Novavax The Downtrodden Finally Finds A New Bull At Citi

Analysts at Citi turned bullish on Novavax, Inc. NVAX, a small-cap clinical-stage vaccine company. The firm's Joel Beatty upgrades Novavax's stock rating from Neutral to Buy with a price target boosted from $1.10 to $1.60.

Novavax's phase 1 and phase 2 data for its flu vaccine called NanoFlu is expected to be released in the fourth quarter and will be followed up in first-quarter 2018 with the U.S. Food and Drug Administration's feedback, Beatty said in the upgrade note. In the event that the FDA allows the company to proceed with an accelerated approval then a phase 3 program could be finalized by the end of next year.

This thesis is in fact "underappreciated by the Street" and could be "transformative" for the stock, the analyst wrote. Novavax would be able to compete in a segment where Fluzone HD has a 60 percent market share but costs up to three times as much as other flu vaccines.

Novavax's path towards potential approval has most certainly been a rocky one. The stock tumbled more than 80 percent in one day last year after the company reported results from two phase 3 vaccine trials, which caught investors off guard as the prior phase 2 trials were successful.

After the large sell-off, the company's director Gail Boudreaux made an insider purchase of 100,000 shares — a notable confidence booster for investors. The company's CEO Stan Erck reiterated to Benzinga in an interview what was said during a conference call. Namely, the company found no issues regarding trial execution, data collection, data integrity or drug product.

"We observed RSV attack rates significantly below historical attack rates and our expectations," Erck told Benzinga. "We are continuing to investigate potential root causes that could have impacted the outcome of this trial. We also continue to believe that there is a path forward for our RSV vaccine and that there is an important unmet need for an RSV vaccine in older adults."

At publication, shares of Novavax were up 7.37 percent at $1.10.

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