Novavax surprised the market with its second-quarter results, reporting a profit and revenue that exceeded expectations. The biotech company posted a net income of $58 million, a significant turnaround from the net loss of $510.5 million in the same quarter the previous year. Additionally, second-quarter sales reached $424.4 million, up from $185.9 million in the corresponding period last year. The company’s performance led to its stock closing more than 3% lower on Tuesday.
Novavax CEO John Jacobs explained that part of the reason for the strong results was the recognition of revenue that might have otherwise been attributed to the third quarter due to prior Covid vaccine purchase agreements. However, Jacobs noted that the third quarter is expected to have minimal sales as the Food and Drug Administration’s decision on Novavax’s new Covid shot is anticipated to come in late September. The company can commence the public rollout of the vaccine only after potential FDA approval.
Jacobs indicated that most of the revenue for Novavax in the third quarter would come from grants, while the significant opportunity for its new Covid shot would be concentrated in the fourth quarter, typically the period when Covid cases and vaccinations peak.
The company’s financial outlook has also been influenced by a strategic partnership agreement with SK Bioscience, a South Korea-based biotech manufacturer. This collaboration extends a contract manufacturing arrangement that grants SK bioscience exclusive rights to manufacture and commercialize Novavax’s Covid vaccine in South Korea and nonexclusive rights in Thailand and Vietnam. Novavax will receive royalty payments for sales in these markets and an upfront payment of $4 million from SK Bioscience. Moreover, SK Bioscience will purchase $85 million in Novavax common stock at a 59% premium, while $195 million in manufacturing liabilities will be removed from Novavax’s balance sheet in exchange for a $65 million cash payment to SK Bioscience.
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