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Why Novavax Could Become a Latecomer Leader in the COVID Vaccine Race

By Keith Speights - Jan 16, 2021 at 10:31AM

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This small biotech could be like the tortoise in Aesop's famous fable.

Novavax (NVAX 0.31%) doesn't rank among the top three leaders in the coronavirus vaccine race. However, don't count the small biotech out. In this Motley Fool Live video recorded on Jan. 6, 2021, Healthcare and Cannabis Bureau Chief Corinne Cardina and writer Keith Speights discuss why Novavax could become a latecomer leader in the COVID vaccine market.

Corinne Cardina: Let's talk about a couple of the other vaccine companies that are not yet authorized and being administered. So what we're calling the tortoises and the hare and tortoise vaccine race. Tell me about Novavax. What is the latest with their vaccine and how far are they from data readouts and regulatory submissions?

Keith Speights: Well, with Novavax, you have to look at it from two different angles. Novavax started a UK late-stage study of their COVID-19 vaccine back in September, and they do expect to have results from that study soon, possibly this month, and that could very well lead to at least a UK authorization.

But Novavax was lagging behind in beginning a US study. They started a late-stage study in the US and Mexico at the end of 2020, and so you've got to expect that's going to probably take at least four months or so before they'll have results from it. And so I think it is a promising vaccine that we could see in the US, but maybe not as soon as some of our friends across the Atlantic will.

Cardina: Yeah. So its US trial was actually delayed because of problems with manufacturing the doses that were required for this study. Is that a red flag for investors? That if they can't even get the doses in a timely way for the study, how is it going to roll out millions and millions of doses?

Speights: I don't think it's a red flag as such. I think it's certainly a concern, but it's one that Novavax has overcome. Novavax is one of the companies that received a lot of money from operation work speed, they've teamed up with other companies to help manufacture their doses. So even though they are a tiny company, they are teaming up with a network of other companies that are manufacturing the vaccine, so I don't think this will be a long-term issue. I think it was just a bump in the road that they have now largely moved past.

Cardina: Sure. So another potential hurdle that is not unique to Novavax but really relevant to any companies still trying to enroll participants in their clinical trials. What does that mean when you're trying to enroll participants in a study, but those participants might want to just wait until the vaccine is ready instead of risk getting the placebo. How does that impact these studies?

Speights: I think that is a very legitimate concern for Novavax and some of the other companies that are not in the front tier of companies. You have other companies that are close to wrapping up their late-stage studies, but that could be a real issue for Novavax, and I think especially in the age groups, older people who are eligible to go get Pfizer's vaccine or Moderna's vaccine.

Think about it. If you were in that age group and you could actually go get a vaccine that's already been authorized, how motivated would you be to go participate in a study with a vaccine that hasn't been proven yet? I think that's going to be a real challenge and I don't know how they're going to overcome that. I think it's going to present some issues for them. Now obviously there will be people who will want to help because they realize that it's important to help advance the potential for even better vaccines, but this is going to be interesting to watch to see how Novavax and other companies handle the situation.

Cardina: Right. The fact that we're vaccinating the people who are the most at-risk first with the newly authorized vaccines, it might also have an impact on how soon those clinical studies get to their necessary events, because the events are a certain number of people contract COVID-19. If all the grocery store workers and essential workers are getting the actual vaccine, they're the ones who are most at risk, and you follow my logic here?

Speights: Absolutely and throughout the time-frame of maybe four months or so, and that was based on Novavax's UK study. They started in September, they expect to report results hopefully in January, but the US study could take longer than that just because of the factors you just mentioned Corinne.

Cardina: Excellent. Can you remind us what vaccine approach Novavax is taking? Of course, the Pfizer and Moderna ones are mRNA vaccines. What approach is Novavax taking and how does that impact its potential efficacy number? It will be hard to compete with those high 90% numbers from the ones we have.

Speights: It will be hard to compete. Although a lot of experts really have high hopes for Novavax's vaccine. It's a protein sub-unit vaccine, so basically what that means is-- it's an interesting approach that Novavax takes, by the way.

They get part of the spike protein that occurs on the surface of the coronavirus. And then what they do is they put DNA from that protein into insects, and allow the proteins to grow. And then they harvest the proteins from the insects  and then form them into what are called nanoparticles that resemble the structure of the coronavirus itself, and then put that into a vaccine that they inject in. And this approach really is expected to create very high levels of antibodies, and so it's expected that Novavax's vaccine will be highly effective. It remains to be seen if it's going to be as effective as that 94% from Moderna or 95% for Pfizer, but it should be quite effective.

Cardina: So I'm going to put a New York Times article into the chat that actually walks through exactly how Novavax's vaccine works. I found it very illuminating, so take a look at that if you are interested. Last question on Novavax. What do you think of Novavax as an investment? What more do investors need to know about its underlying business beyond the COVID-19 vaccine program?

Keith Speights: Well, Novavax has been in business for quite a while, their lead candidate before the COVID-19 pandemic hit was a nanoparticle flu vaccine called NanoFlu. The company reported just outstanding results for NanoFlu in March, I think of 2020. It was a head-to-head study against Sanofi's market-leading flu vaccine, Fluzone Quadrivalent, and it trounced Fluzone basically.

There are a lot of opportunities, I think, for Novavax with that flu vaccine. The company is also exploring the opportunity to combine NanoFlu with their COVID vaccine and have a combination flu/COVID-19 vaccine. Now they're looking at something like that for post-pandemic use. This isn't anything I think we're going to see in 2021. But that would be attractive I think if there was a combo vaccine like that.

The company, by the way, the market cap is -- even though Novavax absolutely skyrocketed last year, it was one of the best performing stocks in the entire stock market last year -- but the market caps is still only around seven and a half billion dollars. If these two vaccines that Novavax has end up being successful, the company could easily be looking at billions of dollars in sales annually. That's going to drive that market cap up quite a bit.

Corinne Cardina: Keep in mind, Moderna is $40 billion and just has that one COVID vaccine. There's a lot of catalysts in Novavax's future.

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Stocks Mentioned

Novavax, Inc. Stock Quote
Novavax, Inc.
$52.11 (0.31%) $0.16
Sanofi Stock Quote
$52.39 (-0.96%) $0.51
Pfizer Inc. Stock Quote
Pfizer Inc.
$50.40 (-1.83%) $0.94
Moderna, Inc. Stock Quote
Moderna, Inc.
$137.71 (-3.21%) $-4.57

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