Following up on my part I newsletter, here is the NVAX earnings report update: US/Mexico study completed enrollment and data is now expected in Q2 2021. Initially, everyone was expecting this to be reported sometime in May, which has now been pushed back about a month.
Manufacturing capacity has been revised to 100M doses/month by end of Q3 2021 and 150M/month in Q4 2021. Full capacity (~170M/month) was initially anticipated in mid-2021. This has now been delayed about 6 months. The company lists supply shortage of raw materials.
Regulatory filings (UK, EMA, FDA) expected in Q3 2021, which will all present market-moving events. If you’re an NVAX shareholder, the first expected approval is the UK in July. These filings were initially expected in Q2, so there has been a 3-month delay. The company mentioned that the delay was caused by manufacturing issues that included having comparable potency assays across their manufacturing sites.
On the plus side, NVAX ended Q1 with $2B in cash, primarily from $772M in advance payments from purchase agreements. Trading at EV of around $8B now. Fraction of others like BNTX, MRNA and PFE. But need to execute!
Short-term post-earnings was a painful ride into the 120s but currently trading around 140 again. Management team still needs to show they can execute and get some regulatory approvals. Upside is limited relative to the risk/reward of other small cap bios (e.g., AUTL, AFMD, MGTA, EPIX, JNCE, and NMTR all look strong) but if NVAX executes well this coming year, they may be a 3X. Preclinical data showing 100% protection against both influenza and COVID-19, presenting a nice flu/COVID combo, inspires confidence as well. Concerns include: what if there are no booster shots, will there be a market? On the plus side, NVAX still has the 1.4B doses already signed, although the market cares primarily about boosters. That being said, this Indian variant may be trouble (good for NVAX stock). Another point of concern is: what’s to stop Pfizer and Moderna from adapting more quickly (they had the initial vaccine in two days)? I believe NVAX will adapt more quickly due to mRNA technology being quicker to develop. The issue there might be tolerability. mRNA side effects generally increase with each added dose. This is why people feel more effects on second Pfizer dose than first. Chances are booster will have even more secondary effects.
SUMMARY: Timing is difficult (e.g., it does not help that the entire biotech sector is in the midst of the 2nd worst sell-off on record) but I will write another post to let subscribers know if my thesis on NVAX changes. As of now, it has not. Also, I wouldn’t be surprised if NVAX got bought out by a bigger pharma at some point, as they are well-positioned for new strains and manufacturing during pandemic is too big a hurdle for anyone not just big pharmas (GSK, Sanofi, Novartis, Merck could all use NVAX vaccine tech). Win-win-win for investors, company, and acquirer if a takeout does happen.
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