The brand new chief government of Novavax has urged governments to honour Covid-19 vaccine buy commitments because the as soon as high-flying US biotech battles to remain afloat amid a collapse in demand for jabs.
John Jacobs instructed the Monetary Instances there was no assure governments would ship on all their present commitments with the corporate, which embrace $2.1bn in superior buy agreements signed with the US biotech group stretching into 2025.
“We needed to make investments billions . . . to ship a vaccine that helped to stem the tide of a worldwide pandemic that was killing thousands and thousands of individuals,” mentioned Jacobs, who changed Stan Erck as Novavax’s chief government in January.
“After which to rapidly say: ‘Effectively you spent all of your cash, you dedicated to guard our residents. Now we don’t suppose we’d like it as a lot. Sorry, you’re out of luck.’ That’s most likely not good for long-term relationships and that kind of factor and to profit public well being,” he mentioned.
Novavax is considered one of a handful of vaccine makers, together with BioNTech/Pfizer and Moderna, that are accredited to provide Covid jabs within the US, EU and different western nations. All suppliers are going through steep falls in gross sales resulting from weak demand, which is contributing to a provide glut that has left billions of vaccine doses unused.
This has prompted governments to renegotiate billions of {dollars} of provide contracts with producers, a transfer that analysts warn may pile additional stress on cash-strapped Novavax.
“The drive to renegotiate agreements just isn’t distinctive to Novavax however they’re extra pressed towards a wall due to their tough monetary state of affairs,” mentioned Brendan Smith, analyst at Cowen, an funding financial institution.
Novavax mentioned in December it might repay the UK authorities $112.5mn following its choice to not train an choice in its contract to purchase extra vaccine doses. The corporate additionally faces a $700mn arbitration course of linked to its cancellation of a vaccine contract with Gavi, a global physique offering vaccines to poor nations.
Novavax’s market capitalisation soared above $20bn when it developed Nuvaxovid, a Covid jab made utilizing a standard protein-based vaccine course of relatively than the messenger RNA expertise utilized by BioNTech/Pfizer and Moderna. However the 36-year-old firm’s valuation has since crashed under $1bn, resulting from delays in launching the vaccine, powerful competitors from rivals and weak demand for Covid jabs.
Novavax warned in February that there was “substantial doubt” about its future and Jacobs lately detailed plans to slash prices by as much as 50 per cent and scale back the corporate’s 2,000-strong workforce by 1 / 4.
Novavax’s money reserves fell to $637mn at March 31, down from $1.3bn on the finish of December. Present liabilities are virtually $2bn, which embrace the Gavi arbitration course of.
Jacobs mentioned he was prioritising chopping prices, creating and launching an up to date model of its jab in time for the autumn vaccination season and assembly income steering of between $1.4bn and $1.6bn in 2023.
He mentioned most companions had been transferring to guard long-term relationships with the biotech business within the information that the subsequent pandemic may very well be “proper across the nook”.
Jacobs mentioned Novavax anticipated to ship on the $800mn superior buy agreements with the EU, Australia, Canada and New Zealand, that are due for supply this 12 months. He added that the corporate was negotiating with some prospects about amending 2024 and 2025 buy agreements, which may lead to modifications to supply schedules and, in some instances, accelerated upfront funds to Novavax.
Roger Music, analyst with Jefferies, mentioned any renegotiation sought by nations because of the present vaccine provide glut posed a danger to Novavax. Nevertheless it may additionally present some near-term advantages by way of money circulation, citing a $100mn fee paid this quarter in relation to a renegotiated buy settlement.
“International locations can renegotiate however they may most likely have to pay a portion of their contracts to compensate Novavax,” mentioned Music.
The EU is renegotiating its vaccine contract with BioNTech/Pfizer, which has raised issues amongst rivals that it may push them out of the profitable market. Particulars of a draft deal reported by the FT counsel that BioNTech/Pfizer may provide as many as 70mn doses a 12 months till 2026, leaving little room for Novavax, Moderna or Sanofi.
Jacobs mentioned policymakers had a robust want to take care of range within the Covid jab market by guaranteeing there was an alternative choice to the mRNA jabs supplied by BioNTech/Pfizer and Moderna. Novavax was working carefully with regulators to make sure market entry, and in order that it may replace its vaccine to focus on new Covid strains in time for the autumn, he mentioned.
“Think about if we get a pathogen the place that [mRNA] product in some way can’t work in addition to we’d anticipate it to. And also you don’t have range and instruments, and even sufficient quantity to assist individuals in nations that don’t have the cash that we’re lucky sufficient to have in the US and western Europe,” he mentioned.
Jacobs mentioned he had no regrets about becoming a member of Novavax at a time when it was struggling. “To me it appeared like a terrific alternative for a turnround.”