What happened
Shares of Novavax (NVAX 3.54%) lost 28% of their value in the first six months of the year, according to data from S&P Global Market Intelligence, extending a downtrend that began in early 2022. The pharmaceutical company's COVID-19 vaccine not only hit the market far too late to matter for the company (consuming time and resources that could have been used to develop vaccines that are more marketable now), but there's little else in the pipeline that can replace declining vaccine revenue.
So what
It's not all bad news, though. A week ago, Novavax's Nuvaxovid received the European Union's full approval as a preventive vaccine for COVID-19. Shortly after that, the company announced it will receive partial payment for COVID-19 vaccine doses ordered by Canada's government that ended up being unneeded. The drugmaker is also working toward the development of a vaccine that specifically targets the newer XBB.1.5 variant of COVID-19.
None of this, however, changes the fact that the world simply doesn't need anywhere near the number of COVID-19 vaccines it needed two years ago. For Novavax, which has been hyperfocused on COVID-19, that's a problem.
In 2021 Novavax spent more than $2.2 billion on COVID vaccines,. That work ultimately more than doubled the top line, which nearly doubled again last year as those vaccines were sold and dispensed en masse.
NVAX Revenue (Quarterly) data by YCharts
But with new COVID-19 cases now barely even a measurable fraction of the number of new cases seen at the peak of the pandemic, demand has plunged. That's a big reason Novavax's revenue is projected to fall 31% this year, and then continue dwindling through next year.
Now what
Novavax's portfolio does go beyond COVID. It's also a developer of influenza vaccines, as well as treatments for malaria. Addressing Ebola, MERS, and RSV is also on its developmental radar.
The bulk of its recent revenue has been coronavirus-related though, and that market opportunity is shrinking fast. The company doesn't have many other drugs in its pipeline that are anywhere near ready for approval consideration, setting the stage for a return to pre-pandemic product revenue of... well, practically nil.
Until Novavax can articulate a plausible plan for driving meaningful, sustainable revenue growth after this year, the market's apt to continue shedding the stock. It makes sense to avoid this stock.
