COVID-19 vaccine maker Novavax will lay off hundreds of employees in a global restructuring that’s meant to reduce its operational and research spending by as much as half by next year.
The restructuring, announced by Novavax Tuesday alongside first quarter earnings, will shrink the company’s workforce by 25%, the bulk of which will impact its full-time employees.
Novavax has 1,992 full-time employees as of Feb. 21, 2023, nearly two-third of whom are in research and development, and manufacturing.
Company CEO John Jacobs, who took over for longtime leader Stanley Erck in January, described the restructuring as a response to the shifting demand for COVID vaccines as the pandemic has evolved.
“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 Jacobs in the company’s statement.
Sales of Novavax’s COVID-19 vaccine, which never became as widely used as the company envisioned, have fallen, with the company reporting Tuesday an 88% drop in revenue compared to the same period last year.
Novavax attributed the decline in sales to “an emerging seasonal demand pattern for COVID vaccines.”
The company’s shot uses an older protein-based technology that some saw as a complement to the newer messenger RNA designs of Pfizer’s and Moderna’s vaccines. Novavax hit numerous delays in securing its approval, however, and struggled to manufacture supplies when it eventually won U.S. clearance in July 2022.
By that time, public health officials’ focus had shifted to booster shots and responding to the then emergent omicron strain. Vaccination rates have also declined over time, shrinking the market Novavax is competing in.
Despite the reduced sales, the company aims to produce an updated version of its COVID vaccine ahead of the fall season, and is advancing a combination shot for both COVID and influenza. Novavax reported Phase 2 study results for that formulation on Tuesday.
As part of the restructuring, the company is also consolidating its facilities and infrastructure. The moves are expected to reduce R&D, and selling, general and administrative expenses by 20% to 25% this year from 2022’s totals.
Shares in the company rose by 37% through early afternoon Tuesday.