Novavax (NVAX -3.50%) released its first-quarter earnings report on May 10, and the vaccine-focused biotechnology company's numbers reflected notable progress.
Revenue increased 16% to $94 million (a bit shy of its guidance for "around $100 million") and while it still lost money, it reduced its net loss significantly. However, despite the ongoing operational losses, a major new strategic partnership points toward a potentially profitable future.
| Metric | Q1 2024 | Q1 2023 | % Change |
|---|---|---|---|
| Revenue | $94 million | $81 million | 16% |
| Net earnings | ($148 million) | ($294 million) | N/A |
| Earnings per share | ($1.05) | ($3.41) | N/A |
Data sources: Company results from company.
About Novavax
Novavax brings innovative technologies to bear on vaccine development. Its recent focus has been on developing and marketing COVID-19 vaccines, flu vaccines, and combination COVID/flu vaccines.
But its new partnership with pharma giant Sanofi (SNY -2.70%) will be transformative for the business. Under the collaboration deal, potentially worth more than $1.3 billion, Sanofi will co-commercialize Novavax's COVID-19 vaccine worldwide, and will collaborate with it to develop and market a combination shot of Sanofi's flu vaccine and Novavax's Nuvaxovid COVID-19 inoculation. In addition, Sanofi will have the right to use Nuvaxovid in combination with other vaccines; and to use its Matrix-M adjuvant in other vaccine products. Sanofi is also making an equity investment of about $70 million in the vaccine company.
Quarterly highlights
The Sanofi partnership promises to be transformative for Novavax's finances, delivering it a surge in revenue. The deal has a $500 million upfront payment, and up to $700 million in near-term milestone payments. In that context, the recent quarter's results are less meaningful, but they still show upbeat trends.
Novavax's revenues ticked upward against a backdrop of shrinking losses. Operational discipline enabled a significant reduction in R&D expenditures, which bolstered the bottom line.
Looking ahead
Novavax updated its 2024 outlook in light of the Sanofi agreement. It now predicts total revenue of between $970 million and $1.17 billion, up from its prior range of $800 million to $1 billion. This underscores the strategic value of the Sanofi partnership, which will cost it a share of its vaccine sales, but will provide it with collaboration revenue. While the guidance reflects optimism, the focus for investors should remain on vaccine sales trajectories, regulatory milestones, and the execution of strategic partnerships.
Management's ambition to taper R&D and SG&A (selling, general, and administrative) expenses below $500 million in 2025 further emphasizes its effort to shift toward a leaner operational model.
