This biotech has had a year where its stock had grown 20 percent and roller-coastered down 20 percent, several times.
Novavax has had a year where its stock had grown 20 percent and roller-coastered down 20 percent, several times. Keith Speights, writing for The Motley Fool, argues that the company’s stock has a good chance of doubling by the end of next year. Let’s look.
Novavax is a clinical-stage company working to develop vaccines using its proprietary recombinant nanoparticle technology. Its pipeline covers several diseases, including respiratory syncytial virus (RSV), seasonal influenza and Ebola virus (EBOV) as well as a preclinical program for Zika virus (ZIKV) and a combination respiratory vaccine candidate.
Speights gives three reasons why he thinks the company stock could double.
1. NanoFlu
In August, the company reported dazzling preclinical results, and on Sept. 19 announced a Phase I/II clinical trial. The first priority of the trial is to assess the safety and immunogenicity of two concentrations of NanoFlu compared to a licensed influenza vaccine, Fluzone High-Dose (Fluzone HD).
“The trial is designed to identify an immune response, characterized by hemagglutination-inhibiting (HAI) and neutralizing antibodies, that is similar to or better than Fluzone HD,” said Gregory Glenn, the company’s president of Research and Development, in a statement. “We will evaluate immunogenicity using HAI titers, which are the industry standard and an established surrogate marker for protection. Data from this trial may provide the basis to request accelerated approval for initial licensure of our NanoFlu vaccine.”
If positive, it could start a pivotal late-stage trial in 2018, with late-stage results by the end of the year if everything goes well. Speights writes, “Should NanoFlu prove to be as successful in the late-stage study as it was in pre-clinical testing going up against Sanofi (SNY)’s leading flu vaccines, Fluzone and Fluzone HD, Novavax could have a huge winner on its hands.”
2. RSV F Vaccine
On July 24, Novavax announced positive topline data from its Phase II trial of RSV F Vaccine in older adults, new preclinical data on the vaccine’s construct, and more data from previous Phase II and Phase III trials in older adults. Speights also believes the company will have positive news about this vaccine in 2018. Interim data on the RSV maternal immunization of infants clinical trial is expected in 2018.
He writes, “There are two reasons I suspect this study will go well. First, Novavax reported impressive results from its Phase II study of its RSV F vaccine for maternal immunization of infants. Second, the company shouldn’t have the complicating issues associated with studies of the vaccine in older adults, particularly the potential impact of varying RSV attack rates (a measurement of the spread of the virus). Novavax believes significantly lower attack rates could have made a difference in the disappointing late-stage results of its RSV F vaccine in older adults last year.”
3. Licensing deals
File this one under “possible.” Clinical results for NanoFlu or the RSV F vaccines will be the major factor in whether a big pharma company will license it. Speights also notes that if U.S. corporate tax reform actually happens, in particular the provisions in the current tax plans for repatriation of overseas cash, merger-and-acquisition activities will take off next year. And if that’s the case, Novavax could be in a good position to develop commercial partnerships.
Like any biotech company, things could go wrong with these clinical trials and the company’s stock would be pretty close to worthless. Speights also points out that the company doesn’t have all that much cash, about $172.6 million at the end of September, and with several ongoing clinical trials, their burn rate is high. “My guess,” Speights writes, “is that the biotech will need to raise more cash by mid-2018. Its most likely route to getting this cash will be a stock offering. That means existing shares will be diluted in value. The path to doubling is a steeper one in the face of such dilution.”
Still, building on overall positive preclinical and early-stage results and a number of data readouts in 2018, Novavax is a stock investors might want to consider.
