After struggling mightily since the tail end of 2021, Novavax (NASDAQ:NVAX) finally gave embattled stakeholders something to cheer about. On Monday, NVAX stock popped dramatically higher on the news that current CEO Stanley Erck will retire. Replacing Erck at the helm will be John Jacobs, an industry veteran and previously head of Harmony Biosciences (NASDAQ:HRMY).
According to the accompanying press release, the transition will take place officially on Jan. 23, 2023. Jacobs will also take over the role of president of Novavax. Erck will serve as an advisor to the biotechnology firm for the next 15 months to enable a smooth transition.
“As we prepare for Stan’s retirement, the Board reflects on the incredible legacy he leaves behind,” said James F. Young, Ph.D., Chairman of the Board of Directors. “Stan led Novavax from a clinical development organization to a global commercial vaccines company during a worldwide pandemic.”
“This foundation puts Novavax in a strong position to execute on its long-term strategy, and we look forward to supporting Stan and John through the transition. John is a seasoned industry leader who will bring a fresh perspective and deep industry expertise to Novavax,” added Young.
Well respected within the broader healthcare industry, on paper, Novavax securing Jacobs represents a win for NVAX stock. Prior to Harmony Biosciences, Jacobs held leadership roles at Teva Pharmaceuticals (NYSE:TEVA). He also climbed the ladder of various other pharmaceutical companies including Pfizer (NYSE:PFE).
Interestingly, while NVAX stock jumped over 16% in early afternoon trading, HRMY fell over 18% during the same period.
NVAX Stock Stares Down Gargantuan Obstacles
Over the trailing five days, NVAX stock managed to gain over 20% at the time of writing, a somewhat buoying sentiment. Nevertheless, the underlying biotech must climb a mountain of anxieties and severe viability concerns.
Moving forward, one of the new leadership team’s main tasks presumably centers on restoring credibility for NVAX stock. According to data from TipRanks, sentiment among hedge funds for Novavax shares rates is very negative. Since the fourth quarter of 2020, these institutional investors significantly unwound their exposure to the biotech outfit.
On the scientific front, Novavax distinguished itself with its coronavirus vaccine, which utilized a subunit, or traditional vaccine approach. According to Sara Berg, MS of the American Medical Association, “[t]he Novavax vaccine is protein-based, which is a type of vaccine that has been widely used for decades. Some more familiar protein-based vaccines include those that protect against human papillomavirus, hepatitis B and shingles.”
However, one of the challenges of the protein-based approach centers on the time and money needed to develop such vaccines. That’s according to Cynthia A. Challener, contributor for BioPharm International. Certainly, the innovative approach of using messenger-RNA-based vaccines allowed companies like Pfizer to hit distribution faster.
Invariably, hesitancy toward new technologies keeps Novavax relevant, at least for now. For instance, according to Popular Mechanics, the introduction of the first domestic microwave failed to launch successfully because the platform carried a steep price tag and integrated unknown technology. However, microwaves today represent a staple in a vast majority of households, implicitly demonstrating the risk of inflexibility.
As other biotech rivals incorporate mRNA-based innovations to forward therapeutic and vaccine candidates against multiple pressing public health threats, staying the course with subunits may present high risks for NVAX stock.
Why It Matters
With NVAX stock down over 90% in the trailing year, the underlying company must do whatever it can to right the ship. Per Google Finance, Novavax’s lifetime return presently sits at more than 84% below parity.
Nevertheless, one glimmer of hope stems from analysts’ opinions. Per TipRanks, the consensus view among experts stands at moderate buy. Individually, this breaks down to three buys and one sell. Also, the average price target pings at a remarkable $65, representing roughly 408% upside potential.
On the date of publication, Josh Enomoto 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.