- Novavax (NVAX) is down from a peak of $217.32 on Dec. 17 to just $53.69, reaching a new low.
- The company is still waiting for FDA approval of its Covid-19 vaccine, but the worst of the pandemic seems to be over.
- Novavax is putting its hopes on a combined influenza/Covid-19 vaccine which just reported good Phase 1/2 results.
Since the end of the last year, Novavax (NASDAQ:NVAX) stock is down 62%. Moreover, it’s off over 75% from its recent peak of $217.32 on Dec. 17. Clearly, NVAX stock is in a slump.
And it’s no wonder. Its straight Covid-19 vaccine has missed the curve. It’s still waiting for FDA approval when the worst of the pandemic has already passed. Now the company is hoping that its combination of influenza and Covid-19 vaccine will be its salvation.
The Combination Vaccine Works
On April 20, the Gaithersburg, MD company announced initial results from the Phase 1/2 clinical trial of its Covid-Influenza Combination Vaccine (CIC). The CIC combines Novavax’ Covid-19 vaccine, NVX-CoV2373 and its quadrivalent influenza vaccine candidate. Quadrivalent means it is meant to protect against four different flu viruses.
The good news is that the combination vaccine turns out to be feasible, well-tolerated and immunogenic. Immunogenicity is defined as the ability of cells/tissues to provoke an immune response.
As a result, Novavax might be able to sell its vaccine as a recurrent booster to fight both Covid-19 and seasonal influenza. Novavax announced that the combination vaccine was generally well tolerated: “Serious adverse were rare and none were assessed as being related to the vaccine.”
Recent News on Its Covid-19 Vaccine
Moreover, three days ago Novavx received good news concerning its Covid-19 vaccine. A Japanese health ministry committee approved it for the Japanese population. It can now be sold there as a possible fourth shot for the coronavirus.
The Japanese government has agreed to purchase 150 million doses of Novavax’s vaccine. It will be manufactured domestically by Takeda Pharmaceutical (NYSE:TAK). Novavax’s vaccine is known as a recombinant protein type. This is a more conventional technology rather than a messenger RNA (mRNA) type made by Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE).
Moreover, Reuters reports that its Covid-19 vaccine, although approved in Europe, has had a slow rollout under its trade name of Nuvaxovid. In Germany, only 38,000 doses have been administered since its rollout began on Feb. 24. That is nothing too write home about and won’t help convince analysts about its prospects.
Where This Leaves Investors In NVAX Stock
As it stands, analysts forecast revenue this year of $4.49 billion, but lower sales next year of $3.67 billion. Given that NXAX stock has a market capitalization of $4.39 billion now, it still trades over 1 times sales (1.2x). The point is that sales will likely fall over the next several years.
The good news is that this is very cheap compared to other vaccine makers. For example, Moderna trades for over 3.8 times sales and Pfizer is at a similar valuation. However, both of these companies have substantially higher sales and more countries and locations use their vaccines. So they deserve a much higher valuation, or put another way, Novavax deserves to have a discount. But should it really be at a 70% discount (i.e., 1.2x sales vs. 3.86x price-to-sales multiple)?
I suspect that, given the news of its combination vaccine, NVAX should be at just a 50% discount or 1.93 times sales. That implies its valuation should be 1.93 times $3.67 billion, or $7.08 billion. This is 62.9% higher than its $4.35 billion market value today. In other words, NVAX stock is worth $87.46 per share, up 62.9% from its price today of $53.69 per share.
This gives investors a good upside in NVAX stock. For example, even if it takes two years for this return to occur, the compound annual return will be 27.6% each year for the next two years. That is a good ROI for most investors and probably worth the risk, especially given how far NVAX stock has fallen.
On the date of publication, Mark Hake did not hold (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.