Please ensure Javascript is enabled for purposes of website accessibility

This Huge Win Could Boost Novavax's Fortunes -- and It Has Nothing to Do With COVID-19

By Keith Speights - Apr 27, 2021 at 5:52AM

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

The Matrix-M adjuvant is increasingly looking like Novavax's crown jewel.

Since early 2020, Novavax (NVAX 11.12%) has received a lot of attention due to its efforts to develop a COVID-19 vaccine. That attention is deserved. The biotech's COVID-19 vaccine candidate NVX-CoV2373 appears to be quite promising.

Novavax has been at the center of attention more recently for great results announced last week from a clinical study of a different vaccine. This huge win could boost Novavax's fortunes -- and it has nothing to do with COVID-19.

A scientist holding a syringe with a needle next to a small globe.

Image source: Getty Images.

A malaria milestone

On April 23, results from a phase 2b clinical study evaluating malaria vaccine candidate R21 were published online in Preprints with The Lancet. The vaccine achieved an efficacy of 77%. 

R21 was developed by the University of Oxford, which also created the COVID-19 vaccine marketed by AstraZeneca. So how does Novavax fit into the picture? The company's Matrix-M adjuvant is used to boost the malaria vaccine's immune response. Matrix-M is also used with Novavax's COVID-19 vaccine candidate as well as its flu vaccine candidate NanoFlu.

It seemed pretty obvious from the phase 2b results that Matrix-M helped increase efficacy. In the study, children between 17 months old and 5 years old were given 5 mg of R21 with either 25 mg or 50 mg of Matrix-M. Efficacy of 71% was achieved with the lower Matrix-M dose, while an efficacy of 77% was achieved with the higher dose.

In 2019, there were around 229 million worldwide cases of malaria with an estimated 409,000 deaths. Children under the age of 5 years old accounted for roughly two-thirds of those deaths. Although GlaxoSmithKline currently markets a malaria vaccine, its efficacy is only between 35% and 55%. If R21 is ultimately approved, it would truly be a milestone in preventing malaria.

Improving Novavax's fortunes somewhat

Recruitment has already begun across five trial sites in four countries for a registrational phase 3 clinical study evaluating R21. It's also possible that the University of Oxford could seek Emergency Use Authorization (EUA) for the malaria vaccine. Regardless, if R21 makes it to market, Novavax's fortunes will improve somewhat.

The Serum Institute of India (SII) holds the license to the experimental malaria vaccine. It plans to produce at least 200 million doses annually if R21 wins approval or EUA. Novavax will receive royalties on all sales of the vaccine.

Just how much money Novavax might make, though, remains uncertain. SII chairman and managing director Cyrus Poonawalla said that his organization plans to make R21 available after approval "at a very cost-effective price." GlaxoSmithKline charges around $5 per dose for its malaria vaccine. 

However, Novavax also will be able to generate revenue in another way from R21. The company will have the right to sell and distribute the malaria vaccine in some countries, primarily targeting travel and military markets.

There's another potential benefit for Novavax as well. Matrix-M could enjoy higher demand as an adjuvant in other vaccines after it's seemed to work so well in boosting the immune response in R21, NVX-CoV2373, and NanoFlu.

The biotech's big game-changer

While R21 could be a game-changer in preventing malaria, the big game-changer for Novavax is still its COVID-19 vaccine. Although the U.S. already has enough doses ordered for vaccines that have already secured EUA to fully vaccinate all Americans this year, Novavax shouldn't be too late to the party to still be a winner in the U.S. market.

Novavax has stated that it hopes to file for U.S. EUA for NVX-CoV2373 in the second quarter of 2021. The company already has a deal with the U.S. government to supply 100 million doses of the vaccine. The high efficacy of its COVID-19 vaccine could help Novavax secure more supply deals for 2022 and beyond.

In addition, Novavax plans to soon advance vaccine candidates targeting coronavirus variants into clinical testing. If these candidates achieve impressive efficacy against the worrisome newer strains, it will almost certainly provide a major catalyst for the biotech stock.  

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.
NVAX
$57.15 (11.12%) $5.72
AstraZeneca PLC Stock Quote
AstraZeneca PLC
AZN
$65.95 (-0.18%) $0.12
GSK Stock Quote
GSK
GSK
$43.75 (0.51%) $0.22

*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 analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

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.