NOVAVAX
FOR IMMEDIATE RELEASE
COMPANY CONTACTS: Nelson M. Sims
President & CEO
Dennis W. Genge
Chief Financial Officer
NOVAVAX, INC.
301-854-3900
COMMUNICATIONS CONTACTS: Alison Ziegler - General
Julie Tu - Investors
212-445-8300
Cynthia Martin - Media
312-640-6741
FINANCIAL RELATIONS BOARD
NOVAVAX, INC. ANNOUNCES 2003 THIRD QUARTER RESULTS
HIGHLIGHTS INCLUDE FDA APPROVAL OF ESTRASORB(TM), IMPROVED PRODUCT SALES
AND LOWER CASH UTILIZATION
COLUMBIA, MD, NOVEMBER 10, 2003 - NOVAVAX, INC. (NASDAQ: NVAX) today announced
financial results for the third quarter ended September 30, 2003.
Total revenues for the third quarter of 2003 were $4.3 million compared to third
quarter 2002 revenues of $2.3 million. Revenues for the third quarter included
$3.6 million of product sales compared to $1.8 million of product sales in the
prior year period, a 100% increase. Product sales increased across all of the
Company's product lines. In particular, sales benefited from the introduction of
the Company's two new prenatal vitamin products, as well as increased orders for
AVC Cream, Nestabs and Gynodiol. Revenue from research and development contracts
with the National Institutes of Health (NIH) and other government agencies
increased 36.5% to $560,000 in the quarter from $410,000 in the third quarter of
2002. In addition to improved quarterly revenues, the Company announced the most
significant event in its history, the FDA approval of ESTRASORB, its proprietary
topical emulsion for estrogen therapy.
For the nine months ended September 30, 2003, total revenues were $7.7 million
compared to total revenues of $12.5 million for the prior year period, a decline
of $4.8 million. Product sales were $6.5 million in the period, a decline of
$4.3 million. A decline in prenatal vitamin revenues year-over-year was due to
the effects of competitive pressure from generics, aggressive sales promotions
in the first half of 2002 and a higher than average volume of expired product
returns as a result of those promotions. An AVC product line decline was also
the result of sales promotions in 2002. Revenues year-to-date also included $1.0
million from research and development contracts and $212,000 in milestone and
licensing fees.
Operating expenses for the three months ended September 30, 2003 were $7.2
million, a decrease of $1.6 million, or 18%, from $8.8 million in the 2002
period. Selling and marketing costs were $2.0 million compared to $2.7 million
incurred for the same period in 2002, a decrease of 26%. The $700,000
year-over-year decline resulted from cost-cutting initiatives. General and
administrative expenses in the quarter were $1.9 million compared to $1.6
million for the third quarter of 2002, an increase of 17%. This increase is due
to lower than usual quarterly general and administrative costs in the third
quarter of 2002, rather than increases in 2003. Research and development
expenses were $2.6 million in the third quarter of 2003 compared to $3.7 million
in the prior year period, a decrease of 30%. This decrease was due to reductions
in clinical trial and NDA filing costs for ESTRASORB when compared to the prior
year period.
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NOVAVAX, INC. ANNOUNCES 2003 THIRD QUARTER RESULTS
PAGE 2
Operating expenses for the first nine months ended September 30, 2003 were $20.7
million, a decrease of $9.2 million, or 31%, from $30.0 million in the 2002
period resulting from the Company's planned reduction in spending and its
preservation of capital in conjunction with the delayed approval of ESTRASORB.
Selling and marketing expenses were $6.1 million compared to $10.6 million for
the prior year period, a decrease of 43%. General and administrative expenses in
the period were $5.6 million versus $6.7 million for the comparable period of
2002, a decrease of 16%. Research and development expenses were $7.7 million
compared to $9.8 million in the prior year period, a decrease of $2.1 million,
or 21%.
