Crushed by a PhIII flop, Novavax slashes jobs as it looks to chop out up to $100M in costs
Two months ago, shares of Novavax $NVAX were crushed when the biotech was forced to concede that its big Phase III study for an RSV vaccine had flopped badly. Today, after the market closed, the other shoe dropped — on about a third of its workforce.
The layoffs are part of a wide-ranging restructuring aimed at slashing the Gaithersburg, MD-based biotech’s pre-commercialization work and reducing the cost burn, cutting up to $100 million in expenses as it scrambles to come up with some positive data to satisfy unhappy investors.
The new plan includes completing a Phase III for reducing RSV infections in infants while starting a Phase II study of its RSV F vaccine in an older population. And Novavax plans to run a Phase I Zika vaccine study in 2017.
The company recruited 11,856 people over the age of 60 for its RSV study, looking for clear evidence to support a claim that the vaccine could significantly prevent RSV-associated lower respiratory tract disease — the primary goal — or at least incidents of all symptomatic respiratory disease due to RSV. It didn’t work. Shares of Novavax were crushed by the news, plunging 83% and wiping out the bulk of its $2.2 billion market cap.
According to the latest Q3 numbers, Novavax has about $300 million in cash to work with.
“We have identified a clear path forward that we expect will provide us with important clinical data throughout 2017 and protect liquidity,” said Stanley C. Erck, president and CEO. “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.”