Novavax (NVAX +15.56%) started the year with plenty of good news. So far, more than 35 countries have authorized the biotech company's very first product -- its coronavirus vaccine. Novavax has shipped its product to various areas, such as the European Union. Doses have reached arms. And the company even forecast billions of dollars in revenue for the year.
But there is one particular thing Novavax investors -- and potential investors -- have been waiting for. And that's the authorization of its vaccine by the U.S. Food and Drug Administration (FDA). Novavax completed its submission in late January. But the FDA hasn't yet set an advisory committee meeting to consider the potential product. Is this situation a red flag for Novavax? Let's find out.
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An early leader
Novavax was considered one of the early leaders in the vaccine race. In fact, the U.S. offered it one of the biggest awards: $1.6 billion in funding along with an order for 100 million doses of vaccine. That was back in July 2020. Fast forward to 2021. All of Novavax's clinical trials produced positive data. But troubles with the manufacturing ramp-up set Novavax behind in its regulatory submissions. In order to receive an authorization or approval, a company must show it can actually produce quality product at scale.
By the time Novavax started requesting authorization in certain countries, rival vaccines from Pfizer and Moderna had already been on the market almost a year. But those authorizations began to come in over the final weeks of 2021. Novavax finally announced the completion of its U.S. request on Jan. 31.
More than six weeks have passed since that time. At this point, it's natural to look at the timeframe of the FDA's reviews of the Pfizer and Moderna vaccines. Pfizer and Moderna requested authorization on Nov. 20, 2020 and Nov. 30, 2020, respectively. And the FDA set dates for advisory meetings on Dec. 10, 2020, for Pfizer and Dec. 17, 2020, for Moderna.
The timeline was much shorter for those two companies than it is for Novavax. So, the question is: Should investors be worried?
It's impossible to say for sure why the FDA is taking longer on the Novavax request than it did on the requests of rivals. We do know that the need for a vaccine was much more urgent in late 2020, though, than it is today. That could have resulted in a speedier process for companies back then. So, this longer timeframe may not have anything to do with Novavax's vaccine. Instead, it may have to do with the overall vaccination situation. Right now, I would favor this scenario over a potential problem with the Novavax vaccine.
NASDAQ: NVAX
Key Data Points
What does this mean for investors?
So, what does this mean for investors? I don't see the FDA decision -- or lack of it so far -- as a red flag. But until the FDA does make a decision, it's possible the shares will stagnate. That's because it does represent an element of uncertainty. And no one likes uncertainty.
But here's why long-term investors shouldn't worry too much about this -- and should focus on Novavax's future. The company predicted $4 billion to $5 billion in revenue this year thanks to the vaccine. Many investors are focused on the U.S. regulatory decision. But Novavax has significant opportunity elsewhere. The company has deals for as many as 430 million doses in countries outside of the U.S. And Novavax could be a leading provider to low- and middle-income countries through its partnership with Gavi, the vaccine alliance. It has an agreement for 350 million doses there.
Novavax also is the most advanced company in the development of a combined coronavirus/flu vaccine candidate. This could be a long-term winner. People are used to going for an annual flu shot. In fact, 50% of Americans went for one in the 2020-2021 flu season. So, if the candidate succeeds, it could represent recurrent annual revenue. Novavax expects to report data on this candidate next month.
All of this means, yes, the FDA decision clearly will impact Novavax in the near term. A negative decision could result in major trouble for the shares. A positive decision could give the stock momentum. But a simple delay -- even if it goes on for a while -- won't change the long-term picture for this up-and-coming vaccine maker.
