Novavax Stock Forecast: Where Is It Likely Heading By 2025? (NASDAQ:NVAX)

Germany Begins Novavax Covid Vaccinations

Carsten Koall/Getty Images News

There is no substitute for facts to help an investor make decisions. There has been a lot of hype in the COVID vaccine story and Novavax (NASDAQ:NVAX) is a company that has attracted more than its share of attention. As the COVID vaccine story matures some things are becoming clearer. Here I comment on comparison between four much discussed vaccines, which shows the Novavax vaccine NVX-CoV2373, while highly effective, falling short of the mRNA-based vaccines of Pfizer (PFE)/BioNTech (BNTX) and Moderna (MRNA) in specific areas. I also comment on the Novavax technology in reaching conclusions about prospects for the company.

Head-to-head comparison of 4 vaccines

Recently prestigious science journal Nature highlighted a paper recently published (but not yet reviewed) on bioRxiv. The paperHumoral and cellular immune memory to four COVID-19 vaccines” compares the BioNTech/Pfizer, Moderna, Johnson & Johnson (JNJ) and Novavax COVID vaccines.

The above study compares 3 different kinds of COVID vaccines, two mRNA-based vaccines, a viral vector vaccine (where a harmless virus which carries the SARS-CoV-2 spike protein gene is injected as a vaccine, with the patient being tricked into making the COVID spike protein) and a genetically engineered spike protein injected into recipients. Fourteen different aspects of immune protection were measured, including antibody response and how different kinds of immune cells react. The powerful aspect of this study is that all of the tests were conducted with the same lab tests. This removes a powerful variable due to some tests being very specialised and results from different labs can vary.

The mRNA and Novavax vaccines produced very high levels of antibodies, but the levels of the antibodies declined over 6 months. The J&J viral vector vaccine produced a strong antibody response which was sustained, although it never exceeded the mRNA vaccine results.

A key difference between the Novavax vaccine and mRNA (BioNTech/Pfizer, Moderna) & J&J viral vector vaccines was that in the case of the Novavax vaccine, a particular class of T-cells, which destroy cells infected by the SARS-CoV-2 virus, were low to undetectable while the other 3 vaccines performed well with these protective cells.

As is often the case for really detailed studies the number of people in each treatment was pretty small, with just 12 Novavax-treated people, while the other 3 vaccines each had 30 participants. Note that the Novavax and mRNA vaccines were the 2-shot regime, while J&J was a single dose vaccine. The study was completed before the booster shot was approved for both the BioNTech/Pfizer and Moderna vaccines.

These vaccines cover the major kinds of vaccines that are prominent in the COVID story, with the mRNA vaccines being the gold standard because they are simple to make and have very high efficacy. Note that the above study claimed that it did not have access to the AstraZeneca (AZN), Chinese (CoronaVac, Sinopharm) and Russian (Sputnik) vaccines that have been widely used globally. The Chinese vaccines are inactivated virus vaccines whereby the SARS-CoV-2 virus is “killed” (made non-infectious). They are less efficacious for causing symptomatic illness, but they work well to prevent hospitalisation. The Russian Sputnik vaccine is a viral vector vaccine, like the Johnson & Johnson vaccine. The Sputnik vaccine production might be threatened by the war with Ukraine.

Novavax technology

While the Novavax vaccine (NVX-CoV2373, or Nuvaxovid (Europe) or Covovax (India)) produced good immunity, on some scores it was inferior to the BioNTech/Pfizer and Moderna vaccines, even though the mRNA vaccines had just the initial two shots (i.e., no booster dose). Here I give a little more information about the Novavax vaccine and how the company is seeking to compete with the mRNA vaccines.

The NVX-CoV2373 vaccine is a protein-based vaccine. This means that Novavax makes the SARS-CoV-2 spike protein in an insect cell culture in a fermenter using recombinant DNA technology. It then purifies the protein and formulates it in a nanoparticle so that the genetically engineered spike protein is presented to the body after injection in a way that makes our immune system think it is SARS-CoV-2. Hence the body responds to be protective when the real SARS-CoV-2 attacks the person who has been vaccinated. The vaccine is stored at refrigeration temperature (2-8C).

Perhaps it is worth noting that I am a protein scientist and I was initially very sceptical that the mRNA technology (which is really simple to manufacture, but has tricky delivery packaging) would work as a vaccine. I do know how hard it is to manufacture proteins from cultured cells and purify them.

Why has Novavax been hyped?

