Summary
- NVAX had run over 4,000% YTD at its peak.
- COVID-19 vaccine hype is giving it some much-needed fuel after failing two late-stage clinical trials in 2016 and 2019.
- With recent ATM offerings, Novavax's market cap now is about triple what it was in 2016, even with shares trading ~35% lower.
Novavax (NASDAQ:NVAX) has seen some of the largest gains YTD of all involved in the vaccine race, with shares up over 4,000% in early August; however, shares have given up nearly 40% since then to hover just above $100. But shares have had an immense value added from COVID-19 vaccine hype and might not be able to sustain such a lofty valuation as it is sourced primarily from the COVID-19 hype. Shares are trading ~35% lower from old highs in 2016 after two failed trials, but the reverse split and following dilution associated with COVID-19 hype has seen Novavax trading at a market cap 3 times higher.
Novavax’s gravity-defying rise to over $180 intraday made it look like the most expensive of the clinical stage vaccine makers far along in the vaccine hunt on a per share basis [namely Moderna (MRNA), Inovio (INO), and recent IPO CureVac (CVAC)], but that’s not the case.
The intra-day high of $189.40 really isn’t all that impressive, considering Novavax’s history - that’s barely more than it had been in September 2016, when shares were $169.80. But these prices are reflective of the 1:20 reverse split on May 10, 2019; on an adjusted basis, shares were $8.49 in 2016 and would be just ~$5.50 now, rising from a low of $0.177 in November 2019. Novavax needed the split in order to avoid NASDAQ de-listing requirements and to maintain investor interest as faith was being lost quickly.
Lack of faith because of two late-stage clinical trial failures, in September 2016 and February 2019, caused shares to trade hands at prices that low.
Ahead of the top-line data release in fall 2016 from the Phase 3 Resolve trial for RSV in elderly adults, the vaccine was labeled as a “game changer” with bright potential; optimism faded rapidly when Novavax announced that the trial “‘did not demonstrate vaccine efficacy’ in the prevention of a lower respiratory tract disease in older adults” – and shares dropped 84%. All hope hasn’t been lost for an RSV F vaccine for older patients, as the company has stepped back to do another Phase 2 trial – old hopes for a 2020 approval have been dashed.
Shares didn’t recover much following that plunge before data was released for the Phase 3 Prepare trial for RSV in infants in February 2019. While the trial “failed to meet the primary objective of prevention of medically significant RSV LRTI through 90 days of life… [it] did show efficacy against a secondary objective of RSV LRTI hospitalization.” Novavax plunged another 66% on the news, which ultimately led to the reverse split a quarter later. However, ResVax is currently undergoing a secondary Phase 3 trial due to secondary objective efficacy and potential still for commercialization.
Now, Novavax has joined the COVID-19 vaccine front, and, although it is not as far along in trials as others, received $1.6 billion in funding from Operation Warp Speed, aimed at streamlining trials in order to have a viable vaccine candidate by the winter. Novavax is still in a Phase 1/2 trial, while seven candidates are in/starting Phase 3 trials. The funding from Warp Speed outlined a delivery of 100 million doses dependent on clinical trial success, which still is some time away; on the other hand, Pfizer (PFE) and BioNTech (BNTX) have already announced the delivery of up to 600 million doses to the U.S. and 120 million to Japan subject to approval, as well as establishing a price per dose estimate.
August 4 marked the release of positive results from the Phase 1 portion of the trial, as Novavax proceeds on to Phase 2. NVX-Cov2373 “had a reassuring safety profile” with no serious adverse events and “induced neutralization titers in 100% of participants,” with all developing wild-type neutralizing antibodies after the second dose. Positive data will allow NVX-CoV2373 to advance through trials, but a hopeful Phase 3 trial with up to 30,000 participants starting by the fall will need some changes to outcome endpoint durations.
Trials aren’t something to be rushed, but that’s exactly what the aim is with the Warp Speed initiative; we run the risk of not fully understanding long-term effects until late 2021 based on the endpoint completion dates of the late-stage trials underway currently.
Novavax’s endpoints for the Phase 1/2 trial only extended to 35 days for identifying serum IgG antibodies – quite a short-term duration, considering Inovio’s comparable Phase 1/2 trial antibody endpoint extends up to 52 weeks. Endpoint durations for some of the Phase 3 trials range from one year to two, so understanding the ultimately long-term protective benefits of the vaccines won’t be known until late 2021 at the earliest, yet data and EUA for certain vaccines based on short-term immunity might arrive sooner.
