Please ensure Javascript is enabled for purposes of website accessibility

Here Are the 2 Most Important Things to Look for in Novavax's Earnings Report Next Week

By Adria Cimino - Feb 24, 2021 at 8:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

They both have to do with the company's COVID-19 vaccine candidate.

I'll be looking at Novavax's (NVAX -9.46%) earnings report on March 1. But my focus won't be on the financial aspects. Novavax doesn't have products on the market yet, which means the biotech company is yet to report an annual profit. At the same time, research and development expenses have generally increased throughout the years as programs advance through the pipeline. I don't expect a different story for 2020.

But what Novavax has to say in this report may change the story for 2021. That's because the company's coronavirus vaccine candidate is approaching the finish line. Novavax recently reported U.K. phase 3 trial results and just completed enrollment in a U.S. phase 3 trial. Possible regulatory authorizations sit on the horizon. Considering all of this, here are two key items to watch for when you read through Novavax's earnings report next week.

A woman glances as notes as she sits in front of her laptop.

Image source: Getty Images.

1. Potential timing of authorizations

Earlier this month, Novavax said regulatory agencies in the U.S., U.K., Europe, and Canada have begun the rolling review process. That means the agencies have started looking at Novavax's trial data so far -- and Novavax will submit additional results as they become available. Regulators can get a head start rather than waiting until all trials are complete to begin considering a potential product. And this speeds up the review process.

In the meantime, these agencies could decide to offer the investigational vaccine emergency authorization. So far, Novavax hasn't specifically spoken of the potential timing of such authorizations. But CEO Stanley Erck has said he's hoping the U.S. Food and Drug Administration (FDA) may consider the U.K. trial data as a basis for its Emergency Use Authorization (EUA). That would be instead of waiting for the U.S. trial results later next month. I'll be looking to see if Novavax speaks in more detail about this possibility during the earnings report.

And any other details about authorization timing are welcome, too. They would offer us clues about when to expect product launch -- and revenue.

2. Progress on a booster shot

Novavax is working on a solution to the problem of new coronavirus strains. In January, the company started studying a potential booster or combination vaccine to handle new strains. Novavax said earlier this month that it would choose candidates "in the coming days." The company plans to start clinical studies of a potential candidate in the second quarter. It's very possible Novavax will present us with more news on this project during its earnings report.

Here's why this element is so important: Today, new coronavirus strains present one of the biggest challenges for vaccine makers. Pfizer (PFE 1.00%) and Moderna (MRNA -4.04%) brought their vaccines to market under EUAs in December -- before the strains became prevalent. Since, in vitro tests have shown their vaccines work against the latest variants. But experts -- such as White House health advisor Dr. Anthony Fauci -- have said efficacy is lower when faced with these new strains.

The company that produces a vaccine or booster that effectively conquers new strains is sure to gain market share. Pfizer and Modera technically "won" the coronavirus vaccine race by finishing first and second, respectively. But Novavax could be the winner of the next stage of this race if its booster or combined vaccine is successful. Moderna, too, is investigating a booster to address new strains. It will be important to watch both companies as the programs move forward.

Any details regarding Novavax's coronavirus vaccine candidate are worth your attention during the upcoming earnings report. But the above two are crucial as they will determine when Novavax will start generating revenue and its chances of gaining a large share of the vaccine market. And all of this will define Novavax's next annual earnings report -- and its share price performance ahead.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Novavax, Inc. Stock Quote
Novavax, Inc.
$46.54 (-9.46%) $-4.86
Pfizer Inc. Stock Quote
Pfizer Inc.
$53.41 (1.00%) $0.53
Moderna, Inc. Stock Quote
Moderna, Inc.
$132.06 (-4.04%) $-5.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.