Novavax is reducing its head count by 25%. After trying to cut costs without laying off staff, the vaccine company has now accepted it will need to part ways with hundreds of employees to align its spending with the dwindling size of the COVID-19 opportunity.
“2023 will continue to be a challenging year for Novavax,” CEO John Jacobs said on a Tuesday call with investors. He just assumed the chief executive role in January.
Maryland-based Novavax has grown quickly, increasing its head count from 165 early in 2020 to 1,992 by February this year. The biotech took on staff at a rapid rate as it pursued the COVID-19 vaccine opportunity. But with Moderna and Pfizer-BioNTech laying claim to most of the pandemic money and the market shrinking, the leadership team at Novavax has concluded the operation needs slimming down.
The company revealed plans Tuesday morning to significantly reduce its spending and align its business with the endemic COVID opportunity. The biotech plans to consolidate facilities and infrastructure and reduce its head count by 25%. The figures suggest around 500 people will be leaving Novavax. Chief Financial Officer Jim Kelly said 80% of the layoffs are impacting full-time employees and that the larger cost-saving strategy is primarily impacting R&D.
The cuts are intended to slash Novavax’s R&D and selling, general and administrative expenses. Last year, the biotech spent $1.7 billion across those areas. Novavax wants to reduce that figure by 20% to 25% this year, resulting in spending of $1.3 billion to $1.4 billion, and by 40% to 50% in 2024.
Novavax excluded potential costs associated with a phase 3 clinical trial of its combined COVID-influenza vaccine from its spending guidance. The biotech reported Tuesday that its combination shot was safe and that there were no identified side effects of special interest or serious treatment-related side effects. The combo elicited an immune response similar to its singular COVID shot and other licensed flu vaccines, Novavax said.
But the company will need a financial boost to further develop the 1-2 punch, saying it will weigh its options to advance the vaccine via strategic collaborations or “financing alternatives.” Such is the case across the portfolio, with Kelly saying the cost-saving efforts mean the pipeline is paused.
The changes follow a quarter in which Novavax reduced spending by $50 million without laying off any staff. In a statement sent to Fierce Biotech on April 13, a spokesperson for Novavax said there had “not been any staff reductions at this time,” adding that the goal was “to continue to find ways to operate efficiently.”
Now, Novavax’s remaining employees will work to deliver an updated COVID-19 shot for the fall vaccination season. The biotech is on course to report top-line results for the second part of its phase 3 strain change trial around the middle of 2023 and expects to file for approval in the U.S. in the second half of the year.
Editor's note: This story was updated with additional editorial from the company's first-quarter earnings call.