The road to FDA approval can be long, and in the case of COVID-19 vaccines, there is no time for delays and no room for error. One company that has come to understand this very well is Novavax (NVAX 2.06%). Since 2020, the company has been developing a vaccine to help prevent and fight the impact of COVID-19. Now, after a year of declining confidence from the market, the company's awaiting judgment from the FDA -- leaving investors wondering what the agency will say, and how that might affect the company's shares.
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Novavax has worked tirelessly to develop a successful COVID-19 vaccine candidate. But after manufacturing delays led the company to miss deadlines, it's still trying to prove that its Nuvaxovid's 90% efficacy rate and 100% protection against moderate and severe disease levels is worthy of FDA approval. The company also touts the vaccine's convenience for doctors; it doesn't have to be frozen, making it easier to store and transport.
Last month, the company submitted prerequisite data to the FDA in anticipation of application for emergency use approval, expected to take place this month. Since then, it has obtained emergency use authorization in India, South Africa, and South Korea. Novavax SVP of Global Corporate Affairs Sylvia Taylor estimates there are over 11 billion doses in demand. The total number of doses long term could conceivably be much higher, given that boosters may be required repeatedly, much like we experience with annual flu shots.
The company plans to produce 2 billion doses during 2022, averaging 150 million per month, meeting contract requirements for Canada, Australia, and Europe, and including 110 million to be distributed in the U.S. According to analytics firm, GlobalData, upon FDA approval for its COVID-19 vaccine, Novavax could generate $33 billion in global revenue through 2027, highlighted by a top annual revenue of $7 billion in 2027. Those numbers do take into consideration the fact that Novavax would have the -- potentially -- fourth Covid vaccine on the market, including the more familiar Moderna, Pfizer, and Johnson & Johnson.
A non-COVID pipeline hinges on one candidate
Beyond COVID-19, Novavax faces the challenge of a limited pipeline. NanoFlu is a seasonal flu shot shown to produce significantly superior antibodies, allowing it to adapt to drifting strains more than the leading flu vaccine, Fluzone. According to Novavax President of Research and Development Gregory Glenn, Nanoflu addresses the mismatch between circulating viruses and the strains included in most common vaccines.
The company hopes to achieve FDA accelerated approval this year after positive Phase 3 clinical trials. Under accelerated approval -- an FDA decision within 60 days after formal company request -- it could potentially reach the market by the end of the year, or possibly in time for our next flu season. A market that was valued at $5 billion in 2020, and is expected to double by 2030, at a compound annual growth rate of 7%, paving the revenue path for Novavax.
But its vaccine to treat infants and older adults suffering from RSV -- a common contagious respiratory virus -- did not meet primary endpoints in trials, leaving it stuck in Phase 2 trials for adult treatment, and Phase 1 for infants. Any breakthroughs there could still take three to five years to come to market. And the remainder of its pipeline involves an Ebola vaccine in Phase 1 trials, plus two respiratory syndrome (MERS and SARS) vaccines still in the preclinical phase. None of these three are in active development.
If it's approved, they will come
Novavax's stock price has dropped from $217 barely over a month ago to $79 as of Jan. 25 -- a one-two punch of those missed deadlines and the overall market hitting the skids. Investors may have gotten anxious, especially after the stock spiked to $290 less than a year ago amid heightened attention given to vaccines from the aforementioned competitors. But let's be real: When a stock price spikes from $7 in early Feb. 2020 to $290 in just one year, who can blame investors for cashing in?
Still, the recent price drop, combined with its recent steps closer to FDA approval, may set Novavax up for a bull run as early as late Q1 if its latest FDA submission timeline works out well. The potential is there, but so is the risk that comes with investing in the best biotech companies -- the requirements of FDA approval in order to achieve profitable success.
Investors with a long-term growth investing strategy willing to take a bit more risk related to the FDA submission timeline could be rewarded handsomely. For those a bit more risk-averse, you might want to wait for the FDA decision on Nuvaxovid before buying shares.
