In a surprise move, Novavax (NASDAQ:NVAX) stock is down 13% today after the biotech company’s Covid-19 vaccine secured its long awaited approval from the Food and Drug Administration (FDA).
Today’s decline comes after NVAX stock rose 10% in recent days on anticipation of FDA approval. While the selloff can be partly attributed to the Wall Street adage of “sell the news,” today’s downturn is also likely due to the European Union listing “severe allergic reactions” as a side effect of the Novavax vaccine.
NVAX stock is now down 60% this year, including today’s decline, and trading at $57 a share.
As had been widely expected, the FDA authorized Novavax’s Covid-19 vaccine for emergency use in adults, making it the fourth vaccine available in the U.S. The approval follows two years of delays and setbacks for Novavax in terms of developing its Covid-19 vaccine. However, just as the FDA approved the Novavax shot, the European Medicines Agency (EMA) listed “severe allergic reactions” as a potential side effect of the company’s vaccine dealing it another blow in a major market.
Additionally, the European regulator said that it planned to update the product information for Novavax’s vaccine to add “unusual or decreased feeling in the skin” as a new side effect. To date, about 250,000 doses of Novavax’s Covid-19 shot, called “Nuvaxovid,” have been dispensed throughout Europe, according to the European Centre for Disease Prevention and Control (ECDC). The warnings are a negative development that could hurt future sales of the Novavax vaccine in Europe, one of the world’s biggest pharmaceutical markets with nearly 750 million people.
Why It Matters
The European warning has served to rain on Novavax’s parade. No sooner had the Maryland-based company achieved its long desired FDA approval than regulators in Europe hit is vaccine with a new, troublesome warning label. This has dampened investor enthusiasm and worsened sentiment that was already tenuous given the length of time it has taken for Novavax’s vaccine to win approval in America.
There are also concerns about sales of Novavax’s Covid-19 vaccine given that two-thirds (67%) of the U.S. population is already full vaccinated against the respiratory disease. And the company’s shot trails already approved inoculations from Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) and Moderna (NASDAQ:MRNA). NVAX’s shot could see some sales as a booster, the company is seeking that approval as well, but overall vaccination rates have been slowing in the U.S.
Overall sales could now suffer in Europe as a result of the new warning label. This is just more bad news for Novavax. Its share price is being pushed lower as a result.
What’s Next for NVAX Stock
Excitement over FDA approval of Novavax’s Covid-19 vaccine didn’t last long. The European warning is yet another setback for the small biotech company and likely to keep its share price heading lower in the near-term. Going forward, Novavax will have to keep working to inspire confidence in its vaccine, both among regulators and consumers.
On the date of publication, Joel Baglole 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.