Novavax (NVAX) Tops Q3 EPS by 2c; Will Implement Restructuring Plan

Novavax (NASDAQ: NVAX) reported Q3 EPS of ($0.24), $0.02 better than the analyst estimate of ($0.26). Revenue for the quarter came in at $3.2 million versus the consensus estimate of $4.02 million.

The Company presented a restructuring plan designed to meet the following key objectives:

• Prioritize development activities to achieve clinical data events within 2017;
• Reduce cash burn, extend financial horizon and minimize near-term dilution; and
• Maintain operational core competencies to execute development plans.

The restructuring includes an immediate reduction in workforce of approximately 30%. The Company expects to incur one-time restructuring costs of approximately $3 million to $4 million, including severance expenses, in the fourth quarter of 2016. In addition, management has initiated expense reduction measures relating to pre-commercialization activities, capital equipment investments, project specific and general research and development, and general and administrative expenses. As a result of the restructuring, Novavax estimates a reduction in cash burn of $70 million to $100 million in 2017 relative to 2016.

The restructuring plan was engineered to decrease cash burn and support the Company’s development priorities through the balance of 2016 and in 2017, specifically:

• Continued execution of the Phase 3 Prepare™ clinical trial to prevent RSV in infants via maternal immunization at multiple international sites. Prepare is a randomized, observer-blinded, placebo-controlled trial. The primary objective is to determine the efficacy of maternal immunization with our RSV F Vaccine against symptomatic RSV lower respiratory tract infection with hypoxemia in infants through a minimum of the first 90 days of life. Prepare is supported by a grant of up to $89 million from the Bill & Melinda Gates Foundation (BMGF);
• Initiation of a randomized, observer-blinded, multi-arm, dose-ranging Phase 2 clinical trial, in one and two dose formulations, both with and without adjuvants, of its RSV F Vaccine in older adults (60 years of age and older). The trial will evaluate safety and immunogenicity of these formulations in older adults as measured by serum microneutralization titers against RSV/A and RSV/B, palivizumab competing antibodies (“PCA”) and anti-F IgG; and
• Initiation of a Phase 1 clinical trial of its Zika virus envelope dimer nanoparticle vaccine candidate (ZIKV EnvD Vaccine) in 2017.

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