Wedbush Answers 'So, Now What?' For Novavax Shareholders

On September 15, Novavax, Inc. NVAX announced that its RSV vaccine had failed a pivotal trial in the elderly.

Wedbush’s Heather Behanna downgraded the rating on the company from Outperform to Neutral, while lowering the price target from $14 to $2.

Trial Failure

Expressing surprise at the results of the trial, Behanna mentioned that the RSV rates were significantly lower than anticipated, while the fluctuations in the elderly were less understood than had been expected.

“Although we believe the RSV vaccine is viable, we have removed the elderly opportunity from our valuation at this time, pending a path forward,” the analyst stated, stepping to the sidelines on the stock.

Related Link: Citi Cuts Novavax's Price Target From $12 To $1.50 Following Failed Trial

In terms of numbers, there were more moderate to severe events among the vaccine cohort, as compared to the placebo, although the analyst believes the numbers are too small to draw any conclusions.

“We believe the vaccine is likely not the culprit - the booster study demonstrated immunogenicity that suggests the vaccine is working in a manner consistent with what we have seen in Phase II and in other populations,” Behanna explained.

The Way Forward

The analyst believes management will now rapidly formulate a path forward to avoid wasting the 2016 RSN season, although it could be used in other geographies later.

“We believe one option could be an adaptive design to account for variability in RSV or a focus on cumulative data over more than one season,” Behanna added.

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