It's the moment investors in Novavax (NVAX 3.54%) have been waiting for. A Food and Drug Administration (FDA) advisory committee will meet next week to discuss the possible authorization of the company's COVID-19 vaccine candidate. Novavax originally aimed to file for authorization in the first half of last year, but the company struggled with manufacturing issues, which held up its filing.
Meanwhile, Novavax's once market-beating shares sank. They climbed more than 3,400% over the past two years through December. But this year, the stock has declined 61%. Earlier in the Novavax vaccine story, investors expected a potential regulatory authorization in the U.S. to be a big catalyst for the shares. What's likely to happen now? Before the regulatory meeting, here's what you need to know.
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An advisory committee meeting
So, first some details on what's set to happen next week. An FDA advisory committee plans to meet on June 7 to discuss Novavax's submission. The committee will discuss authorization as a primary series -- not as a booster. (Novavax must submit a separate request for booster authorization.)
The public virtual meeting will run from 8:30 a.m. to 5 p.m. ET, and at the end, the committee will vote on whether to recommend authorization. The FDA isn't required to follow an advisory committee's recommendation, but it usually does. If this procedure follows the same timeline as those for vaccine leaders Pfizer and Moderna, we can expect an FDA decision within a day or so of the meeting.
Now, let's move on to what's probably the most important point here: What's at stake? Novavax right now has more vaccine business outside the U.S. than in the U.S. Through an advance purchase agreement with the U.S., Novavax has an order for 110 million doses. But it has orders for as many as 430 million doses from the European Commission, the U.K., Canada, and several other countries.
And it has an agreement for as many as 1.1 billion doses for lower-to-middle-income countries through Gavi, an organization for equitable vaccine access. More than 35 countries have authorized Novavax's vaccine. So it already is generating revenue from the product. In fact, it reported $704 million in revenue and $203 million in net income in the first quarter.
And we should also keep in mind the vaccination situation in the U.S. Today, nearly 77% of the adult population is fully vaccinated. That number might not grow by much. Some people might have held off because they prefer a more-traditional vaccine over an mRNA version, and they might opt for Novavax.
But others who haven't gone for a jab so far have made the decision to remain unvaccinated. So most Americans who want a vaccine probably already have gotten one.
A spot in the future vaccine market
When coronavirus vaccines first came to market, the U.S. would have represented a huge opportunity for Novavax. That's not the case today. So a nod from the FDA might not change a lot for the company immediately. Does that mean we should shrug off the decision? No.
That's because what's at stake actually is Novavax's spot in the U.S. vaccine market of the future. A favorable decision now opens the door for the company. It's an opportunity to carve out a small share of the market and make its presence known.
The company's biggest opportunity could actually be a few years away. Novavax is developing a combined coronavirus/flu vaccine candidate. So is Moderna -- but Novavax is ahead. Moderna hasn't yet started clinical trials. Novavax recently reported positive phase 1 data for that vaccine and plans on launching phase 2 by the end of the year. Both players could succeed in this future market. But the one that gets there first will have a shot at the biggest share.
So a positive FDA decision next week would be a major win for Novavax. Even if it doesn't translate into major revenue or stock gains right away.
