Covovax has become the ninth Covid-19 vaccine to be granted emergency use approval by the World Health Organisation. The vaccine is produced by the Serum Institute of India under licence from Novavax, with the aim of increasing vaccine access in lower-income countries.
The Novavax share price leapt 11.5% to $217.32 following news of the approval on 17 December. But what does it mean for the Maryland-based biotech company?
Novavax share price reacts to vaccine trials
Prior to the pandemic, Novavax was a small player in the biotech market focused on drug discovery and experimental vaccines. The company has developed vaccines for viruses, including swine flu, Zika and Ebola.
But vaccine development hasn’t always been a driver of the Novavax share price. As reported by the Financial Times, it faced being delisted back in April 2019 after the stock plunged below $1 for 30 consecutive days. The Novavax share price had fallen off a cliff after its candidate vaccine for RSV, a common respiratory virus, failed a phase three study. It was the second such failure since 2016.
Wild fluctuations have continued since then. The Novavax share price ended 2019 down close to 90%. That performance reversed in 2020, with the stock climbing 2,888.9%, before swinging to an all-time high of $331.68 on 9 February 2021. The Novavax share price has gained 81.1% in the year-to-date to $201.95 on 20 December.
Whether the Novavax share price can continue hitting new highs depends on several variables. For example, the company’s vaccine candidate only received its first authorisation for use in Indonesia in November, meaning it’ll be some time yet before any impact on revenue and profit is factored in.
Covovax: Blockbuster vaccine potential
Indeed, Novavax’s earnings have been disappointing in recent quarters. For the third quarter of 2021, the company reported revenue of $179m, up 14% from $157m reported in the year-ago quarter. Net income was a loss of $322m, or $4.31 per share, versus a loss of $197m, or $3.21 per share, in the third quarter of 2020.
Novavax announced during the third-quarter earnings call that it had an agreement with the Serum Institute of India to provide 1.1 billion doses for lower-income countries. It also has advance purchase agreements with the European Commission as well as the governments of the UK, Australia, Canada, New Zealand and Switzerland. As for the US, Novavax had originally set its sights on approval from the Food and Drug Administration by May 2021, but the filing has been delayed due to manufacturing complications. The hope is that it will have been submitted by the end of the year.
Going into 2022, the big question is whether existing vaccines will need to be tweaked to provide protection against the Omicron variant. Two phase three studies have concluded that Covovax has an efficacy rate of 89.7% and 90.4%, respectively. Tests are ongoing to see whether the existing vaccine makeup can provide a similar level of protection from the new variant of concern. However, Novavax has already announced it would be able to tailor it if need be and go into commercial production by the end of January, according to Reuters.
Novavax is also investigating the potential for a combined Covid-19 and flu vaccine. It launched phase one and two studies in September. “We believe that much like flu, Covid-19 will continue to circulate,” Filip Dubovsky, executive vice president and chief medical officer of the company, said during its earnings call. “Our flu and Covid-19 vaccine share immunologic attributes that make the vaccine attractive in providing protection against drifted flu strains as well as Covid-19 variants.”
Until Novavax has the data, however, it’s all speculation. In the meantime, Covovax is expected to drive revenue next year. Analysts are expecting 2022 sales to be $5.19bn, up 238% from the $1.53bn forecast for 2021, according to Zacks Equity Research data. They also expect that it will report a profit of $27.40 per share versus a forecast loss of $11.75 per share by the end of this year.
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