What's Next For Novavax Stock As COVID Vaccine Clears Key Hurdle In US

After last week's scare stirred by the release of the Food And Drug Administration's briefing documents, Novavax NVAX can now heave a sigh of relief.

Adcom Unanimously Backs Novavax: FDA's Vaccines and Related Biological Products Advisory Committee that reviewed the Gaithersburg, Maryland-based company's biologic license application decided to unanimously recommend approval of the first protein-based vaccine candidate in the U.S. 

Novavax's vaccine, codenamed NVX-CoV2373, is a protein-based vaccine engineered from the genetic sequence of the original SARS-CoV-2 strain that causes COVID-19 disease. The vaccine is fortified by the use of the Matrix-M adjuvant to increase the immune response and stimulate high levels of neutralizing antibodies.

Novavax stock tumbled about 20% on Friday when the briefing document prepared by FDA staffers ahead of the Adcom reflected their concerns over the higher-than-expected rate of heart inflammation associated with the vaccine administration.

The decision to recommend authorization was sealed with a 12-0 margin, with one member abstaining from voting.

Will FDA Tow In Line With Adcom? The greenlighting by the Adcom panel removes the overhang around potential authorization. Adcom recommendations are not binding on the FDA, although the regulator will consider the inputs while making its decision.

Novavax's vaccine candidate could get authorization any time this week, possibly on Thursday or Friday.

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Novavax's Long Wait: After COVID-19 struck in early 2020, Novavax was among the early companies that plunged headlong into the COVID-19 vaccine development. The company received copious funding running to the tune of about $1.8 billion from the federal government under the "Operation Warp Speed" to expeditiously develop the shot.

Even as those companies which started the vaccine development race along with Novavax went past the finish line as early as December 2021, Novavax was left to contend with clinical trial delays and manufacturing issues with its vaccine.

Novavax received the first global authorization for its vaccine in Indonesia in early November. Several approvals/authorizations followed, and on account of which, the vaccine is now in use in more than 40 countries worldwide.

Novavax' Vaccine Vs. Others': Novavax's protein-based vaccine, plus adjuvant, is packaged as a ready-to-use liquid formulation in a vial comprising ten doses. It should be administered as a two-dose regimen, given intra-muscularly, 21 days apart.

The vaccine can be stored at 2-8 degrees Celsius and, therefore, can use the existing vaccine and cold supply chain.

Vaccines manufactured by Pfizer, Inc. PFE-BioNTech, Inc. BNTX combo and Moderna, Inc. MRNA belong to new-age vaccines and use the messenger RNA technology.

Some of the vaccine hesitancy seen around has been attributed to the fear of the vaccine interfering with the genetic makeup. FDA officials commented during the Adcom meeting that Novavax's protein-based vaccine could help bring in more people under the vaccination net.

Novavax's vaccine has a logistics advantage as the vaccines of Pfizer and Moderna require low-temperature storage.

Novavax boasts 90.4% efficacy, lower than around 95% each of Pfizer and Moderna.

Pfizer and Moderna have since then received full approval for the use of their respective vaccines in adults. The companies have also expanded the authorizations to include adolescents and children and received the nod for additional booster doses as well.

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Is Novavax Not Of Woods Yet? To counter the existing mRNA duopoly, Novavax, a late entrant with relatively poor competitive positioning, may have to use price as a lever, SVB Leerink analyst Mani Foroohar said in a note.

Novavax may face difficulty in raising vaccine prices in the endemic phase of the pandemic, he added.

The slower speed of development of protein subunit vaccines and manufacturing challenges experienced by Novavax suggest that mRNA manufacturers will more easily pivot to variant-specific vaccines that provide greater protection against circulating COVID-19 variants, the analyst said.

Despite all the negatives, if Novavax successfully clears the FDA hurdle, it would at least be a moral victory for the biopharma.

Novavax Stock Take: Novavax stock launched into a rally from obscurity following its COVID vaccine foray in early 2020. The upward momentum in the stock picked up pace through the remainder of 2020 and into early 2021, with the stock topping out at $331.68 on Feb. 9, 2021.

The delay in the vaccine launch pressured the stock and kept it in a wide range. Selling intensified in late 2021 and persisted through 2021. It is currently trading at the sub-$50 level.

The stock could gather some meaningful upward momentum if it can break through a near-term resistance around $62. The next upside resistance is around the $84 level, where the stock's 200-day moving average lies.

The 14-day relative strength index is at 36, suggesting the stock is at oversold levels.

The average analysts' price target for Novavax stock, according to TipRanks, is around $131 – nearly 175% upside from current levels.

In premarket trading on Wednesday, Novavax shares were 19.29% to $56.71, according to Benzinga Pro data.

Image by Ali Raza from Pixabay