Stock Analysis & Ideas

Novavax Covid Vaccine Could Soon Win EUA Approval — And So What?

At long last, Novavax (NVAX) may be close to getting its EUA.

As the company announced late Tuesday, the U.S. Food and Drug Administration (FDA) Vaccines and Related Biological Products Advisory Committee (VRBPAC) just voted 21-0 (with one abstention) to recommend that the FDA grant Novavax’s “Nuvaxovid” coronavirus vaccine (aka NVX-CoV2373) Emergency Use Authorization (EUA) to protect patients aged 18 and older from getting infected with Covid-19. If the FDA agrees with the recommendation, and approves the vaccine for emergency use, this could make NVX-CoV2373 “the first protein-based COVID-19 vaccine available in the U.S.,” says Novavax. 

VRBAC based its recommendation on data from a Phase 3 clinical trial of the vaccine among 30,000 participants, which showed NVX-CoV2373 to be 90.4% effective at preventing infection, and resulting in only a “low” number of “serious and severe adverse events.” (More common side effects were headache, nausea, injection site pain, fatigue — basically, the usual side effects for any vaccine).

Commenting on VRBAC’s recommendation Tuesday, J.P. Morgan analyst Eric Joseph cautioned that issuance of an EUA is still not 100% certain, but that only a few hoops remain to be jumped through. In the analyst’s view, Novavax is now approaching a potential “$4-5 upside event” for Novavax shares if EUA approval results in the U.S. government funding production of Novavax.

That’s not a huge amount of upside, however, for a stock that’s currently trading for about $47.50. It wasn’t quite enough upside to convince Joseph to upgrade Novavax shares to “buy,” either. Rather, the analyst is standing pat with a neutral rating on the stock. (To watch Joseph’s track record, click here)

Going forward, Joseph expects discussion of Novavax stock to center on questions of just how widely Nuvaxovid will be used in a market that already has three or four “broadly approved vaccines” available. Potentially, Novavax’s vaccine could appeal to patients who have only been waiting for the arrival of a protein-based vaccine as an alternative to current mRNA-based vaccines. The analyst, however, admits he is “doubtful” whether this is the case. And honestly, after more than two full years of pandemic, it seems likely that if anyone was wanting to take any vaccine at all to prevent Covid or lessen its effects, and was only hesitating out of some fear of “mRNA,” they’d have caved by now and taken the vaccine anyway.

Simply put, the likelihood that there’s some giant, untapped market for protein-based vaccines, only, out there somewhere, just waiting for Novavax to tap into it… seems slim.

Indeed, as Joseph points out, FDA data show that out of roughly 31 million doses of Nuvaxovid distributed to healthcare providers worldwide (but not in the U.S.) to date, so far only about 2.5% of those doses have actually been administered. This appears to suggest that the Covid vaccine market is pretty well tapped out at this point — and that Novavax is finally coming to market too late to do its stock price very much good.

Not everyone is quite so pessimistic, though. J.P. Morgan’s peer analysts have actually given NVAX more “buy’ ratings than “holds” over the past 3 months. Moreover, the consensus is that the shares should be good for ~175% profit as they climb to a $131 target price over the next year. (See NVAX stock forecast on TipRanks)

To find good ideas for biotech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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