Shares of Novavax (NASDAQ:NVAX) are down 27% today after the Covid-19 vaccine maker raised doubts about its ability to continue operations. Prior to today, NVAX stock had declined 89% over the past 12 months to trade at $9.26 per share.
The Gaithersburg, Maryland-based pharmaceutical company also announced it is cutting spending and preparing for a fall campaign of its long-delayed Covid-19 vaccine. Novavax raised the prospect of it ceasing operations as it reported lackluster fourth-quarter 2022 financial results.
What Happened With NVAX Stock
In announcing its Q4 results, Novavax said that it faces “significant uncertainty” related to its 2023 revenue and funding from the U.S. government. The company reported that it lost $182 million, or $2.28 per share, in Q4 as sales of its Covid-19 vaccine came in at a weaker-than-expected $357 million. Analysts had forecast vaccine sales during the final quarter of 2022 in the amount of $380 million.
However, Novavax did indicate it has $1.33 billion in cash on hand, which should be enough to fund its operations over the next year. “If we execute on our operating plan, we’ll be in a very strong position not only at the end of this year, but going into next year,” said Novavax CEO John Jacobs, who joined the company in late January of this year.
Why It Matters
Novavax has struggled to bring its Covid-19 vaccine to market. The company’s vaccine was only authorized for use by the U.S. Food and Drug Administration (FDA) in July of last year, well behind competitors such as Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). Since last summer, only about 80,000 of Novavax’s Covid-19 shots have been administered worldwide.
In many respects, Novavax’s Covid-19 vaccine came to market just as demand for the shots was waning. Bringing the vaccine to market was repeatedly delayed by regulatory issues, manufacturing problems and weak orders. While Novavax has been in business since 1986, the Covid-19 vaccine is its first commercially available product.
In speaking to analysts following the Q4 results, Jacobs said the company has $2 billion worth of signed contracts with governments around the world for its vaccine, and the company plans to collect on the money owed. However, future sales of the Covid-19 shot do not look good. As a result, Novavax is planning to cut some of its 1,500 staff members and is considering “all options” as it assesses its future.
What’s Next for NVAX Stock
During the pandemic’s peak, NVAX stock traded as high as $330, giving the company a $20 billion market capitalization. However, since hitting that peak, the share price of Novavax has dropped 97% — and that was before today’s steep selloff. With its future in doubt and losses mounting, investors would be wise to steer clear of Novavax stock.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
