uploads///NVAX

Analyzing Novavax’s Cash Flows

By

Updated

Bottom line

Novavax (NVAX) incurred a net loss of $183.7 million in fiscal 2017 compared with $279.9 million in fiscal 2016. This translated into a net loss of $0.63 per share in fiscal 2017 compared with $1.03 per share in fiscal 2016.

This decrease in Novavax’s net loss was primarily due to lower research and development expenses, decreased costs for clinical trials, and lower employee-related costs in fiscal 2017 compared with fiscal 2016.

Article continues below advertisement

Cash flows

At the end of December 2017, Novavax had $157.3 million in cash and cash equivalents compared with $235.5 million at the end of December 2016. The company spent $138.6 million in operating activities in fiscal 2017 compared with $255.4 million in fiscal 2017. This decrease of $116.7 million was primarily due to lower employee costs and a decrease in costs related to its RSV F vaccine.

In fiscal 2017, Novavax generated $35.9 million from investing activities compared with $28.0 million in fiscal 2016. The company incurred capital expenditures of $4.2 million in fiscal 2017 compared with $18.2 million in fiscal 2016.

This decrease was primarily due to reduced capital requirements based on Novavax’s operating plans. In fiscal 2018, Novavax expects to see capital expenditures at similar levels reported in fiscal 2017.

Novavax generated $64.5 million from financing activities in fiscal 2017 compared with $279.0 million in fiscal 2016.

Valuation

For a clinical stage company like Novavax, cash burn levels are important, and an understanding of the company’s ability to meet its obligations is imperative. Novavax’s quick ratio stands at 2.8. Among its peers, Merck & Co. (MRK), Arena Pharmaceuticals (ARNA), and Arrowhead Pharmaceuticals (ARWR) have quick ratio metrics of 1.1, 3.9, and 3.9, respectively.

Advertisement

More From Market Realist