Company planning to make COVID-19 vaccine in Canada could go out of business

An American company that signed a deal with the federal government to produce COVID-19 vaccines in Montreal has warned investors it could go out of business within the year.

Executives at Maryland-based Novavax told investors on a conference call Tuesday that there is significant uncertainty surrounding the company's ability to continue funding operations as the market for COVID-19 vaccines changes.

"While our current business plan and cash flow forecast estimate that we have sufficient capital available to fund our operations for the next 12 months, we recognize that this plan is subject to significant uncertainty," Jim Kelly, Novavax's chief financial officer, said on the call.

He said the company, which lost more than $600 million last year, doesn't expect to sell any new vaccine during the first three months of 2023 and there are fears that funding from the United States government could be cut.

The company, which has more than $1.3 billion in cash in hand, is counting on its ability to develop and sell an updated COVID-19 vaccine next fall and is cutting costs, Kelly told investors.

In February 2021, the federal government announced a deal with Novavax to begin producing its vaccine at a National Research Council facility in Montreal.

At the time, Industry Minister François-Philippe Champagne said the facility -- which has the potential to produce around two million doses of vaccine a month -- would be in position to begin production at the end of 2021.

However, on an NRC website last updated in December, the federal science and technology agency said it is still working on the "technology transfer" required to produce the vaccine.

Christine Jodoin, the vice-president of strategic initiatives at the NRC, wrote in an email on Wednesday that the agency is still working with Novavax, but directed questions about production to the company.

The company did not immediately respond to a request for comment on Wednesday afternoon about production at the Montreal facility and whether its cost-cutting measures could affect operations in Canada.

Laurie Bouchard, a spokeswoman for Champagne, said in an email that "at this time, there are no expected changes to the partnership between Novavax and the (Biologics Manufacturing Centre)."

The company is currently the NRC's only client at the Montreal biomanufacturing centre, which was completed in 2021 and is intended to produce biopharmaceuticals such as vaccines.

"We’re continuing to explore options with potential collaborators on producing vaccines and other biologics at the facility on its second production line," Jodoin said.

Canada has struggled to ramp up COVID-19 vaccine production. A deal with Chinese company CanSino Biologics -- which could have seen the company's vaccine manufactured at the Montreal facility -- fell apart in the summer of 2020.

Mitsubishi Chemical announced early last month that another company planning the commercial manufacture of COVID-19 vaccines in Canada, Quebec-based Medicago Inc., would be shut down.

However, in August, vaccine giant Moderna announced it would build a new manufacturing facility in the Montreal suburb of Laval.

Bouchard said the government's approach to acquiring COVID-19 vaccines ensured Canadians had access to vaccines quickly and reversed 40 years of decline in Canada's biomanufacturing sector.

"So far, we have invested $1.8 billion towards 33 projects across the country and we continue to invest in the researchers, talent and innovation that will keep strengthening the Canadian life sciences ecosystem," she wrote.

This report by The Canadian Press was first published March 1, 2023.