The net loss for the third quarter of 2003 was $3.4 million, or $0.11 per share,
compared to a net loss of $6.9 million, or $0.28 per share, for the third
quarter of 2002. The decrease in the net loss was primarily related to the
reduction in operating expenses as well as the increase in revenue. Average
shares outstanding for the quarter was 30.1 million compared to 24.7 million in
2002, primarily due to the February 2003 private placement of 4.75 million
shares. The net loss for the first nine months of 2003 was $14.2 million, or
$0.49 per share, compared to a net loss of $18.4 million, or $0.75 per share for
the prior year period.
Nelson M. Sims, President and Chief Executive Officer of Novavax, stated, "This
has been an exciting quarter for Novavax. Most important was the recent FDA
approval of ESTRASORB, which marked the culmination of nine years of work on our
proprietary micellar nanoparticle (MNP) drug delivery platform. With the launch
slated for late in the first quarter of 2004, we are working hard to make sure
everything from sales and marketing to manufacturing to financing is in place.
An important step was the recent addition of Ford Lynch as Senior Vice President
of Sales and Marketing and Howard Miller as Vice President of U.S. Sales to our
sales and marketing team. We are delighted with the development of our
management team and we are optimistic about our ability to successfully launch
ESTRASORB, the first product in our proprietary MNP drug delivery platform.
"We were also pleased with our financial performance in the quarter. As
expected, the launch of our two new prenatal vitamin products, NovaStart and
NovaNatal, in addition to the reduced impact from prior product promotions
resulted in sales improvement across all our product lines in the quarter.
"On the vaccine development front, Novavax continues to receive confirmation of
the value of its technologies. During the quarter we were awarded a $19 million
contract from the National Institute of Allergy and Infectious Diseases for the
design and development of a new class of HIV vaccine candidates for preclinical
and clinical studies. We were also named as part of a consortium led by the
University of Alabama at Birmingham for another HIV grant. This makes two awards
in two months for our HIV vaccine development program and represents a
significant accomplishment for our virus-like particle (VLP) platform
technology."
Mr. Sims concluded, "Since joining Novavax in August, I continue to be impressed
by our progress utilizing our micellar nanoparticle technology. We are convinced
that over the longer-term the platform can be utilized in a vast array of
pharmaceutical applications. In the short term, our focus will be on ESTRASORB.
We have been working diligently with our marketing partner King, who shares our
excitement on the upcoming launch. We are fine-tuning market research,
finalizing our marketing programs and preparing our joint sales forces. I
believe we have all the elements in place for a successful launch of ESTRASORB.
I look forward to updating you on our progress."
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NOVAVAX, INC. ANNOUNCES 2003 THIRD QUARTER RESULTS
PAGE 3
Novavax will hold a conference call at 10:00 AM ET Tuesday, November 11, 2003 to
discuss its financial results and continuing business plans. Interested parties
are invited to listen to the call live over the Internet at www.novavax.com,
www.fulldisclosure.com or by dialing 800-240-4186. International participants
should call (303) 205-0033. For interested individuals unable to join the call,
a replay will be available until November 18, 2003, by dialing 800-405-2236 or
(303) 590-3000, passcode 558758.
