In the volatile world of stock trading, healthcare companies Novavax (NASDAQ:NVAX) and Invitae (NYSE:NVTA) have been making headlines as they navigate significant financial challenges. Both firms are taking measures to reduce costs, aiming to improve their financial standing and appeal to a broader range of investors.
Novavax, a biotech firm specializing in vaccine production, has struggled after falling behind competitors Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) in the coronavirus vaccine market. The delay in product launch resulted in missed revenue opportunities and increased expenses, pushing the company to question its survival earlier this year.
However, Novavax has initiated countermeasures to these setbacks. The firm plans to reduce its workforce by 25% and implement further cost-cutting strategies with the goal of decreasing overall expenses by up to 50% by next year. Despite initial hurdles, Novavax is developing an updated vaccine for the fall market and a combined flu/coronavirus vaccine. The clinical trials show promise, indicating the company's potential to produce quality vaccines. Currently, Novavax shares are trading at approximately $8 or 0.4 times sales.
Invitae, a healthcare company specializing in genetic testing across multiple fields including neurology, obstetrics, and gynecology, has also been grappling with financial challenges. Despite increasing revenue over time, Invitae has experienced a corresponding rise in cash burn.
To mitigate this issue, Invitae announced a turnaround plan last year that included exiting certain markets, reducing jobs and offices, and focusing on activities most likely to accelerate positive cash flow. This strategy appears to be working; Invitae's revenue excluding exited businesses increased about 1% in the most recent quarter. Additionally, its non-GAAP gross margin improved for the eighth consecutive quarter.
The company also reduced its forecast for this year's ongoing cash burn to between $220 million and $245 million, down from initial projections of over $250 million. However, Invitae still faces challenges, having lowered its forecast for annual revenue. Its shares currently trade for less than a dollar, with a price-to-sales ratio of 0.4.
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