Novavax to pause RSV vaccine trial, assess pipeline

Novavax (NVAX) is facing serious headwinds going into 2023 with the pandemic demand waning and new leadership changes, even as it celebrates a historic milestone of $2 billion in revenue for 2022 with $1.3 billion cash on hand.

In a statement Tuesday, the company warned about the impact of the uncertainty on its ability to operate.

"While our current cash flow forecast for the one-year going concern look forward period estimates that we have sufficient capital available to fund operations, this forecast is subject to significant uncertainty, including as it relates to 2023 revenue, funding from the U.S. government, and pending arbitration," the company said.

The arbitration is an ongoing issue with Gavi, the global vaccine alliance that spearheaded the purchase and distribution of vaccines to lower income countries during the pandemic. The company terminated an advance purchase agreement that went unfulfilled, but kept the advance payment as per the agreement.

Chief Financial Officer Jim Kelly said the shift to a commercial market and the ending of the public health emergency in the U.S. — and shifting to an endemic phase of the COVID outbreak globally — was the reason for the uncertainty clause in the earnings statement and a lack of a 2023 outlook.

"Given these uncertainties, substantial doubt exists regarding our ability to continue as a going concern through one year from the date that these financial statements are issued," Novavax said in the statement.

Novavax's only authorized product, the COVID-19 vaccine, missed the pandemic boom and faces market challenges in 2023, all while a new CEO, John Jacobs, is taking the helm.

Jacobs is taking a hands-on approach to his transition, calling for a full review and assessment of the company's pipeline and workflow, as well as promising transparency in the future.

That includes pausing the development of an RSV vaccine — which has been a new competitive space for bigger pharmaceutical companies, as well as other COVID-19 vaccine manufacturers Moderna (MRNA) and Pfizer (PFE). Pfizer received a recommendation by a panel of external FDA advisers for its RSV vaccine in ages 60 and older Tuesday.

"I'm aware that over the past few years we have experienced both highs and lows," Jacobs said on an earnings call late Tuesday, adding that he pledges to be humble and transparent "about our opportunities as well as our challenges."

COVID-19 vaccine

Novavax is anticipating vaccine sales to pick up in the second half of 2023, as vaccinations become more seasonal.

Executive vice president and chief commercial officer John Trizzino said that the COVID vaccine remains a more than $15 billion annual global market that includes continued government interest even with a growing commercial market across the U.S., European Union and, Asia.

The company plans on producing variant-specific doses this fall, as well as — similar to other makers — reducing the size of vials to include fewer doses per vial.

To-date the company's strength has been its ex-U.S. business. The ongoing clinical trials reflect as much, with a study of recipients who have HIV, as well as the benefit of a second boost with those who previously received mRNA vaccines.

In addition, the company still has $2 billion in advance purchase orders to fulfill this year and next.

Meanwhile, Novavax is also still working on its adolescent and younger age group trials.

Pipeline assessment

The company will continue looking at a combination flu-COVID vaccine.

Meanwhile, the company is awaiting assessment of one of its flu vaccines to decide on whether or not to restart the program. The results would determine if the company chooses "dilutive or non-dilutive" funding options, according to CFO Kelly.

The company also announced it will focus on partnerships and other relationships.

To that effect, the manufacturing facility in the Czech Republic just received authorization from the European Medicines Agency to supply a antigen drug substance to the European Union. Novavax has similarly applied for authorization with the FDA.

This could help create more partnerships as well as strengthens the company's internal infrastructure, Trizzino said on the call Tuesday.

Follow Anjalee on Twitter @AnjKhem

Click here for the latest trending stock tickers of the Yahoo Finance platform

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube