Two months ago Novavax ($NVAX) announced that its Phase III RSV F vaccine flopped fantastically, and now, with a sense of inevitability, it has announced a “corporate restructure.”
This will entail an “immediate” 30% cut across its workforce, and more bloodletting is set to come from new “expense reduction measures” from across the board, including to precommercialization activities, capital equipment investments, project-specific and general R&D, and general and administrative expenses.
The job cuts will cost it around $4 million in the fourth quarter, but it hopes to reduce cash burn by around $100 million next year after the culling.
This has all been prompted by the news in mid-September that saw the biotech’s RSV F-protein recombinant nanoparticle vaccine candidate fail to hit both its primary and secondary objectives, and most damning of all, did not demonstrate vaccine efficacy in the Phase III Resolve trial.
It had until then enjoyed a market cap of $2.2 billion, but its stock plummet on the news, down by more than 83% afterhours--decimating its share price from $8.34 to just $1.40 in a few short hours.
Given the unique set of circumstances yesterday, the biotech actually ended the day up around 17%, but was again punished after hours on the news, falling 14%. Its market cap is now under $500 million, with a share price of $1.46.
The once-promising drug was seeking to treat adults with respiratory syncytial virus (RSV), a respiratory infectious disease that causes serious infection of the respiratory tract, similar to influenza. The virus puts more than 200,000 over-65s in the hospital each year and accounts for around 16,000 deaths in that age range.
At the same time, Novavax also reported data from its Phase II rollover trial of the vax in around 1,400 older adults, which showed “immunogenicity in all active vaccine recipients,” according to Gregory Glenn, president of R&D at the biotech.
He added however that the company “observed similar low attack rates and absence of efficacy of a single immunization in this trial as was observed in Phase III Resolve trial,” but said that a second season immunization “could provide efficacy.”
In addition to the adult studies, it is also running midstage trials of its RSV F vaccine to protect infants via maternal immunization. Glenn said a call to investors after the Phase III flop in September that he didn’t think the issues with its adult test could be seen as a negative read-through for this program, which has been given a $89 million grant by the Bill & Melinda Gates Foundation.
Last night, the company said it will have a “continued execution of the Phase III Prepare clinical trial to prevent RSV in infants via maternal immunization at multiple international sites.”
The test is designed to determine the efficacy of maternal immunization with its RSV F vaccine against symptomatic RSV lower respiratory tract infection with hypoxemia in infants through a minimum of the first 90 days of life.
It’s also plotting to kick-start a dose-ranging Phase II trial, in one- and two-dose formulations, both with and without adjuvants, of its RSV F vaccine in older adults (60 years of age and older).
“We have identified a clear path forward that we expect will provide us with important clinical data throughout 2017 and protect liquidity,” said Stanley Erck, president and CEO of the Maryland biotech.
“We have the balance sheet to execute this plan. We have resized our organization consistent with this plan and look forward to reporting data from these programs in 2017. We continue to have great confidence in our platform technology, our RSV F vaccine and the significant commercial opportunity for an RSV vaccine for infants via maternal immunization.”
The biotech is also working flu and Ebola vaccines, but doesn’t have any commercially available products.
Other companies are seeking to get a new RSV vax to market, with AstraZeneca’s ($AZN) MedImmune unit gaining an FDA fast-track tag last April for its early-stage candidate.