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We were excited about Novavax’s (NASDAQ: NVAX) protein-based COVID-19 vaccine, but the delays were annoying. Despite many assurances of greater production capacity from its manufacturing partner in India, we may have to eventually concede that some of the critics were right.
Despite submitting an Emergency Use Authorization (EUA) to the US FDA on January 31, 2022, there has been no more news in nine weeks. However, the US FDA quickly approved COVID-19 booster doses from competitors Pfizer (PFE) and Moderna (mRNA). Speculatively, we believe the approval delays are tied to the US production concerns disclosed in October 2021. Also, the weak uptake in the EU, which has received around 35.4M doses, raises issues about the demand for the protein-based vaccine.
Novavax: Leaving No Man’s Land Why So Slowly
Nvax Sii Total Deliveries
NVAX will give its manufacturing partner, Serum Institute of India, early doses of its Advance Purchase Agreements (SII). NVAX would subsequently complement the EUAs with data from other production facilities abroad, once regulatory permits were obtained.
In fact, according to India’s Ministry of External Affairs, SII has only provided 50.82M doses so far.
It’s a far cry from SII’s claimed monthly NVAX production capacity of 150M. Also, SII’s maximum monthly output is 275M, from the Oxford-AstraZeneca vaccine in October 2021 and Covishield in December 2021k. Even with South Korea’s first release of 840K vaccines, the total is still much below NVAX’s forecast for 2B doses of yearly capacity.
NVAX’s prior APAs of 1.61B for commercial uses and COVAX leave us puzzled as to the delay and limited production. The business also missed its target of 80M doses to COVAX by Q1’22. We believe that some of these countries may have reconsidered or cancelled their APAs due to the year-long delays. The anti-vaxxers have remained unvaccinated for 15 months, whereas others from affluent countries have been vaccinated. As the dominant COVID-19 strain globally, Omicron and sub-variants, Alpha-specific vaccinations are no longer required.
Only 14.5% of low-income countries have received at least one dose, indicating significant demand. We are especially disappointed by the tardy launch of COVAX, considering our high hopes for the proven protein-based vaccine. Mayank Mamtani, B. Riley Securities healthcare analyst: It’s troubling when they say millions of doses are ready to ship but the figures change. (Biospace)
Given that NVAX was only provided in regional vaccination facilities for the first few weeks, the Reuters data may be misleading. Now that it is available in clinics and pharmacies, we may see increased EU NVAX usage. Regardless, both supply and demand for the vaccination have been disappointing. So, despite NVAX’s outstanding COVID-19 vaccine being delayed by almost a year,
the $1.6 billion US government financial injections to NVAX, Among other funds, the Bill & Melinda Gates Foundation gave $89M.the US FDA’s Fast Track Designation, the world’s largest vaccine maker, Serum Institute of India. No matter how well its vaccinations have functioned, its future is questionable. In the end, keeping promises matters. Otherwise, it’s like being five hours late for Thanksgiving dinner with the world’s best turkey. Sadly, everyone is already filled.
So, Buy, Sell, or Hold Nvax Stock?
Since our February report on NVAX, consensus revenue forecasts have remained stable, with only one upward revision for FY2023. NVAX recently guided FY2022 revenues between $4B and $5B, a 438 per cent YoY growth. Regardless, NVAX is having capital challenges and/or building its balance sheet, considering its huge shareholder dilution over the last two years. As of February 2022, the corporation had generated $565M through the sale of 2.6M shares, with another $500M sales agreement in place and $34.7M already exercised.
Is Novavax on Track to Make $4 Billion by 2022?
Novavax said in a fourth-quarter update that vaccine doses have been provided in Europe, Australia, Indonesia, and South Korea. And even with royalties from vaccine sales in South Korea and Indonesia, $222.2 million fell short of forecasts. NVAX shares rose on March 1, the day after the announcement. The corporation estimates annual revenue of $4-$5 billion. Analysts expected $4.92 billion. Analysts predicted vaccine sales to be $4.6 billion. Their predictions have since fallen. Sales of $3.5 billion in products are now expected for the full year.
Meanwhile, the vaccine is being considered in the US, where many individuals want an alternative to Pfizer (PFE) and Moderna’s messenger RNA vaccines (mRNA). Johnson & Johnson (JNJ) also sells a single-shot vaccine to prevent Covid. MarketSmith.com says NVAX is still below its 50-day and 200-day moving averages. Novavax’s stock has been under pressure as it expands production and attempts to prove the shot’s purity to US regulators.
Should You Purchase or Sell Nvax?
Novavax Doesn’t Meet Can Slim’s Growth Stock Trading Requirements
The corporation has been losing money for years, and it continued last year. Novavax lost $23.44 per share in 2021, compared to $7.27 in 2020. A loss of $13.70 was predicted in 2021. Analysts estimate Novavax to break even this year, earning $22.84 per share. Losses are frequent for newly commercial biotech companies, which usually invest in R&D, although they are not desired from a CAN SLIM standpoint.
Annual revenue was $1.15 billion, below projections of $1.26 billion. But revenue soared 141%. Analysts expect NVAX to earn $4.49 billion this year. The corporation estimates annual revenue of $4-$5 billion.
2 Reasons to Be Wary of Novavax
There’s reason to doubt everything is proceeding as planned. I can’t blame Novavax ( NVAX -5.18 per cent) stockholders for being nervous. The delays in having its first product, a coronavirus shot, authorised have hurt the vaccine developer’s finances. Now, with the company presumably nearing completion, there are a few new challenges that should cause investors concern.
The challenges I’ll address today aren’t insurmountable, but they do offer significant risks to Novavax’s stock.
Why Is Novavax Stock Dropping?
After disappointing sales, Novavax’s stock price is falling.
Novavax, the producer of the Covid-19 vaccine, said Monday that it expects sales of between $4 billion and $5 billion in 2022.
Us Regulators Are Slow
The FDA hasn’t authorised Novavax’s coronavirus vaccine despite having its application package since Jan. 31. While the FDA quickly approved comparable requests from competitors like Pfizer and Moderna, it’s unclear why the FDA is taking so long with Novavax’s. Contrast this with Moderna and Pfizer, who both had their submissions accepted by the FDA’s non-binding advisory committee within three weeks.
As of March 15, the FDA had yet to convene its advisory group to discuss Novavax’s vaccine. When regulators do schedule a meeting, they usually do so many weeks in advance to allow for preparation. So, the applicant may not hear from the panel for another month, adding to an already lengthy development cycle that began in 2020.
In none of the firms mentioned do we hold stock, options or other derivatives, nor do we intend to do so in the next 72 hours. This article is my work and conveys my views. I’m not paid for it (other than from Seeking Alpha). I have no financial ties to any of the companies mentioned in this piece.
Jonathan Herrod is a content writer who enjoys writing about technology, video games, and other topics. The author of informative articles that are well-researched and written with attention to detail has been writing professionally for nearly three years and specializes in the creation of well-researched and written attention to detail articles.