Shares of late-stage biotechnology company, Novavax, Inc. (NVAX), lost over 20% to close at $44.76 on June 3, after the U.S. Food and Drug Administration (FDA) disclosed a briefing on its COVID-19 vaccine, NVX-CoV2373.
According to the FDA, data showed that Novavax’s vaccine could lead to a possible risk of myocarditis, a condition of inflammation of the heart muscle. The news sent the shares spiraling down 26.5%, marking a new all-year low of $41.10.
FDA Briefing on the Novavax Vaccine
Novavax’s vaccine has been shown to be 90.4% effective against the virus and claims to reduce the chances of mild-to-severe disease.
Four cases of myocarditis have been detected in a trial of about 30,000 patients conducted between December 2020 and September 2021. The symptoms were visible within 20 days of taking the vaccine dose.
The FDA staff said that since the data studied came from a trial before the spread of the Omicron and Delta variants, it is unsure if the vaccine will provide “some meaningful level of protection against COVID-19 due to Omicron, particularly against more severe disease.”
In a briefing document, the FDA staff wrote, “These events raise the concern for a causal association with this vaccine, similar to the association documented with mRNA COVID-19 vaccines.”
The FDA has suggested that Novavax flag myocarditis and pericarditis as “important identified risks” in its vaccine materials. However, Novavax has refused to do so and, in response, stated, “Throughout the pandemic, as publicly available vaccines have been administered, there have been numerous investigations into findings related to myocarditis.”
According to the company, such “natural background events of myocarditis” can occur in any sufficiently large database. Moreover, the company stated that young males are at higher risk of attracting the disease most often caused by “nonspecific viral infections.”
Novavax also stated that there is a lack of substantial evidence to prove a causal relationship between its vaccine and heart conditions. NVAX will continue to monitor all side effects, including myocarditis and pericarditis.
FDA VRBPAC Meeting on June 7
On June 7, the FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) will meet to discuss Novavax’s EUA application for use of NVX-CoV2373 as a primary vaccine for adults. Whether Novavax receives EUA authorization for use in the U.S., and further clarity on the heart issue will be issued after the meeting.
Both the spread and the severity of the COVID-19 virus worldwide are diminishing slowly. Meanwhile, vaccine makers are facing the risk of overstocking and limited demand due to the pandemic’s slowdown. Novavax is trying to push its vaccine usage in the U.S., citing that it could be used to vaccinate the segment of the population that is hesitant to get immunized. The company is also undertaking educational drives for the same.
The company has stated, “Despite the wide availability of authorised or approved vaccines, the SARS-CoV-2 pandemic is not well controlled in the US… there remains a desire for vaccines that have been developed using well-understood technology platforms.”
Analysts’ View
Responding to the FDA’s briefing, B. Riley Financial analyst Mayank Mamtani reiterated a Buy rating on the NVAX stock with a price target of $181, which implies a whopping 304.4% upside potential to current levels.
Mamtani noted, “We believe there is a public health policy case being made, in support of maintaining high confidence in mRNA vaccines, noting how this is an on-target risk as spike antigen protein can induce antibodies to SARS-CoV2 spike glycoproteins that cross react with myocardial contractile proteins, including myocardial α-myosin heavy chain, with the antibodies’ effect influenced by hormonal differences, age, and sex.”
Furthermore, the analyst noted that while the FDA briefing may have shaken investor confidence at the moment, it is likely that the panel review will vote in favor of the Novavax vaccine at the June 7 meeting.
Analysts on the Street have a cautiously optimistic view on the stock with a Moderate Buy consensus rating based on five Buys, two Holds, and one Sell. The average Novavax price target of $131 implies 192.7% upside potential to current levels. Meanwhile, the stock has also lost 68.7% this year alone.
Concluding Thoughts
Novavax is at a crucial stage in regards to its COVID-19 vaccine. It is deemed to benefit from EUA authorization for use in the U.S. However, the company may be late to the party as several macro headwinds and the abundance of vaccine dosage from competitors might prove to be a hindrance to its exponential growth.
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