Covid Novavax (NVAX) Q1 2022 Earnings

Novavax on Monday reported its first profitable quarter as its Covid vaccine rolls out in multiple countries around the world, though the company still missed earnings and sales expectations.

Novavax reported net income of $203 million for the first quarter, compared to a net loss of $222.7 million for the same period last year. The company reiterated its 2022 revenue guidance of $4 billion to $5 billion.

However, Novavax has yet to secure an order from Covax, the international partnership that sources vaccines for low-income countries. The timing and amounts of future orders from Covax are unclear, which could affect its revenue guidance, Chief Financial Officer Jim Kelly told analysts during the company’s earnings call.

“It’s an unclear market in the low- and middle-income countries right now,” CEO Stanley Erck told analysts.

Novavax shares lost nearly 19% in extended trading.

Chief Commercial Officer John Trizzino told analysts that the sales forecast in the U.S. market also bodes well if the vaccine is approved by the Food and Drug Administration. Novavax expects the FDA to approve vaccines for adults ages 18 and older this summer as a two-dose primary series, Erck said. The company is currently in negotiations with the US government on how to meet the demand for approval, the CEO said.

Here’s how the company has performed versus Wall Street expectations, based on average analyst estimates compiled by Refinitiv:

  • Adjusted result: $2.56 per share versus $2.69 expected
  • revenue: $704 million versus $845 million expected

The FDA’s Committee of Independent Advisors is scheduled to meet on June 7 to review Novavax’s data and make a recommendation on whether the injections should be cleared for use. Erck said Novavax’s manufacturing partner, Serum Institute of India, successfully passed FDA inspection ahead of the committee meeting. Novavax has also submitted vaccine data to the FDA in adolescents ages 12 to 17 and will submit additional data on booster doses, Erck said.

Novavax will begin clinical trials of a vaccine targeting mutations in the Omicron variant this month, the CEO said. The FDA committee is also holding a meeting on June 28 to consider whether the US needs to switch to a new vaccine design that targets recent virus mutations. Current vaccines still target the original strain of the virus that emerged in Wuhan, China in 2019.

Novavax was one of the first participants in Operation Warp Speed, the US government-backed race to develop a Covid vaccine in 2020. Pfizer, Moderna and Johnson & Johnson ultimately beat the company as it struggled to increase its manufacturing capacity . Novavax asked the FDA to clear the shot four months ago in January, but officials said the review process was complicated.

“This is an incredibly complex review process that involves not only reviewing clinical data but also the manufacturing data needed to make an emergency use approval decision,” said Dr. Doran Fink, deputy director of clinical review at the FDA’s Vaccine Division, told the Centers for Disease Control and Prevention’s Committee of Independent Vaccine Advisors last month.

Novavax has received approvals in 41 countries for its two-dose Covid vaccine outside of the United States. The company has shipped more than 42 million doses of its vaccines to markets including the European Union, Canada, South Korea, Australia, New Zealand and Indonesia this year with Trizzino.

“As we look to the second quarter, we expect our shipments to key markets to increase,” said Trizzino. Novavax is fulfilling an order for 42 million doses to the EU, which should lead to higher revenue for the second quarter, he said.

Novavax’s clinical trial in the US and Mexico found that the protein-based vaccine was 90% effective in preventing mild disease and 100% effective in preventing severe disease. However, the study was conducted from December 2020 to April 2021, well before the Delta and Omicron variants emerged and weakened the ability of Covid vaccines to block infection.

Novavax released results of a laboratory study in December that showed the vaccine elicited an immune response against Omicron, although not as strong as the response against the original strain of the virus. A third dose increased the immune response against Omicron to levels similar to those seen in the US and Mexico clinical trial, indicating a high level of protection with a booster dose.

If approved by the FDA, Novavax’s vaccines would provide an alternative for people who don’t want to take Pfizer’s and Moderna’s vaccines. Novavax uses more traditional protein-based technology, while Pfizer and Moderna shots use messenger RNA for the first time. Although Moderna and Pfizer shots have been shown to be safe and effective against serious illnesses, some people may prefer a technology that has a longer track record of success.

“We continue to hear from our market research, as well as anecdotally, that there is a lot of demand for a choice in the market,” said Trizzino. Covid Novavax (NVAX) Q1 2022 Earnings

Gary B. Graves

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