Novavax(NVAX) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics - Total revenue for Q2 2023 was $424 million, a 128$186 million in Q2 2022 [152] - Combined R&D and SG&A expenses for Q2 2023 were $313 million, a 21$518 million in cash and $395 million in accounts receivable, totaling over$900 million [153] - Net income for Q2 2023 was $58 million, compared to a net loss of$510 million in Q2 2022 [155] - The company reduced current liabilities by $864 million in the first half of 2023, including$323 million in Q2 2023 [141][182] Business Line Data and Key Metrics - The company's COVID vaccine is authorized in over 40 countries, with many still purchasing under Advanced Purchase Agreements (APAs) [21] - In the US, the company is preparing for commercialization, with product availability expected as early as September, pending FDA authorization [22][24] - Outside the US, the company expects approximately $700 million in revenue from APA orders for 2023, subject to regulatory approvals [31] - The company has amended its APA with Canada, securing up to$350 million in cash payments for 2023 and extending commitments into 2024 and 2025 [13][32] Market Data and Key Metrics - The US market demand for COVID vaccines in the fall is estimated to range between 80 million to 100 million doses [55] - In Europe, the company expects to deliver 17 million committed doses by the end of 2023, with strong relationships in key markets like Germany, Spain, France, Italy, and Switzerland [74] - In the Asia-Pacific region, the company continues to supply vaccines under existing APAs to Australia, New Zealand, Singapore, Taiwan, and Israel [75] Company Strategy and Industry Competition - The company's three priorities for 2023 are: delivering an updated vaccine for the fall season, reducing spending and managing cash flow, and driving value from its technology platform [9][12][15] - The company is focusing on developing a combination COVID-influenza vaccine, recognizing the emerging need for combination vaccines as COVID becomes a seasonal challenge [45] - The company's Matrix-M adjuvant is being used in collaborations, including a new partnership with the Bill & Melinda Gates Medical Research Institute for preclinical vaccine research [47][249] Management Commentary on Operating Environment and Future Outlook - The company is confident in its readiness to deliver an updated, differentiated, and competitive vaccine for the fall season, with ample supply to meet anticipated demand [39][40] - Management acknowledges significant execution risks, particularly in securing regulatory authorizations and competing in the US market as it transitions to a commercial model [48] - The company expects to achieve full-year 2023 revenue of between $1.3 billion and$1.5 billion, with product sales of $960 million to$1.140 billion and grant revenue of $340 million to$360 million [193] Other Important Information - The company has secured up to $600 million in cash to improve its cash runway, including$450 million from the amended Canada APA [160] - The company has reduced its outstanding liabilities by over $1 billion in 2023, including a$195 million reduction through agreements with SK Bioscience [157][182] - The company is on track to reduce combined R&D and SG&A expenses to between $1.3 billion and$1.4 billion for 2023, reflecting a 20% to 25% reduction compared to 2022 [158] Q&A Session Summary Question: What is the status of the BLA approval for the XBB vaccine? - The company has initiated the rolling submission of its BLA filing and expects to complete the submission in the coming weeks, with full approval anticipated in early 2024 [64][227] Question: What is the pricing strategy for the US market? - The company's pricing strategy is aligned with publicly stated WACC (Weighted Average Cost of Capital) of $130 per dose, with reimbursement calculations incorporated into the overall access strategy [220][238] Question: What are the key drivers for gaining market share in the US? - Key drivers include ensuring broad access to the vaccine across all market segments, competitive pricing, and the availability of a non-mRNA protein-based vaccine option [204][206] Question: What is the status of the Wuhan strain deliveries in the EU? - The company has completed shipments of the Wuhan strain in the EU and will be delivering the updated XBB variant strain for the fall season [226] Question: What is the timeline for removing the going concern disclosure? - The company is optimistic about its operating plan and expects to remove the going concern disclosure if it successfully executes its plans, particularly in the fall vaccine season [207]