Novavax stock falls sharply amid significant uncertainty

Yahoo Finance’s Anjalee Khemlani joins the Live show to discuss the decline in stock for Novavax following quarterly earnings, as well as news that Eli Lilly will reduce the cost of its insulin price by 70%.

Video transcript

- All right. Well, Novavax shares nosedived this morning after yesterday's announcement that the company was facing, quote, "significant uncertainty around 2023 revenue." The drugmaker reported a fourth quarter loss almost twice as wide as analysts had predicted. I'm joined now by Yahoo Finance's Anjalee Khemlani for more on that.

ANJALEE KHEMLANI: That's right, Rachelle. So Novavax's story, of course, we've been following for some time. Really interesting, as it's one of the major players in the COVID vaccine space broadly. Globally, one of the most recognized names. But it has struggled over the years, as we know. It entered the market kind of late after some manufacturing issues set it back. So that is really catching up to the company right now.

On an earnings call yesterday, the new CEO John Jacobs said the company is going through an assessment of its pipeline as a result of all this. As you see on your screen, looking at the earnings, $357 million for the quarter, but a total of $2 billion for the year, marking a pretty historic milestone for the company. They're also looking at fulfilling orders totaling about 2 billion advance purchase orders for the coming year and looking towards the fall or later half of this year to really see what the revenue looks like for 2023.

That's what resulted in a concerning note that they sent as part of the earnings statement, cautioning that they're not giving a 2023 outlook and that there's some uncertainty on the line. They said, quote, "while our cash flow forecast estimates that we have sufficient capital available to fund operations, this forecast is subject to significant uncertainty." And that includes government contracts as well as ongoing arbitration with Gavi. They do have about $1.3 billion on hand right now in cash. So that is a significant number to look at.

Meanwhile, going forward, they do have an order of 1.5 million doses from the government, looking at the commercial market, like I mentioned, for the rest of the year. And they're also looking to reduce spend, especially in R&D and the like that goes to assessing the pipeline. They are also looking to strengthen their internal infrastructure, looking at a facility specifically in the Czech Republic as a way to expand manufacturing.

So total, that's what's going on right now. Now, I know it was kind of a grim outlook for the company. They have been struggling in this COVID race so far. I just want to throw back to an interview, the final interview, with former CEO Stan Erck at JP Morgan Health and what he kind of explained was the state of the company back in 2019 prior to the pandemic. Take a listen.

STANLEY ERCK: And we had fewer than 100 people. We had less than $100 million. We had enough money to get through the next five months. And we were focused on flu.

ANJALEE KHEMLANI: So as you can hear, just a much better position than then, but still taking a look at the pipeline once again. Back to you.

- And shifting gears now because big news this morning out from Eli Lilly. They've announced a series of price cuts that would lower insulin costs. What do we know about that?

ANJALEE KHEMLANI: That's right. So two of its top selling fast-acting insulins-- and this is a really complex area where there are multiple types of products. So two of their top products, they're reducing the cost by 70% starting in Q4 of this year. That includes Humalog, which is now currently $530 per five pack of injectables, and then Humulin, which is now $274 per vial. They are also reducing the cost of their unbranded insulin to about $25 per vial. And a new insulin that's coming on the market that is a competitor to Sanofi's Lantus will be $92 per pack. And that is a 70% price reduction from Sanofi's price.

They also have introduced in the past couple of years different savings programs, including a card that would cap out of pocket at $35 per month. That is now going to be automatically in place at the counter for those who are insured. And uninsured individuals will still have to prove-- carry that card in order to get that in place. So a lot of movement. Of course, we know there's pressure on the industry.

Other players like Novo Nordisk also waiting to hear to see what moves they'll be making as a result. But all these companies have had these sort of saving programs over the years. It's just been more of like an opt in or something that you have to know about to get into so. Eli Lilly taking the first step to make it broadly applicable and really respond to the pressure that the industry is facing right now from the government.

- Definitely a more proactive response. As you mentioned, for some of these discounts, you don't even know that they're available unless you ask for them. So hopefully a lot of relief on the way for a lot of people who need their insulin. Great stuff there. Anjalee Khemlani, thanks so much.