ABOUT NOVAVAX
Novavax, Inc. is a specialty pharmaceutical company engaged in the research,
development and commercialization of proprietary products focused on women's
health and infectious diseases. Novavax sells, markets, and distributes a line
of prescription pharmaceuticals through its specialty sales force calling on
obstetricians and gynecologists throughout the United States. Products include
Nestabs(R), NovaStart(R) and NovaNatal(R), a line of prescription prenatal
vitamins, Gynodiol(R) (estradiol tablets, USP), an oral form of estrogen
therapy, AVC(TM) Cream (sulfanilamide vaginal cream) for vaginal bacterial
infections and Analpram HC(R), a prescription corticosteroid and antipruritic
product for hemorrhoids. Novavax's micellar nanoparticle technology involves the
use of patented oil and water emulsions that it believes can be used as vehicles
for the topical delivery of a wide variety of drugs and other therapeutic
products, including hormones. In addition to ESTRASORB(TM), its topical emulsion
for estrogen therapy, Novavax has several product candidates utilizing this
technology in human clinical trials or in pre-clinical development, including
ANDROSORB(TM), a topical testosterone emulsion that has completed two Phase I
clinical trials. Novavax has other drug delivery technologies, such as its
Novasome(R) and Sterisome(R) technologies that are being utilized to develop
other products. Novasomes are used as adjuvants to enhance vaccine
effectiveness. Sterisomes are being used for, among other things, subcutaneous
injections that can deliver long-acting drug effects. In addition, Novavax
conducts research and development on preventative and therapeutic vaccines and
proteins for a variety of infectious diseases, including smallpox, HIV, SARS,
West Nile, influenza and hepatitis viruses; and therapeutic immunotherapies for
the prevention of stroke.
Statements made in this press release that state Novavax's or management's
intentions, hopes, beliefs, expectations, or predictions of the future are
forward-looking statements. Forward-looking statements include but are not
limited to statements regarding product sales, future product development and
related clinical trials and statements regarding future research and
development. Novavax's actual results could differ materially from those
projected in such forward-looking statements. Factors that could cause actual
results to differ materially from those in the forward-looking statements
include, among other things, the following: general economic and business
conditions; competition; unexpected changes in technologies and technological
advances; ability to commercialize and manufacture products; results of clinical
studies; research and development activities; changes in, or failure to comply
with, governmental regulations; and the ability to obtain adequate financing in
the future. Additional information is contained in Novavax's SEC report on Form
10K for the year ended December 31, 2002 and Form 10Q for the quarter ended June
30, 2003, incorporated herein by reference. Statements made herein should be
read in conjunction with Novavax's Forms 10K and 10Q. Copies of these filings
may be obtained by contacting Novavax at 8320 Guilford Road, Columbia, MD 21046
Tel 301-854-3900 or the SEC.
- TABLES TO FOLLOW -
NOVAVAX, INC. ANNOUNCES 2003 THIRD QUARTER RESULTS
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NOVAVAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
2003 (RESTATED) 2003 (RESTATED)
------------------------------------ --------------------------------------
(UNAUDITED) (UNAUDITED)
Revenues
Product sales $ 3,647 $ 1,781 $ 6,508 $ 10,775
Contract research and development 560 410 1,017 643
Milestone and licensing fees 62 137 212 1,088
------------ ------------ ------------ ------------
Total revenues 4,269 2,328 7,737 12,506
Operating costs and expenses:
Cost of sales 761 762 1,384 2,828
Research and development 2,554 3,702 7,713 9,848
Selling and marketing 2,003 2,713 6,073 10,637
General and administrative 1,911 1,629 5,561 6,659
------------ ------------ ------------ ------------
Total operating expenses 7,229 8,806 20,731 29,972
------------ ------------ ------------ ------------
Loss from operations (2,960) (6,478) (12,994) (17,466)
------------ ------------ ------------ ------------
Interest expense, net (401) (375) (1,196) (886)
------------ ------------ ------------ ------------
Net loss $ (3,361) $ (6,853) $ (14,190) $ (18,352)
============ ============ ============ ============
Basic and diluted loss per share $(0.11) $ (0.28) $ (0.49) $ (0.75)
============ ============ ============ ============
Basic and diluted weighted average number of
common shares outstanding 30,134,586 24,653,759 29,045,982 24,359,013
============ ============ ============ ============
SELECTED BALANCE SHEET DATA
SEPTEMBER 30, 2003 DECEMBER 31, 2002
- ---------------------------------------------------------------------------------------------------------------------
(Unaudited)
Cash and cash equivalents $ 6,045 $ 3,005
Total current assets 10,247 6,242
Working capital 4,998 378
Total assets 61,563 57,505
Convertible notes 40,000 40,000
Total stockholders' equity 12,831 8,073
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