Six months after announcing a first wave of cost cuts, Novavax is instituting another round, looking to shave off a further $300 million in spending with more layoffs on the way.
The drug developer, which is still sprinting to catch up to Pfizer and Moderna in the COVID-19 vaccine race, announced the news as part of its third-quarter earnings report Thursday. The company said in a statement that exact decisions about the cuts have not been agreed but that some layoffs will likely be included.
“We have not yet finalized decisions about these cost reductions but expect it will include reduction of external spend, focused headcount reductions, and a review of our facilities,” the biotech told Fierce. “In all of our actions, we will prioritize preserving the key capabilities we need to be successful.”
Roughly two-thirds of the new cuts will be found in R&D and SG&A, while the other $100 million will come from shavings to supply chain-related expenses, CFO Jim Kelly said on an earnings call. CEO John Jacobs echoed that the plan is to make substantive cuts, not accounting tweaks.
“We're confident we can make the real cuts, as Jim said, not by accounting function, but by reducing scope and scale,” Jacobs told analysts on the call. The previously announced cost reductions spurred layoffs to 25% of employees, but it’s unclear how many new jobs are now on the chopping block.
Novavax’s updated full-year 2023 guidance now expects $1.2 million in R&D and SG&A expenses, a nearly 30% reduction compared to full-year 2022. The full 2024 guidance is now set to be below $750 million, down by more than a quarter from the original projection for that year.
The moves come as Novavax is a few weeks into its first full year on the U.S. COVID-19 vaccine market, though it's still operating under emergency use authorization as opposed to full approval.
Moderna recently had to write off $1.3 billion due to “excess and obsolete” vaccine stock while Pfizer was left with $5.6 billion in COVID-related inventory write-offs and other expenses.