Novavax (NVAX) Profit Jumps on Milestone
Novavax posted a surprise profit in Q2 2025, reporting GAAP EPS of $0.62 compared to an expected loss of $0.04 per share.
Revenue (GAAP) was $239 million, well above the analyst estimate of $152.61 million, but down 42.4% from the prior year.
Results included a large one-time $175 million milestone from Sanofi, highlighting a shift toward partnership-led revenues and away from direct product sales.
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Novavax (NASDAQ:NVAX), known for its protein-based vaccine technology, released its second quarter fiscal 2025 results on August 6, 2025. The standout news was a return to profitability on a GAAP basis, driven by significant partnership milestone payments, most notably a $175 million payment linked to U.S. regulatory approval of its COVID-19 vaccine. Revenue (GAAP) reached $239 million, ahead of analyst expectations of $152.61 million, while diluted earnings per share (GAAP) came in at $0.62, well above the expected loss of $0.04. While the company beat expectations decisively, its business model is in transition, with product sales falling sharply and partnership revenues comprising the bulk of results this period.
Metric Q2 2025 Q2 2025 Estimate Q2 2024 Y/Y Change
EPS – Diluted $0.62 ($0.04) $0.99 (37.4 %)
Revenue $239 million $152.61 million $415 million (42.4 %)
Product Sales $11 million $23 million (52.2 %)
Licensing, Royalties and Other Revenue $229 million $393 million (41.7 %)
Net Income $107 million $162 million (33.9 %)
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Success Drivers
Novavax is a biotechnology company specializing in the development of recombinant protein-based vaccines, including its COVID-19 shot and the adjuvant Matrix-M, which enhances immune responses. Its core offering, Nuvaxovid, is the only recombinant protein-based, non-messenger RNA (mRNA) COVID-19 vaccine currently available in the U.S.
In recent quarters, Novavax has shifted its focus from building and running a direct sales operation to leveraging strategic partnerships and licensing its vaccine platform to larger pharmaceutical firms. The company's future success hinges on its technology platform, the ability to win significant regulatory approvals, and the effectiveness of its partners—such as Sanofi, Takeda, and others—in bringing products to market and generating milestone and royalty revenues.
Quarter Highlights and Financial Shifts
This period was marked by outsized partnership revenues and shrinking product sales. The $239 million revenue figure (GAAP), though ahead of expectations, was mainly due to a one-off $175 million milestone from Sanofi following U.S. full approval (Biologics License Application, or BLA) of Nuvaxovid. By contrast, product sales (GAAP) shrank to just $11 million, less than half the prior year, as Sanofi took over commercialization in major markets. Licensing, royalties, and other revenue of $229 million (GAAP) includes a $175 million milestone earned related to the Nuvaxovid BLA approval, the company reported.
The new mix signals a decisive transition away from selling directly to customers and toward relying on major pharma partners to handle marketing and distribution. Additional partners such as Takeda (Japan), Serum Institute, and SK bioscience contributed non-negligible revenue as Novavax's Matrix-M adjuvant and related vaccine ingredients enter more global markets.
Expenses dropped sharply, contributing to positive net income of $107 million (GAAP). Research and development (R&D) expenses for the second quarter of 2025 were $79 million, compared to $107 million in the same period in 2024. The decrease was primarily due to reduced expenditures related to COVID-19 vaccine development and the elimination of the associated commercial manufacturing network infrastructure. Selling, general, and administrative expense dropped 57%, reflecting the winding down of Novavax's own commercial activities as partners ramp up their roles.
The company's cash and equivalents stood at $628 million as of Q2 2025, down 33.0% from December 2024, but are set to be boosted by expected milestone receipts, including the $175 million from Sanofi due in the third quarter. Working capital (GAAP) swung to a positive $530 million as of Q2 2025, up sharply from a negative position at the end of 2024, indicating improved liquidity and a stronger balance sheet thanks to partnership payments.
Business Model, Product Families, and Partnership Strategy
Novavax's foundation is its proprietary vaccine technology, which uses protein nanoparticles and the Matrix-M adjuvant to stimulate the immune system. This approach is an alternative to mRNA vaccines like those developed by Pfizer and Moderna. While used initially for COVID-19 (Nuvaxovid), the platform is now being applied to new areas, including malaria, influenza, respiratory syncytial virus (RSV), shingles, and even experimental cancer vaccines.
The late-stage COVID-19-Influenza-Combination vaccine and standalone flu programs are being advanced with the intention to out-license or partner before further clinical development. The company has stated it does not intend to launch these vaccine candidates without a partner and will not make additional investments in the program until a partner is in place. (As of Q2 2025, the initial Phase 3 cohort was completed, and the company is seeking a partner to advance and fund all future clinical development, regulatory filing, and commercialization activities.) Novavax reported early positive immune response data in a 2,000-participant safety and immunogenicity study in Q2 2025, with T-cell responses described as "numerically higher than in the comparator Fluzone HD arm." Other parts of the pipeline remain preclinical or in early development, such as candidates targeting H5N1 flu and new projects in oncology and C. difficile.
Most Notable Developments During the Quarter
Novavax's most significant event was the U.S. FDA approval of Nuvaxovid, which unlocked the milestone payment from Sanofi. Transfers of marketing authorization to Sanofi for the U.S. and European Union (EU) markets are expected in the fourth quarter of 2025. Sanofi is scheduled to assume responsibility in the U.S. for the 2025-2026 COVID-19 vaccination season. An additional $50 million in milestones is anticipated upon the transfer of marketing authorizations, expected by the end of 2025. This reflects a larger strategic transition, with Novavax positioning itself as a technology provider and relying on stronger partners to drive commercial growth.
Financial performance this quarter was shaped primarily by these deal structures. Licensing, royalties, and other revenue (GAAP) made up nearly the entire topline. Product sales (GAAP) almost halved, as Novavax effectively stands back in territories where partners now control commercialization. The composition of revenue is increasingly 'lumpy' and tied to specific partnership milestones rather than steady product demand, meaning quarterly results may remain volatile as new deals are struck or as partners hit regulatory and commercial hurdles.
On the cost side, the company continued to cut expenditures. Both research and development and selling, general, and administrative costs saw major declines, largely attributed to wind-downs in internal commercialization infrastructure and tighter capital allocation. The net result was a substantial improvement in total stockholders' equity (GAAP), which swung from a large deficit at year-end to positive territory, underlining the financial impact of the partnership-driven shift.
The company signaled that future profitability would depend on securing further milestone payments, royalties, and strict cost controls, all of which are closely linked to the performance and commercial success of its partners.
Looking Ahead: Guidance and Watchpoints
Management raised its FY2025 adjusted (non-GAAP) revenue guidance, now expecting $1.00 billion to $1.05 billion. Expense guidance for combined research and development and selling, general, and administrative was raised to $495 million–$545 million for full year 2025, higher than previously, to account for the cost of a postmarketing commitment study requested by the U.S. Food and Drug Administration. Sanofi is set to reimburse Novavax for approximately 70% of these study expenses, which are expected to occur during 2025 and 2026.
There remains no clear revenue guidance for future royalties or sales from Sanofi's commercialization of Nuvaxovid or other new vaccine combinations that may be developed using Novavax's technology. Future performance will largely reflect the timing and success of partnership deals, regulatory progress in the pipeline, and the commercial appetite for protein-based vaccines, especially as the global COVID-19 vaccine market normalizes. Investors should watch for updates on new collaborations, further regulatory milestones, and data from pipeline programs, all of which could drive additional milestone revenue.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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