-based Novavax (NVAX) announced that it plans to cut 30 percent of staff and restructure the company.
On September 16, Novavax released data from its Phase III trial for its RSV F Vaccine for older adults. The trial failed to meet its goal, did not demonstrate “vaccine efficacy.” At that point, company stocks plunged to $1.18 per share, more than 82 percent.
At the company’s third-quarter financial report yesterday, Novavax indicated it was laying off 30 percent of its workforce, which will incur one-time costs of $3 to $4 million in this year’s fourth quarter. Overall, however, the company hopes to cut expenses by $70 to $100 million in 2017.
“We have identified a clear path forward that we expect will provide us with important clinical data throughout 2017 and protect liquidity,” said Stanley Erck, Novavax president and chief executive officer, in a statement. “We have the balance sheet to execute this plan. We have resized our organization consistent with this plan and look forward to reporting data from these programs in 2017. We continue to have great confidence in our platform technology, our RSV F Vaccine and the significant commercial opportunity for an RSV vaccine for infants via maternal immunization.”
Much of the company’s efforts will go toward its Phase III Prepare trial of its RSV F Vaccine in infants by way of maternal immunization. This trial is also supported by a grant up to $89 million from the Bill & Melinda Gates Foundation (BMGF). Novavax also plans to start a Phase II trial of the RSV F Vaccine in adults 60 years of age and older. It also plans to start a Phase I trial of a vaccine for Zika virus, ZIKV EnvD Vaccine.
In the third-quarter conference call, Erck said, “We have a Phase (III) maternal RSV program underway which will be our lead program for several reasons. It addresses a serious, global, unmet medical need for which there is no vaccine or drug, we believe that it has a high likelihood to protect newborns and their mothers from RSV infection as has been shown in animal and clinical trials, respectively, it has a very attractive market and we have the capital to allow us to fund this program to important milestones.”
RSV is an often fatal infection in infants and older adults. In the U.S., about 16,000 older adults die of RSV infections or complications. Approximately 900,000 annually are infected and grow sick from RSV in the U.S.
The company had high hopes for the vaccine’s success and had plans to add 850 jobs to its already 400 full-time employees. Now it plans to cut about 120 jobs.
Novavax reported $3.231 million in third-quarter revenue, down from $6.525 in the same period in the previous year. Nine-month revenue was $9.954 million. Total expenses for the quarter were $66.539, giving the company a net loss of $66.254 million for the third quarter.
Novavax stock is currently trading for $1.70. Shares traded on September 14 for $8.31, and plunged on September 16 to $1.29. The yearly high was on December 16, 2015, when shares traded for $8.77.
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