Novavax Q3 Earnings & Sales Beat, Stock Falls 6% on '24 View Cut

Core Viewpoint - Novavax reported a narrower loss in Q3 2024 compared to expectations, driven by increased product sales of its COVID-19 vaccine, but overall revenues declined significantly year-over-year Financial Performance - The company incurred a loss of 76 cents per share, better than the Zacks Consensus Estimate of a loss of 87 cents, and improved from a loss of $1.26 per share in the same quarter last year [1] - Revenues for the quarter were $85 million, exceeding the Zacks Consensus Estimate of $57 million, but representing a 55% decline year-over-year [1] - Product sales reached $38.2 million, a significant increase from $2.2 million in the prior year, primarily due to the COVID-19 vaccine sales in the U.S., although it fell short of the Zacks Consensus Estimate of $49 million [2] - Licensing, royalties, and other revenues rose 133% year-over-year to $46.3 million, attributed to a new agreement with Sanofi for the COVID-19 vaccine [3] Strategic Partnerships - Novavax entered a partnership with Sanofi, which will market its COVID-19 vaccine and develop combination vaccines, receiving a $570 million payment, including $70 million in equity investment [4] - The company is eligible for milestone payments of up to $700 million and royalties on vaccine sales from Sanofi [4] Cost Management - Research and development expenses were $87 million, down 18% year-over-year, while selling, general, and administrative expenses decreased 34% to $71 million due to restructuring efforts [6] Cash Position - As of September 30, 2024, Novavax had $924 million in cash and cash equivalents, down from $1.1 billion as of June 30, 2024 [7] Guidance - For 2024, Novavax revised its total revenue guidance to $650-$700 million, down from $700-$800 million, reflecting lower vaccine uptake outside the U.S. [8] - The revised guidance includes nearly $475 million in licensing and royalties, with product revenue expected to be $175-$225 million, reduced from $275-$375 million [9] Pipeline Developments - The FDA lifted the clinical hold on Novavax's COVID-19-Influenza Combination and stand-alone influenza vaccine candidates, allowing the company to proceed with a phase III study [13] - Novavax is on track to complete a pediatric clinical study on its COVID-19 vaccine, which could trigger a $50 million milestone payment from Sanofi [14] - A regulatory filing for full approval of the COVID-19 vaccine is under FDA review, with a decision expected in April next year, potentially triggering a $175 million milestone payment from Sanofi [14] Future Projections - The company maintains its combined R&D and SG&A expense guidance of $700-$750 million for 2024, with expectations of $500 million for 2025 and around $350 million for 2026, with some costs reimbursed by Sanofi [11][12]