After two years characterized by layoffs, pipeline reorganizations, FDA delays and clinical holds, Novavax CEO John Jacobs says the company is at a pivot point.
In February 2023, Novavax warned investors that it might not be able to continue operations for another year. It’s now two years later and the company is still rolling on—although CEO John Jacobs admits it’s been a bit like pushing a boulder up a hill.
“It took the last two years to reset the company, to reset us for a better future,” Jacobs told BioSpace on the sidelines of the J.P. Morgan Healthcare Conference. “We had to unwind a lot of what was good intention put in place to try to hit the pandemic just so. And the silver lining that came out of that was proving out the technology [and] actually having a marketed product now.”
Jacobs took the helm just the month before the company’s dire prediction in early 2023. Checking off the news items that have occurred since his tenure began shows a painful evolution of the vaccine company: layoffs, pipeline reorganizations, FDA delays and clinical holds.
But through all of that, Novavax has built up a 4 million–strong patient safety database and launched its COVID-19 vaccine around the world. A massive partnership with Sanofi last year paved the way for that product’s future in the face of a “David vs. Goliath” battle against Pfizer and a fluctuating vaccine market.
“Now we’re at this new pivot point,” Jacobs said. The market has shifted from government contracts with huge orders to a private market. Demand dropped way off and even the front runners, Pfizer-BioNTech and Moderna, have struggled to adapt.
“Our strategy was to let someone else do that and to get paid for that,” Jacobs said of the Sanofi deal.
The market in the U.S. now sits at about 40 million shots annually across all the available options, with Pfizer’s Comirnaty taking the largest share, according to Jacobs. Sanofi is the perfect company to try and break through with Novavax’s shot, which offers an alternative to mRNA technology, because the French pharma has marketed a flu shot for years and is more familiar with the seasonal demands of the vaccine market.
“We’ll let the experts with the scale and scope take that on as a challenge this coming fall,” Jacobs said. “We’re so excited to see what Sanofi can do.”
Experts have been skeptical of the Sanofi deal, with one Seeking Alpha analyst recently warning that it was negotiated “from a position of relative weakness.”
“The partnership with Sanofi offers significant benefits but does not assure [Novavax] of ongoing success,” the analyst said.
Another warned in November 2024 that “it still seems early to bet on a turnaround for Novavax.”
‘Low Cost Bets’
The Sanofi deal does more than just provide the powerful backing of a big pharmaceutical company to oversee the commercialization of its COVID-19 vaccine, however. It also gives Novavax the breathing room to focus on its pipeline, Jacobs said. Novavax brought in a new R&D chief, Ruxandra Draghia-Akli, in November 2024.
Novavax is not about to drop a bunch of cash on R&D, Jacobs said, as the company has carefully scaled back its operating expenses over the past two years by about $1 billion, with plans to go even further by 2026. So the pipeline will be based on what he calls “low cost bets,” with a lean organization that can create more vaccines through partnering.
One area of development will be combination vaccines. Specifically, Novavax is using the COVID-19 shot to provide additional value in combination with others, such as Sanofi’s Fluzone. An earlier RSV program will also now take the combination approach after Pfizer, GSK and Moderna entered the market. In addition, Novavax announced four new preclinical programs in infectious disease at the J.P. Morgan Healthcare conference earlier this month. These include vaccines for shingles, C. diff and vesicular stomatitis virus.
Draghia-Akli has been getting up to speed as fast as possible. The company has collected a ton of data on many pathogens over the past couple years. She said the most important thing as Novavax defines this next period is ensuring there is a business case for the programs they move forward with.
“Obviously, we can have good data in diseases [where] nobody can pronounce the name, but we need to be really, really focused and not go on a fishing expedition, but really go very targeted to diseases or combinations where we think that we can make a difference,” the R&D chief told BioSpace.
The backbone of all these programs is the Matrix-M technology, an adjuvant that Jacobs says could make existing vaccines less expensive and more effective. Novavax is seeking additional partnerships for this technology, and has already signed deals with the University of Oxford and the Serum Institute of India to develop a malaria vaccine. That vaccine is now being administered to people in Africa and parts of Asia that need it at a very low cost.
“That doesn’t bring us a lot of profitability or revenue,” Jacobs admitted, but he estimates the vaccine could be saving the lives of 600 million children annually. “That’s worthy of doing, and it’s a proof point for our technology.”
Building Trust
Novavax’s share price has declined from a pandemic high of around $20 to around $9.50 today. The company’s shares are also heavily shorted, meaning some investors are betting on the continued decline. When the Sanofi deal was announced and the share skyrocketed, Bloomberg reported that one short investor, S3 Partners, lost $255 million.
The share price declined sharply in October 2024 when the FDA placed a clinical hold on the investigational combo COVID-19/influenza and standalone influenza vaccines after a report of a serious adverse event in a trial participant. The stoppage was brief, as an investigation showed in November that the participant had unfortunately been diagnosed with amytrophic lateral sclerosis (ALS), which was deemed unrelated to the vaccine.
Draghia-Akli said that the clinical program was completely stopped when the adverse event was discovered. “We intend to always do the right thing regardless of share price impact,” Jacobs said. “That was the right thing to do until we knew what that was—we acted immediately and sooner than was required, actually.”
Novavax has learned from its experience in the COVID-19 pandemic that transparency is everything.
“We have empathy for anyone who has fear over vaccines, who may have had mixed messages unintentionally during a pandemic. This was a first in a lifetime for all of us, including our government and governments around the world,” Jacobs said. As the science evolved, so did the messaging and communications around vaccines. It was 100% correct to update, but Jacobs admits that there were some things that could have been done better by all stakeholders involved.
“Unfortunately, one of the casualties of the pandemic was trust, and that takes time to earn back, and we’re going to be patient with that. We’re going to be empathetic with consumers who rightfully are asking questions about their health.”
Jacobs said that Novavax hopes to continue to contribute to the conversation around vaccines going forward in a new paradigm that may include Robert F. Kennedy, Jr., at the helm of the Department of Health and Human Services: “I’m glad people are asking questions and paying attention, and I think the silver lining to this is, because people have awoken to vaccines more as an option, more recently, there’s an opportunity then . . . for education.”
