What happened
Shares of Novavax (NVAX -0.95%) had declined by nearly 11% as of 10:56 a.m. ET on Thursday amid the Nasdaq's broader decline of more than 3.8%. Its shares are likely falling due to the Federal Reserve's decision yesterday to hike interest rates, which disproportionately hurts growth stocks like Novavax.
Plus, the Food and Drug Administration's (FDA) nonbinding advisory committee also ruled yesterday that the coronavirus shots made by Moderna and Pfizer are likely to be safe and effective for infants, and both are major Novavax competitors in the vaccine market.
So what
The company's vaccine still isn't approved in the U.S., though there's only one final meeting of the FDA before its Emergency Use Authorization (EUA) could be granted. But even if it gets the green light, it'll only be authorized for those over the age of 18, so it'll probably have a hard time taking market share from the competition.
At the same time, rising interest rates mean that borrowing money will become more expensive for the biotech. That's a concern, as it isn't profitable, its trailing-12-month operating expenses are over $3 billion, and it has only roughly $1.6 billion in cash on hand.
Now what
The FDA hasn't yet confirmed a date for when it'll deliver a binding verdict on Novavax's vaccine. Once regulators convene, the company isn't guaranteed to have its shot approved, though given the positive reception it got with the advisory committee, it's highly likely.
It's also possible that its shares will take another beating if there's another rate hike or another regulatory success for its competitors between now and then.
