Tuesday was a crucial day for Novavax (NVAX -4.58%). At long last, the U.S. Food and Drug Administration (FDA) Vaccines and Related Biological Products Advisory Committee (VRBPAC) met to review the company's COVID-19 vaccine data. A negative recommendation from the FDA advisory committee held the potential to deliver a crushing blow.
But that didn't happen. Instead, the VRBPAC members voted 21-0 in favor of recommending Emergency Use Authorization (EUA) for Novavax's NVX-CoV2373, with one abstention.
Novavax's shares initially moved higher on Wednesday, starting the day up around 10%. However, the upward momentum for the vaccine stock didn't last long. By mid-morning, all of the early gains had evaporated. Here's why investors yawned at Novavax's great FDA-panel news.
Image source: Getty Images.
No big surprise
Stocks move the most when there's good or bad news that's unexpected. In this case, though, many investors were looking for a positive recommendation from the FDA advisory committee.
Microbiologist Eric Rubin, who is editor-in-chief of The New England Journal of Medicine, served as a temporary voting member of the VRBPAC. He perhaps summed things up about EUA for Novavax's vaccine by stating before the committee's vote, "It's not that difficult a decision now."
Granted, there was some level of uncertainty. Last week, Novavax stock plunged after the FDA released briefing documents that highlighted a potential link between NVX-CoV2373 and myocarditis (inflammation of the heart). Investors were concerned that the FDA advisory-committee members could be swayed against EUA because of these possible safety issues.
However, the committee determined that the benefits of Novavax's COVID-19 vaccine outweighed any risks. It's important to note, as well, that the FDA briefing documents stated that there wasn't enough data to establish a causal relationship between NVX-CoV2373 and incidents of myocarditis.
Major hurdles remain
The FDA doesn't always go along with advisory-committee recommendations. In this case, though, it seems very likely that the agency will do so. Before the VRBPAC held its vote, FDA official Dr. Peter Marks stated, "We speak to making available another option for those who might not otherwise take a vaccine."
But Marks' comments underscore two major hurdles remaining for Novavax. Maybe NVX-CoV2373 will be appealing to many of the unvaccinated since it doesn't use messenger RNA (mRNA) and instead uses an approach employed in other vaccines before COVID-19 came along. However, there's no guarantee that large numbers of unvaccinated Americans even want another COVID-19 vaccine.
Also, the EUA at play for NVX-CoV2373 right now is only for the primary two-dose series in adults. Nearly 77% of the U.S. population ages 18 and older are already fully vaccinated. More than 89% have received at least one COVID-19 vaccine dose. Novavax's vaccine won't be a booster option for any of these people, even if it wins the initial EUA, as expected.
One knock against NVX-CoV2373 in the FDA advisory-committee meeting was that there wasn't much data about how the vaccine protects against newer coronavirus strains, including the omicron variant. Moderna and the Pfizer-BioNTech teams are already moving forward with versions of their respective vaccines that specifically target omicron. Novavax could be at a big disadvantage if its rivals' efforts are successful.
Looking ahead
It's possible that Novavax could clear all these hurdles. The company has already filed for authorization in the United Kingdom for use of its vaccine as a booster. It will almost certainly try to move quickly to secure a similar EUA in the U.S.
Novavax also is arguably in the lead at this point in developing a combination COVID-19/flu vaccine. If COVID-19 transitions from pandemic to endemic, as many expect, the combo-vaccine market could be where the most money is made.
For now, Novavax has passed a crucial test with the FDA advisory committee's overwhelmingly positive recommendation. But more big tests loom ahead for the company.
