Novavax Inc., a Columbia biotechnology company, reported a rocky fiscal third quarter yesterday, with revenue down 50 percent and a net loss widening by $4.2 million because of poor sales of its two top products, a prenatal vitamin line and an antibacterial cream.
The company said it lost $6.7 million (27 cents per share) in the quarter ended Sept. 30, compared with a loss of $2.5 million (11 cents) in the year-earlier period. Revenue fell to $2.5 million from $5 million, reflecting heightened competition from generic drugs and reduced spending on marketing.
More worrisome, industry analysts said, is the company's financial standing: Novavax said it has $7.6 million in cash on hand, a small amount for a high-expense biotechnology company that has yet to turn a profit. The need for cash is likely to accelerate. Company officials said in a conference call that they may soon launch advanced human tests on one of their leading drug candidates, which typically requires enormous capital.
Acting chief executive Mitchell J. Kelly said Novavax is scaling back operating expenses to preserve cash and is trying to quickly raise money through private or public financing. But it is a difficult time to raise money in the biotechnology sector. Novavax expects to spend about $1.5 million a month in the fourth quarter, leaving it with only $3 million at year's end unless it finds more financing.
"That's not a heck of a lot of money," said Kenneth Trbivoch, an analyst at C.E. Unterberg, Towbin. Trbivoch believes that King Pharmaceuticals Inc., which owns 16 percent of Novavax, will offer financing if Novavax runs out of money.
"We are spending wisely," Kelly said. "We are looking to control costs wherever we can."
It's been a turbulent year for Novavax. The chief executive and chief operating officer left earlier this year, although the company says the departures were amicable. In April the company withdrew its application for federal approval of Estrasorb, a topical estrogen-replacement therapy, because the Food and Drug Administration raised questions about manufacturing plans. Analysts say the therapy may eventually fuel a $200 million market for short-term estrogen-only therapy, which treats symptoms of menopause.
Novavax resubmitted its application last month and said yesterday that the FDA has accepted the latest filing for review. Kelly said the company plans to launch intensive human tests on its experimental testosterone-replacement therapy, Androsorb, next year.
Kelly, who became acting CEO in September, said the company hopes to select a new chief executive by early 2003.