Novavax (NASDAQ:NVAX), a recombinant nanoparticle vaccine developer, saw its shares shed a whopping 17.3% of their value in June, according to data from S&P Global Market Intelligence. What event precipitated this breakdown?
The good news, if you can call it that, is that Novavax's shares slumped largely in response to President Trump's escalating trade war with China, not because of a clinical or regulatory setback. The long and short of it is that these geopolitical headwinds have caused some investors to lose their appetites for ultra-high-risk stocks like Novavax.
This double-digit move lower couldn't have come at a worse time for this clinical-stage biotech. Despite a sizable capital raise last April, Novavax still needs to raise another large sum of money soon to keep its late-stage respiratory syncytial virus (RSV) vaccine on track, as well as its experimental flu vaccine that's entering mid-stage development right now. With its share price now at $1.37 at the time of writing, though, another large capital raise may be hard to execute.
According to the company's latest update, Novavax plans on unveiling the next major clinical update for its high-value RSV program in early 2019. While the biotech should have sufficient funds to reach this particular milestone, the fact remains that the company is a ways away from a regulatory filing that could bring in some much-needed revenue. Therefore, Novavax appears destined to tap the markets yet again for capital sometime soon, and that move will almost certainly require a reverse split of its stock to maintain compliance with the Nasdaq minimum bid requirement of $1 per share. So, until this clinical-stage biotech gets its financial house in order, its stock is arguably best viewed from the safety of the sidelines.