Investors in the vaccine maker Novavax (NASDAQ:NVAX) stock witnessed rollercoaster trading in September and October.
NVAX stock ended August shy of $240. By Sept. 8, the shares approached $280. Yet now, they are hovering just below $150.
In other words, the record high of $331.68 seen in early February is now in the rear–view mirror, but NVAX shares are still up over 25% year-to-date despite the recent decline.
The most recent drop in the NVAX stock price in October came following a Politico report, suggesting that Novavax Covid-19 vaccine was facing production lags. The company immediately issued a statement reconfirming “Confidence in Regulatory Filing Timelines and Manufacturing Quality.”
Then, in recent days, investors were encouraged by news from the other side of the Atlantic, as the biotech group filed “for Authorization of its COVID-19 Vaccine in the United Kingdom.”
Understandably, there is no guarantee that the country’s Medicines and Healthcare products Regulatory Agency (MHRA) will approve its vaccine against the novel coronavirus, namely the NVX-CoV237. Yet CEO Stanley C. Erck is optimistic about a positive outcome.
Therefore, today’s article focuses on what the future might hold for NVAX stocks in the coming weeks. Novavax shares could remain in flux in the short-run this flu season.
But investors with a two-to-three-year time horizon could consider buying the dips.
How Novavax Recent Earnings Came
Founded in 1987, the biotechnology group Novavax has been working on vaccines against infectious diseases for many years. Its pipeline includes vaccines against seasonal influenza, RSV, Ebola, MERS, SARS, and more recently Covid-19.
Management has been conducting late-stage clinical trials for its vaccine against the novel coronavirus, namely the NVX-CoV2373. However, it has not yet have filed for approval from the U.S. Food & Drug Administration (FDA). Therefore, investors have been hitting the “sell” button in recent weeks.
According to second-quarter financial results released in early August, NVAX generated revenues of $298 million, up 738% year-over-year).
“This increase was due to increased development activities relating to NVX-CoV2373 for services performed under the U.S. government and Coalition for Epidemic Preparedness Innovations agreements,” according to comapny maagement.
Meanwhile, research and development spending surged to $571 million vs. $35 million in the year ago quarter. The surge was also mainly due to expenses related to the development of NVX-CoV2373.
Net loss came in at $352 million, or $4.75 per share compared to a net loss of $18 million, or 30 cents per share in the prior-year period. Cash and equivalents ended the quarter at $2.1 billion.
“Our clinical successes over the second quarter reaffirm our confidence in NVX-CoV2373’s differentiated efficacy profile,” CEO Stanley C. Erck said of the results. “We continue to see the circulation of new variants and inequitable access to vaccine globally, demanding that we bring our COVID-19 vaccine to market as swiftly as possible.”
NVAX shares trade at 2.90x consensus forward price-to-earnings (P/E) and 7.81x trailing sales. The stock is up more than 80% in the past 12 months.
By comparison, other vaccine developers BioNTech (NASDAQ:BNTX), which has returned 225% in the past year, trades at 6.13 times forward P/E. Moderna (NASDAQ:MRNA), which is up more than 410% in the past 52 weeks, trades at 11.25 times forward earnings.
Novavax will next report Q3 results on Nov. 4. Therefore, investors are likely to see more volatility around the earnings release date.
Given the broad product pipeline for various diseases, NVAX offers growth potential in long-term. However, unless it gets regulatory approval in the U.S. as well as other countries soon, it will be difficult to see a new bull leg up start in Novavax shares in the coming weeks.
Covid-19 Vaccine Prospects
“In 2021, COVID-19 vaccine Comirnaty produced by Biontech and Pfizer is expected to make 26 billion U.S. dollars in sales worldwide, while Moderna’s mRNA-1273 vaccine is expected to make $19 billion,” according to Statista metrics,
The same report anticipates the NVX-CoV2373 vaccine to make $4.7 billion in 2022.
Novavax has had serious disruptions in the filings of its Covid-19 vaccine and has clearly fallen behind the competitors in the U.S. and globally.
Just recently, Merck (NYSE:MRK) announced that the FDA scheduled a meeting in late November to discuss the emergency use of Molnupiravir, the first oral antiviral medicine for the treatment of Covid-19.
Potential investors in NVAX stock might want to know that the long-term fortunes of Novavax are not necessarily limited to the Covid vaccine.
The biopharma group has other encouraging trials in the pipeline as well. For instance, one of them is NanoFlu, a combination vaccine for Covid-19 and influenza. So far, Novavax has the lead on that potential product.
The other one in the pipeline is ResVax, a vaccine for infants via maternal immunization against respiratory syncytial virus (RSV).
There are also ongoing clinical studies for a Malaria vaccine. Put another way, buy-and-hold investors would also be investing in numerous studies the company is working on.
The Bottom Line on NVAX Stock
As great as these prospect vaccines might sound, current investors want confirmation as to when there will be commercial products to generate revenues.
Given the recent decline in NVAX price, interested readers might want to keep Novavax shares on their radar for now. We might quickly see a bullish trend start if the company can secure an FDA approval soon.
Alternatively, investors could also consider an exchange-traded fund (ETF) that provides exposure to NVAX stock. Examples include the ETFMG Treatments, Testing and Advancements ETF (NYSEARCA:GERM), the Inspire Faithward Large Cap Momentum ESG ETF (NYSEARCA:FEVR), the iShares Biotechnology ETF (NASDAQ:IBB), or the VanEck Biotech ETF (NASDAQ:BBH).
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.