Summary
- NVAX's quarterly revenue rose over 75% Q/Q. COVID-19 supply spurred growth.
- Regulatory approval for a vaccine may not happen until Q2. It could take a few more months to build out manufacturing capabilities.
- NVAX could be hard-pressed to meet revenue 2021 revenue projections. 2022 revenue could become a point of emphasis.
- It could be difficult to justify NVAX's $12 billion market capitalization until its recurring revenue has been confirmed.
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Source: Barron's
Novavax (NVAX) reported quarterly revenue of $279.66 million and EPS of -$2.70. NVAX is down over 30% post-earnings. The stock's reaction is likely a combination of results of the company's earnings call and the performance of broader markets. The S&P 500 (SPY) has been volatile over the past week. Rising interest rates have created a dark cloud over financial markets. The more rates rise the more attractive bonds could become to investors, potentially competing with the stock market for new money.
Novavax's $280 million in revenue was up 78% sequentially. The company was practically in start-up phase over a year ago. Its prospects for developing a vaccine to combat COVID-19 have opened a pathway for Novavax to generate billions in revenue. The company has secured agreements for approximately 200 million doses of NVX-CoV2373 with Canada, the U.K., Australia and New Zealand, amongst others. The company recently struck an agreement to supply 1.1 billion COVID-19 vaccine doses to the Vaccine Alliance. The deal could give Novavax an entree into low-income countries. How much revenue the Vaccine Alliance deal could generate remains to be seen.
Supply agreements spurred revenue during the quarter. Analysts from Bernstein previously estimated Novavax could garner $4 billion of the $39 billion COVID-19 pie in 2021. How much revenue Novavax actually generates depends on if or when the company receives regulatory approvals for its vaccine. In January the company's vaccine demonstrated 89% efficacy in its Phase 3 trial in the U.K. This put Novavax's vaccine on par with vaccines from Moderna (MRNA) and Pfizer (PFE). Regulatory approval could now be a forgone conclusion.
Despite the spike in revenue Novavax reported a $3.7 million loss from operations. Research and Development and general and administrative costs were a combined $463 million, far exceeding revenue during the quarter. Once regulatory approvals roll in, revenue could rise at or near Bernstein's estimates. In my opinion, the profit potential from Novavax is remains substantial.
Regulatory Approval Could Bleed Into Q2
I was expecting to hear some positive news from management about potential regulatory approval for the company's vaccine. Management divulged (1) it planned to file for regulatory approval in the U.K. by early Q2 2021 and (2) expected an Emergency Use Authorization ("EUA") filing in the U.S. in Q2 2021:
