Although Gamestop dominated the financial news this week, surging more than 1,600% in January, Novavax actually saw greater growth in 2020, with year-to-year gains of 2,731% that exceeded those of all the coronavirus stocks.
Although Gamestop dominated the financial news this week, surging more than 1,600% in January, Novavax actually saw greater growth in 2020, with year-to-year gains of 2,731% that exceeded those of all the coronavirus stocks, according to Stock Apps, a newly-formed financial education hub in London.
In August, however, gains peaked at 3,875%. In recent days, Novavax share prices have hit even higher highs. The spike took share prices for the pre-commercial drug maker from $111.51 December 31, 2020 to a low of just over $175 on January 29, to an all-time high of $275.98 on the next trading day, February 1, before closing at $268.30.
On Monday, analyst B. Riley Financial raised its target price to $334 per share for Novavax stock.
These increasing share prices are driven by three important elements. Perhaps most important is last week’s news of its successful Phase III trials for its COVID-19 vaccine, NVX-CoV2373, in the U.K. and Phase IIb trials in South Africa.
A few days before the trial results were made public, Novavax announced it signed an advanced purchase agreement for up to 76 million doses of that vaccine with the government of Canada. The Toronto Sun and other Canadian media report the company has submitted an application to Health Canada for a rolling review, to expedite approval.
The Canadian news came a few weeks after a similar agreement to supply 51 million doses to the Commonwealth of Australia. The U.K. already has ordered 60 million doses, and the E.U. is negotiating for 100 million doses with an option to double that. It also has contracts to supply 10.7 million doses to New Zealand, 1 billion doses for India, 250 million doses for Japan and an undisclosed number of doses for South Korea.
There’s also data suggesting that some competing vaccines may be less effective against the new strains of the SARS-CoV-2 virus. That concern may have contributed to Bank of America downgrading Moderna’s stock from “neutral” to “underperform” on Monday, although the analyst’s note cited valuation concerns. Its stock has since dropped 9%.
Countering that concern, “NVX-CoV2373 is the first vaccine to demonstrate not only high clinical efficacy against COVID-19 but also significant clinical efficacy against both the rapidly emerging UK and South Africa variants,” Stanley C. Erck, president and CEO of Novavax said in a statement. It reported 85.6% efficacy against the U.K. strain, 60% against the South Africa strain and 95.6% against the original strain.
The company reportedly is working to develop versions that are even more effective against new variants.
It also has launched the PREVENT-19 Phase III clinical trial in the U.S. and Mexico in late December. It anticipates enrolling 30,000 patients, including those ages 65 and over. Early results from that trial may be ready this spring.
COVID-19, while tragic, has been a boon to Novavax and other vaccine developers.
When 2020 began, Novavax had a market capitalization of $130 million. Now its capitalization is $17.8 billion thanks to an influx of nearly $2 billion in funding: $388 million from the Coalition for Epidemic Preparedness Innovations (CEPI) and $1.6 billion from Operation Warp Speed.
On December 31, 2019, before the COVID-19 pandemic began making headlines around the world, Novavax stock closed at $3.98. From there, it began a slow climb, peaking to $170.29 on August 7, before dipping and closing the year at $111.51 and in the past week hitting all-time highs.
Mid-year, senior company officers took the opportunity to pocket some of those early gains (and no doubt now wish they had waited). According to Stock Apps, “Its executives sold stock worth $46 million in 2020. The CEO sold shares worth $8.7 million, the Chief Commerce Officer $13 million, the head of R&D $13.4 million, and the Chief Legal Officer $10.9 million.”
Before COVID-19, Novavax was invested in developing vaccines for SARS and MERS (both coronaviruses), as well as RSV, seasonal flu and Ebola. Building on the strength of its SARS and MERS vaccines, it developed a novel recombinant nanoparticle vaccine that uses the full-length of the prefusion spike protein. The protein for the vaccine is produced in insect cells, which prevents replication, thus eliminating any chance that a person can get COVID-19 from a vaccination of NVX-CoV2373.
Because NVX-CoV2373 is stable at normal refrigerated temperature range of 2°C to 8°C and shipped in a ready-to-use formulation, it is easier to transport, store, and administer than the Pfizer vaccine – which requires deep frozen temperature – or the Moderna vaccine – which is stable for about 30 days at 2°C to 8°C but requires -20°C for longer storage.
Whether the shares continue to gain in value remains to be seen but, the spike in share price doesn’t indicate strong fundamentals, analysts at Benzinga cautioned. During Q3, Novavax reported $157.02 million in sales and a loss of $193.94 million.
Likewise, the Q2 financials showed $35.54 million in revenue but a loss of $14.03 million. Return on Capital Employed (ROCE) – which measures annual pre-tax profit relative to the capital used by the business – had a Q3 rating of -0.63%. High ROCEs typically indicate growth and higher earnings per share, while low or negative number suggest the opposite.
Offsetting that is the fact that Novavax is a precommercial company with a highly desired product, substantial orders ready to be fulfilled, and a truly global need.
