(Reuters) -COVID-19 vaccine maker Novavax on Thursday reported higher-than-expected revenue for the third quarter, boosted by U.S. government grants to help cover the expense of clinical trials, and said it was prepared to further cut costs next year.
Shares of the company rose more than 4% in premarket trading.
Novavax reported revenue of $187 million for the quarter, down from $734.58 million a year ago, but above analysts’ expectations of $158.5 million, according to LSEG data.
“We’ve really optimized that U.S. grant opportunity, which was something that was uncertain at the beginning of the year,” Novavax CEO John Jacobs said in an interview, adding that the government had shortened the timeline for being able to tap into those funds.
The Maryland-based biotech has flagged concerns about its ability to remain in business and has been banking on cost cuts and commercial sales of its retooled COVID shot to help it stay afloat.
Novavax said it had reduced liabilities by $128 million in the third quarter and was prepared to cut costs by an additional $300 million in 2024 to better align itself with the smaller-than-expected COVID-19 vaccine market.
“We and many others thought there would be 80 to 100 million doses in the U.S. market this year and it turned out to be significantly smaller than that,” said Jacobs.
The company said it expects the 2023-2024 U.S. market for COVID shots to be between 30 million and 50 million doses.
Over 15 million people in the United States, around 4.5% of the population, had received the updated COVID-19 shots by Oct. 27, according to a Department of Health and Human Services spokesperson, lagging behind last year’s vaccinations.
Novavax said it had $666 million in cash as of Sept. 30, up from $518 million at the end of June.
The company’s updated COVID shot, using a more traditional technology than the mRNA-based vaccines of rivals Pfizer and Moderna, was authorized in the U.S. in October. It has since been made available in pharmacies, including CVS and Rite Aid, Novavax announced last month.
Novavax missed out on the COVID vaccine windfall that benefited rivals due to manufacturing issues that delayed its filing for approval when the pandemic was raging.
Its stock plunged 93% last year and is down about 34% this year.
The company has said it expects to reduce its annual research and commercial expenses by 20% to 25% from last year through a series of cost-cutting initiatives, including layoffs.
(Reporting by Bhanvi Satija in Bengaluru and Patrick Wingrove in New York; Editing by Sriraj Kalluvila and Bill Berkrot)