Novavax Shares Down 40% From Early August Peak: What's Behind The Weakness?

Novavax, Inc. NVAX stock has fallen significantly from its Aug. 5 peak of $189.40, which was reached on the back of positive interim Phase 1 data for its coronavirus vaccine candidate NVX-CoV2373.

Q2 Drags Stock: Shares of the Gaithersburg, Maryland-based vaccine maker retreated from the peak in a consolidation move and subsequently hovered around the $160-$180 range.

When the company reported mixed results for the second quarter, further selling followed.

Reacting to the quarterly results, the stock fell over 16% Aug. 11. Novavax did recover partially from the post-earnings low of $112.51 hit Aug. 12, rising to an intraday high of $155.75 Aug.17, only to begin another short-term downtrend.

Coronavirus Vaccine Competition Hurting Sentiment? Aside from Chinese companies, about three biopharma companies and their collaborators have advanced their respective vaccine candidates into late-stage studies.

Novavax commenced the Phase 2 portion of its ongoing Phase 1/2 trial in Australia and the U.S. on Monday. The company expects to issue an interim readout from the trial in the fourth quarter. Novavax has another Phase 2b trial running in South Africa.

On Sunday, it was reported that the  AstraZeneca plc AZN-Oxford University combine's coronavirus vaccine candidate could obtain emergency use authorization as early as October.

Insider Selling Another Deterrent? Insiders at Novavax are cashing in on the stock's strong gains. A series of filings with the SEC Thursday revealed that executives sold shares following the exercising of options to buy common stock.

Gregory Glenn, Novavax's R&D president, sold a cumulative of 57,449 shares, raising about $8 million.

John Herrmann III, the company's chief legal officer, sold 46,242 shares for $6.67 million. CFO John Trizzino sold 42,788 shares for a total of $6.37 million.

Gray Evans, one of the directors, disposed of 10,500 shares at $150.44, netting an estimated $158 million, and Michael McManus sold 8,000 shares at $146 to pocket $1.17 million.

Insider selling often raises a red flag, as investors see the act as signaling a lack of confidence among management in the future of the company. That said, it need not necessarily relay pessimism, as the disposal could be in line with the phased sales that insiders are permitted.

What's Next For Novavax? Any revival in Novavax shares hinges on developments related to its coronavirus vaccine program. The company has stitched up several manufacturing and supply agreements that could help scale up and reap returns from the program, contingent on the vaccine obtaining EUA or full approval.

NVAX Price Action: At last check, Novavax shares were down 3.83% at $114.69. 

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