Vaccine Maker Announces 25 Percent Layoffs as Pandemic Worries Subside

Vials with a sticker reading, "COVID-19 / Coronavirus vaccine / Injection only" and a medical syringe are seen in front of a displayed Novavax logo in this illustration, on Oct. 31, 2020. Dado Ruvic/Reuters

COVID-19 vaccine maker Novavax has announced that it will lay off a quarter of its employees as the company faces “substantial challenges” this year amid the easing of the pandemic.

Novavax is focusing on “significantly reducing” its expenses while maintaining critical capabilities that are necessary to execute the company’s operating plans, the firm said in a press release on May 9. As part of this, Novavax will cut down its global workforce by around 25 percent. “Reducing our workforce has been a difficult decision, but we believe it was necessary to better align our infrastructure and scale to the endemic COVID opportunity,” said Novavax president and CEO John C. Jacobs.

“Though we still have substantial challenges ahead of us in 2023, we are encouraged by the progress we have made in the last quarter and are determined to continue executing on our top priorities.” By the end of last year, Novavax had less than 2,000 employees.

The announcement had a positive impact on the company’s share price. On the NASDAQ index, Novavax shares jumped from $7.45 on May 8 to $10.18 as of 09:36 a.m. EDT on May 9, an increase of more than 36 percent.

Over the past year, the stock had fallen by around 80 percent as investors were concerned about the company’s ability to continue staying in business. During the COVID-19 outbreak, companies that produced pandemic products had seen high demand.

However, with the pandemic now mostly a non-issue and the World Health Organization as well as countries like the United States dropping their pandemic emergency alert levels, the sustainability of companies which profited from it comes into question.

Spending Cuts, Financials

In addition to layoffs, Novavax also plans to consolidate its facilities and infrastructure. The company intends to cut down spending on its research and development as well as sales, general, and administrative expenses by 20–25 percent in 2023 compared to last year. By 2024, such expenses are set to be reduced by 40–50 percent compared to 2022.

The company’s total revenue for first quarter 2023 came in at $81 million compared to $704 million during the same period last year. Novavax attributed the revenue decline to “an emerging seasonal demand pattern for COVID vaccines.”

Net loss during the first quarter was at $294 million compared to a net income of $203 million in first quarter 2022. The company had cash, cash equivalents, and restricted cash of $637 million by March 31, 2023, down from $1.3 billion on Dec. 31, 2022.

For full-year 2023, the company’s guidance predicts a total revenue between $1.4 billion and $1.6 billion, with product sales bringing in between $1.06 billion and $1.24 billion.

Layoffs

Novavax’s 25 percent job cuts come as the U.S. economy has seen a surge in layoffs in the first four months of 2023. Employers announced plans to cut 337,411 jobs during January–April 2023, which is 322 percent higher than the same period last year, according to a May 4 report by Challenger, Gray, & Christmas.

This is also the highest number of layoffs for these four months since 2020. Excluding 2020, the layoffs announced in the first four months of this year is the highest total since 2009.

The tech sector leads in layoffs. with 113,944 job cuts during the four months. The retail and consumer product industry was at the second spot, with 36,115 job cuts.

“Retailers and consumer goods manufacturers are preparing for a tightening in consumer spending, particularly with the Federal Reserve’s hike to interest rates in an attempt to control inflation,” said Andrew Challenger, labor and workplace expert and senior vice president of Challenger, Gray & Christmas.

The financial sector has announced 33,356 layoffs during January–April, while the health care/products segment saw 29,134 job cuts being announced.