Why Novavax Shares Are Soaring By 25% Today

Novavax's RSV F vaccine makes headway toward phase 3 trials.

Todd Campbell
Todd Campbell
Aug 11, 2015 at 11:56AM
Health Care

Source: Novavax

What: After reporting second quarter financial results and releasing positive mid stage trial data, shares in Novavax (NASDAQ:NVAX) soared higher by more than 25% earlier today.

So what: As a clinical stage biopharma company, Novavax's second quarter financials are useful for evaluating cash burn and its impact on the balance sheet. Fortunately, Novavax's second quarter did little to raise red flags.

In the quarter, the company reports that expense reimbursement from the Department of Health and Human Services resulted in revenue increasing 68.7% to $14 million. Novavax spent $25 million on research and development and $7.1 million on general and administrative expenses in the quarter, leaving it with $314.9 million in cash on the books exiting June.

The company's net cash used in operations through the first six months totaled $42.8 million, and based on its cash stockpile, it seems there's plenty of financial flexibility to continue advancing its vaccines through clinical trials.

In the past month, the company has announced positive trial results for its Ebola GP vaccine, seasonal flu vaccine, and most recently, its RSV F vaccine. Because 900,000 patients over 65 require medical intervention tied to an RSV infection annually, Novavax's RSV F vaccine may be the most intriguing of the three.

In phase 2 trials, the RSV F vaccine became the first such vaccine to demonstrate efficacy of an active RSV immunization in any clinical trial population. Overall, RSV F met both primary and secondary endpoints for reducing RSV infections and did so with placebo-like safety.

Now what: Since 14,000 Americans pass away annually because of RSV infection, there's a significant unmet need for a preventative vaccine. Novavax plans to meet with regulators soon to map out plans for an upcoming phase 3 trial that could begin as early as the fourth quarter.

Although the company's recent data is compelling, there's no guarantee that late stage trials will confirm these results and for that reason, investors should continue to approach Novavax with a healthy dose of caution.

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