Analysts are weighing in on Novavax, Inc. (NASDAQ:NVAX) and XOMA Corp (NASDAQ:XOMA), as shares of both companies fell sharply today due to various challenges and clinical trial setbacks. Let’s take a closer look:
Novavax shares are crashing close to 83% today after the vaccine maker posted results last night revealing its respiratory syncytial virus (RSV) virus vaccine failed a pivotal study in the elderly, with rates considerably lower than anticipated.
In reaction, Wedbush analyst Heather Behanna downgrades Novavax shares from an Outperform to a Neutral rating, while winding the price target down from $14 down to $2, a reflection of removing the elderly opportunity from the model “pending more clarity.”
Behanna is confused by the fluctuations of the vaccine shown in the elderly, adding, “Although we believe the RSV vaccine is viable, we have removed the elderly opportunity from our valuation at this time, pending a path forward; we step to the sidelines and downgrade shares to NEUTRAL.”
The next question: What next for this biotech firm as they confront this significant setback?
Behanna believes, “Management would like to rapidly come up with a path forward to avoid wasting this year’s RSV season, although other geographies (ie: Australia) can be used. We believe one option could be an adaptive design to account for variability in RSV or a focus on cumulative data over more than one season.”
“The CDC is beginning to monitor RSV in the elderly; current surveillance data is from kids and was consistent with past years. We look to these evolving data to better understand the commercial opportunity for an RSV vaccine in the elderly,” the analyst concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, four-star analyst Heather Behanna is ranked #604 out of 4,158 analysts. Behanna has a 53% success rate and garners 10.7% in her yearly returns.
TipRanks analytics demonstrate NVAX as a Buy. 50% of analysts polled in the last 3 months rate a Buy on NVAX, while 50% maintain a Hold. The consensus price target stands at $14.19, marking a nearly 840% upside from where the stock is currently trading.
XOMA management provided a positive update last night from its ongoing phase II for pipeline drug XOMA 358, a treatment designed to help patients suffering from insulin-induced hypoglycemia. However, XOMA shares are currently falling nearly 14% as the company plans a reverse stock split in order to bring its share prices up from rock-bottom levels.
The initial data XOMA released from two Phase II trials specifically evaluate conditions characterized by high levels of insulin, either as a result of abnormal pancreatic beta cell function, or due to abnormal response to glucose. Patients participating in the trial either have congenital hyperinsulinism (CHI) or hyperinsulinemia post bariatric surgery (PBS).
While the pipeline remains “early in development” and the company is in clear “need of funding,” Cowen analyst Phil Nadeau reiterates a Market Perform rating on XOMA without listing a price target. For Nadeau, “many questions remain” as to where XOMA will go from here.
Regarding XOMA 358, Nadeau believes, “Its profile will be better understood after longer and larger trials are completed. That being said, we find the early profile of XOMA 358 intriguing. Its safety profile appears benign, with no notable treatment emergent adverse events thus far. Moreover, it has shown intriguing signals of efficacy. Most notable in our opinion is the reduction in the number of and duration of hypoglycemic episodes in CHI patients given 3mg/kg or 6 mg/kg XOMA 358.”
Ultimately, “With small patient numbers and a short treatment duration, the data probably do not rise to proof of concept for XOMA 358 in the treatment of either CHI or PBS yet. Nonetheless, the early results do show proof of mechanism, and suggest it possible that there is a path to approval for XOMA 358 in both conditions, in our opinion,” the analyst concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Phil Nadeau is ranked #722 out of 4,158 analysts. Nadeau has a 50% success rate and realizes 4.2% in his annual returns. However, when recommending XOMA, Nadeau faces a loss of 77.7% in average profits on the stock.