In 2020, Novavax (NASDAQ: NVAX) jumped out of obscurity and took investors on the exciting trip of the year. The shares of this tiny biotech skyrocketed from $ 4 in January to $ 117 in December. That means gains of almost 3,000%.
What is driving this incredible race? First, the company received positive news from its phase 3 trial for its candidate flu vaccine, NanoFlu, in March. The Coalition for Epidemic Preparedness Innovations (CEPI) then sent Novavax a check for $ 388 million to help pay for the development of the company’s COVID-19 vaccine. And then Novavax received a $ 1.6 billion grant from Operation Warp Speed (OWS), propelling the small to big leagues. Investors are now talking about the Novavax COVID-19 vaccine at the same time as Pfizer and Moderna’s. And the company and its shareholders are emerging as big winners in the stock market.
Image source: Getty Images.
Will Novavax’s COVID-19 vaccine get FDA approval?
We do not know yet. Novavax reported surprising data from his phase 1, peer-reviewed study published in The New England Journal of Medicine. The vaccine produced so many antibodies (proteins that fight infection) in volunteers that, at the time, many observers considered it the best in its class.
Whether it will really be the best is a matter for debate. Pfizer and Moderna’s mRNA vaccines showed very positive data from their phase 3 studies. This is far more important than any data from phase 1. All we know about Novavax’s early tests is that their vaccine produces a large number of antibodies. Phase 3 data really measures whether people have been safely and effectively protected from the virus. And mRNA vaccines showed incredible numbers – Pfizer and Moderna reported efficacy levels of 95% and 94.1%, respectively.
Novavax has several vaccine studies underway now, including a phase 2 trial in South Africa and Australia, and a phase 3 trial starting to involve participants in the United States. But perhaps the key trial for the company is its phase 3 study in the UK; its reading is scheduled for the first quarter. This phase 3 test will allow the company to seek a license in the UK and other countries. May be sufficient for an emergency use authorization (USA) in the USA
When Novavax released its Phase 1 figures on August 4, excited investors bid up to $ 189 per share the next day. Now in December, the stock fell more than 30% from its highs. Doubts arose as the market patiently waited for UK phase 3 data.
The race for the COVID-19 vaccine is not over yet
Although there are several pharmaceutical companies trying to find a vaccine for COVID-19, there are now five major leaders in the race: Pfizer (in collaboration with BioNTech), Modern, AstraZeneca (in collaboration with Oxford University), Johnson & Johnsonand the tiny Novavax.
| Company | Market value | Return of stock 2020 | Vaccine status |
|---|---|---|---|
| Pfizer | $ 205 billion | (0.5%) | In the market |
| Modern | $ 44 billion | 478% | In the market |
| AstraZeneca | $ 131 billion | 0.3% | Phase 3 |
| Johnson & Johnson | $ 405 billion | 5% | Phase 3 |
| Novavax | $ 7 billion | 2,800% | Phase 3 |
Data sources: Yahoo! Finance, company press releases. Table by author.
AstraZeneca and Johnson & Johnson have pledged not to profit from their COVID-19 vaccines while the pandemic is ongoing. Investors may want to get these two companies out of the race, at least in the short term. Both companies are waiting until the pandemic is over and demand slows down to start profiting.
Novavax, on the other hand, wants to make an adequate return on its vaccine. This is not surprising; fragmented dark horse has not been profitable for a long time. It was almost removed from Nasdaq last year, when a respiratory vaccine did not receive approval from the U.S. Food and Drug Administration (FDA). But the big checks from CEPI and OWS brought him back over the limit.
Novavax is not just looking for profit, biotechnology has been incredibly active on the business front. Despite its small size, the company has acquired more manufacturing capacity than its rivals. Novavax plans to distribute his vaccine to one billion people or more. The company has signed several distribution agreements (with the USA, UK, Canada, Australia and New Zealand), as well as manufacturing and distribution agreements with employees in India, Japan and South Korea.
| Parents | No. of doses that Novavax has agreed to distribute | Agreement Terms |
|---|---|---|
| U.S | 100 millions | $ 1.6 billion ($ 16 per dose) |
| UK | 60 million | undisclosed |
| Canada | 76 million | undisclosed |
| Australia | 40 million | undisclosed |
| New Zealand | 10.7 million | undisclosed |
| India (with Serum Institute of India) | 1 billion | undisclosed |
| Japan (with Takeda Pharmaceuticals) | 250 million | undisclosed |
| South Korea (with SK Bioscience) | undisclosed | undisclosed |
Data source: Novavax.
If Novavax’s vaccine receives regulatory approvals and the price of $ 16 a dose remains, the company will have $ 4.5 billion in revenue in English-speaking countries alone. Novavax is also seeking an important agreement with the European Union. “The planned contract with Novavax provides for the possibility for all EU Member States to buy 100 million doses, and they can buy another 100 million doses,” the EU said in a press release.
Great news from the UK
One problem for vaccine companies – and the world – is that the coronavirus appears to be changing. NBC News reported that “this variant appears to have invaded London and south-east England at an alarming rate”. Although this mutation appears to have started in the UK, infectious disease experts believe it is only a matter of time before this new virus expands to the United States and elsewhere.
One of Novavax’s phase 3 tests is in the UK, the epicenter of this new strain. If Novavax’s vaccine is highly protective against the original strains of the virus and this mutation, demand for the company’s vaccine will skyrocket. But it is also possible that the mutation will cause lower levels of vaccine effectiveness.
If the new coronavirus changes frequently, it is unlikely that a single vaccination will completely eliminate the disease. Instead, vaccination will provide temporary protection, and then we will have to vaccinate again – not unlike what we do for the flu. If we need to vaccinate annually, chances are that Novavax’s stock is worth a lot more than today.