I’ve been puzzled at the hype surrounding Novavax as it has been promoted by some who have not necessarily understood the revolutionary features of the mRNA vaccines. As I’ve indicated above, mRNA technology is amazing because it gets the patient to make the relevant protein that forms the vaccine. Making proteins is hard and expensive. I’m not sure why Novavax has been hyped as a safe vaccine unless it is anti-vaxxer sentiment against mRNA vaccines, which some try to project as not really being vaccines (they are of course).

Novavax execution capacity

I’ve written at some length about the highly productive combination of technical innovation (BioNTech) with world best scale up and execution capacity (Pfizer). It is true that Moderna, which has done it all in house, has also had an amazing and successful learning curve with their mRNA technology and scale up. Both the Moderna and BioNTech/Pfizer vaccines have generated rivers of cash for the companies to aggressively invest in trials to broaden the age range for their vaccines and also to contemplate making variant-specific vaccines. The mRNA technology is well geared to rapid new vaccine developments.

The contrast with Novavax’s failure to execute in a timely fashion is significant, but I do think that making a protein, having it correctly folded and in a vehicle that delivers it effectively, is a very different challenge to what the mRNA teams had. Of course, the big challenge with mRNA was getting delivery sorted out, but the making of the mRNA is trivial and very fast to alter.

Novavax is doing everything it can to be competitive. Novavax has conducted two large Phase 3 trials of its NVX-CoV2373 vaccine in the US, Mexico and the UK and it has a major partnership in India. It is included in COV-BOOST, a mix and match trial in the UK to see whether using different vaccines in the booster phase works (as well as exploring the effectiveness of a third (booster) dose of the well-known vaccines). This trial includes 7 COVID vaccines and it is important for Novavax to be included.

Novavax has adult Emergency Use Listing by the World Health Organisation and Emergency Use Authorization in Indonesia, Bangladesh and The Philippines. It’s NVX-CoV2373 (Covovax) vaccine has now achieved Emergency Use Authorization by the Drugs Controller General of India for 12> – >18 adolescents and trials are ongoing for 7-12 and 2-7 age groups in India. Novavax recently applied in European for conditional marketing authority for its Nuvaxovid vaccine for 12-17 year olds. Trials for this age group are underway in the US but Emergency Use Authorization is yet to be issued in the US.

Novavax seems to be seeking to be a replacement for the various applications of the Moderna and BioNTech/Pfizer vaccines. The point is that each of these approvals requires data and so expensive trials at a time when cash is an issue and the share price is down 58% year on year (and down 48% year to date).

While Novavax revenue was $1.1 billion in 2021, $949 million came from grants and just $198 million was from royalties and other revenue. Novavax anticipates a further $800 million from the US Government in 2022. Q4 in 2021 showed $1 billion expenses, $963 million of which was for R&D. Net loss for Q4 was $846 million. The company expects total revenue in 2022 to be in the range $4-$5 billion. This seems ambitious. For example, it isn’t clear that Novavax is getting traction in the European market, although the majority of projected revenue is expected to come from Nuvaxovid sales (European vaccine product). It looks like the US market is regarded as upside by the company, perhaps indicating that there may be delays?

Is COVID finished?

I don’t think we are through with COVID and I expect BioNTech/Pfizer and Moderna have a lot more to contribute to an evolving vaccine story for COVID. I don’t see that Novavax is going to be more than a marginal contributor, but the way the vaccine has been hyped this might surprise some investors.

My conclusion is not shared by 6 Wall Street ratings in the past 90 days, 4 of which are strong buy, 1 a buy and one hold (no sell recommendations). By contrast, of 7 Seeking Alpha authors there has been 1 strong buy, 1 buy, 3 hold and 2 strong sell recommendations.

Conclusion

Biotech is always complicated and as I’ve pointed out, the Novavax story is not straightforward. What I do think is pretty clear is that Novavax’s arrival on the COVID vaccine scene is not game changing. They come with a whimper rather than a bang. The company is struggling to be profitable against two very cashed up competitor vaccines which are technically also the most effective. I’m not confident about Novavax’s future and suspect the next 12 months will provide a clearer picture about its future prospects.

I am not a financial advisor, but I’ve been in the biotech industry for a long time and I understand both technical and business aspects of the industry. I hope that my commentary helps you and your financial advisor in deciding about investment in the COVID vaccine space.

Be the first to comment

Leave a Reply

Your email address will not be published.


*