Novavax Shares Rise 30% On Positive Data, But Risks Remain

Novavax, Inc. NVAX popped 31 percent Wednesday evening after management announced the NanoFlu Vaccine demonstrated improved immune responses over alternative flu vaccines.

Biotech experts disputed the data’s significance, with STAT News' Adam Feuerstein confessing skepticism.

I’m not a flu vaccine guy, but I keep reading and re-reading the $NVAX PR and can’t find the line where it says NanoFlu seroconversion rate was favorable vs. Fluzone control.

— Adam Feuerstein (@adamfeuerstein) February 28, 2018

Meanwhile, Chardan analyst Keay Nakae asserted that NanoFlu compared favorably to Sanofi SA (ADR) SNY’s Fluzone HD in immunogenicity.

NanoFlu was found to significantly boost hemagglutination inhibition antibody (HAI) responses against H1N1, H3N2 and B/Brisbane strains, leading to a 47-percent rate improvement; significantly boost HAI immune responses against historic and forward-drifted H3N2 strains, with respective improvements of 64 percent and 54 percent improvement; and demonstrate strong neutralizing antibody responses against three H3N2 strains.

A Risk-Weighted Thesis

Despite his optimistic read on the Phase 1/2 trial data, Nakae maintained a Neutral rating on the stock and predicted 46-percent downside.

The analyst justified his bearishness considering Novavax’s expected incurrence of near-term operating losses, potential need to raise capital, unproven pipeline, significant competition and uncertain protection of intellectual property.

“The Company has a history of losses, and may never become and remain consistently profitable,” Nakae wrote in a Thursday note. “...The Company’s product candidates are unproven and may never lead to a marketable product.”

What’s Next

Novavax expects to launch a Phase 2 trial in the third quarter.

At time of publication, shares were trading up 27 percent at $2.76.

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