Novavax Announces Job Cuts In Global Workforce By 25% To Reduce Costs

Novavax is slashing its global workforce by 25% in an attempt to cut its overall expenses.

The Maryland-based biotech initially attempted to reduce costs without laying off its employees. However, as the COVID-19 pandemic presented a bleak outlook, the company decided to eliminate hundreds of jobs in order to align its spending with the dwindling vaccine market.

Novavax chief executive John Jacobs called the job cuts a "difficult decision," but a "necessary one to put the company on a better pathway towards financial strength and sustainability," according to CNBC.

"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," Jacobs in a statement issued Tuesday with the company's first-quarter results. "Let me say that we deeply appreciate the contributions made by those employees who have been adversely impacted today."

As Novavax plans to reduce the global headcount by 25% and consolidate facilities and infrastructure, approximately 500 people will be laid off from the company. According to Chief Financial Officer Jim Kelly, 80% of the layoffs will impact nearly 2,000 full-time employees, and the remaining dismissals will be of contractors.

The job cuts are aimed at bringing down Novavax's expenses in research and development and sales, general and administrative processes. Last year, the biotech spent $1.7 billion throughout the said areas, with approximately $258 million invested in R&D and $162 million in SG&A. This year, the company is seeking to reduce that figure by 20% to 25%, to cut down costs between $1.3 billion to $1.4 billion.

"2023 R&D and SG&A expense reduction expected to be 20% to 25% versus 2022, based on timing of implementation, local laws and regulations and other factors, as adjusted to exclude one-time charges," the statement noted.

With the global onset of the COVID-19 pandemic in March 2020, Novavax rapidly increased its staff to pursue the blooming vaccine opportunity. The biotech raised its overall workforce from 165 in early 2020 to 1,992 by February this year, as per Fierce Biotech.

The company's cost-cutting efforts come days after the World Health Organization (WHO) announced that COVID-19 was no longer a global health emergency. The U.S. public health emergency will also end on May 11, which will lead to Americans paying out of pocket for Coronavirus testing and vaccinations.

Meanwhile, the biotech said it will continue focusing on improving its COVID-19 vaccine for the upcoming fall season, referencing an updated agreement with the U.S. government for the delivery of up to 1.5 million additional doses of its inoculation this year. The company affirmed its combination vaccine for COVID-19 and the flu helped in developing a strong immune response against the viruses.

The U.S. Food and Drug Administration authorized Novavax's COVID-19 vaccine for emergency use in adults in July 2022, making it the fourth coronavirus vaccine available in the country.

Notably, Novavax's COVID-19 vaccine became its only commercially available product after the company's 35 years in business, as it raced against Pfizer and Moderna to develop the inoculation early in the pandemic. It is important to note that the company's endeavors to develop the vaccine were hampered by several manufacturing snags and regulatory glitches, placing it far behind its rivals.