Novavax Stock Forecast: Do Vaccines Equal Profits?

Novavax Stock Forecast: Infectious diseases have decimated populations since humans first began traveling between communities.

One of the earliest recorded examples dates back to 165 AD, when Roman soldiers returning from Mesopotamia brought a bug back with them. Though researchers suspect smallpox or measles, no one is sure exactly what the disease was. What they do know is that 5 million died and the Roman army was devastated.

Other plagues have wiped out millions in subsequent centuries. Bubonic plague killed 25 million – roughly half of Europe’s population – in 541 AD, then struck again in 1346, killing up to 200 million.

The problem is that such epidemics aren’t ancient history. Infectious disease continues to spread through cities, states, and countries today, destroying families, annihilating communities, and bringing entire economies to a standstill. For example, from 2014 – 2016, West Africa experienced an outbreak of Ebola – a disease that kills approximately 50 percent of those who are infected.

Novavax is on a mission to prevent some of the most common infectious diseases from taking hold. If successful, millions of lives could be saved. For investors, the question is whether Novavax can succeed. If so, buying stock now could lead to substantial returns in the future.

A Brief History of Vaccination

The solution to minimizing the spread of infectious disease is vaccination – a concept with ancient roots. Historians have unearthed records showing the Chinese inoculated against smallpox as early as 1000 AD.

Edward Jenner was a pioneer in modern immunization. He developed an effective method of vaccinating against smallpox in 1796. Scientists that came after him perfected the vaccine, and through its use, the disease was eventually eradicated.

At their most basic, vaccines introduce material to the body that stimulates the immune system to recognize and fight the targeted disease. Once this process has occurred, the body becomes immune to infection.

Under this theory, Louis Pasteur developed a rabies vaccination in 1885, and the 1930s brought vaccines for tuberculosis, diphtheria, typhoid, tetanus, plague, anthrax, and cholera – all of which were responsible for deadly epidemics in years past.

By the mid-20th century, scientists found solutions for common childhood illnesses that had long caused disability and death in the most vulnerable patients. The polio vaccine was a huge win for medicine, as were vaccines for mumps, measles, and rubella.

Today, biotech companies are focused on developing vaccines for the infectious diseases that still plague the world’s population. Examples include HIV/AIDs, Ebola, pulmonary tuberculosis (TB), malaria, and a variety of respiratory infections. There is also work being done on vaccinations for conditions that are not infectious like allergies and addiction.

Advanced techniques, such as the use of recombinant DNA technology, are making it easier to find solutions for protecting people from a wide variety of health risks. Novavax is on the frontlines in the fight against infection.

What Does Novavax Do? 

Novavax is a clinical-stage biotech firm on the cutting edge of immunization research.

It is currently focused on developing vaccines for influenza, Ebola, and respiratory syncytial virus (RSV), a respiratory disease that is deadly to infants.

Novavax uses a proprietary recombinant nanoparticle technology in its work, and the resulting vaccine candidates are genetically engineered three-dimensional nanostructures that rely on  recombinant proteins critical to disease pathogenesis for their efficacy.

Novavax launched 2019 with good news on its influenza vaccine candidate, NanoFlu, which is a departure from traditional flu vaccines.

Phase II trials were successful, showing NanoFlu was 50 percent more effective in elderly patients as compared to the leading vaccine on the market, Fluzone High-Dose. The individuals who participated in the trial tolerated the new vaccine well, and NanoFlu is cleared to move into Phase III trials by the end of 2019.

One of the most widely-anticipated features, should the vaccine be approved, is the method of production. Because it is a recombinant protein vaccine, the antigen is synthesized – a far less expensive and less time-consuming process than the traditional egg-based process.

A second vaccine candidate, ResVax isn’t moving forward quite as smoothly – an unfortunate development considering the impact of RSV on infants. Globally, this virus is the second leading cause of death for babies under a year old. ResVax is designed to immunize infants by vaccinating pregnant women.

In a Phase III trial that ended in early 2019, ResVax did not meet its primary objective: to prevent medically significant RSV-related lower respiratory tract infections in the first three months of life.

However, there was some good news. Results indicate that the vaccine reduces the likelihood of serious health consequences for infants who contract RSV. In the first six months of life, immunized children had 25 percent fewer hospitalizations due to lower respiratory tract infections, and there was a 39 percent reduction in lower respiratory tract infections with severe hypoxemia.

The mixed results have prompted the US Food & Drug Administration (FDA) to request an additional Phase III trial. In the meantime, Novavax is partnering with the Bill & Melinda Gates Foundation to explore opportunities to make the vaccine available to vulnerable populations in low and middle income countries outside of the US.

With so many ups and downs, investors aren’t quite sure what to think. Is Novavax stock a smart buy and what is the Novavax stock forecast?

Is Novavax a Buy? 

Biotech stocks are notoriously volatile. New drugs fail during trials more often than they succeed, and sometimes the failures occur quite late in the process.

Investors tend to jump on-board when a trial shows promise, only to abandon ship when there is a setback. Novavax is, unfortunately, not immune to these ups and downs, and the ResVax roller coaster has made 2019 particularly challenging.

Share prices plummeted immediately when the initial results of the ResVax Phase III trial were announced.

By May, shares were trading at less than the $1 minimum required for listing on the Nasdaq. When more data became available and Novavax announced the positive results of the study, share prices recovered somewhat, and news from the NanoFlu front has them creeping upward – slowly.

The fact is that Novavax stock is risky – but perhaps no more risky than other well-regarded biotechs.

The disappointing ResVax results are not putting the vaccine candidate off the market altogether. It appears there is good reason to believe ResVax offers some protection for infants, if not the exact sort of protection the company was aiming for.

Meanwhile, NanoFlu is nearing the end of the trial process. If it successfully achieves FDA approval in 2020, it could rapidly become a leader in the flu vaccine market.

Novavax Stock Forecast

From an investor’s perspective, Novavax’s financial position could be looked at in a positive or a negative way.

The company has made enormous investments in research and development, with the total bill coming in at $184.7 million for 2018. This left Novavax short on cash, which means the company will have to explore options for raising capital if it is to proceed with planned trials. That does add to levels of risk.

On the other hand, the company certainly put that money to good use. The research and development dollars led to important steps forward in the progress of RSV and influenza vaccines. Even if these specific candidates don’t succeed, the company has gained important knowledge and insight along the way. This could form the foundation of future success.

Investors who can stomach the highs and lows certain to come for Novavax stock may find that this biotech is more likely to succeed long-term than some of its peers.

It owns innovative, proprietary technology, and it owns critical information on successfully developing vaccines. Novavax is a gamble, as with any stock purchase, but for those willing to ride through the risks inherent in biotech, it’s a buy.

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.