This Analyst Doesn’t Get Novavax, Inc. (NVAX) Decision to Delay NanoFlu Vaccine Top-Line Data Release to Next Year

Cantor's William Tanner is not thrilled as he joins a disgruntled Street saying goodbye to what could have been a meaningful catalyst for NVAX shares before the end of 2017: NanoFlu vaccine top-line data.

Novavax, Inc. (NASDAQ:NVAX) shares are crashing nearly 22% as investors are shaking their heads with disappointment. What on earth happened to send shareholders into such a running-for-the-hills frenzy? Well, the NanoFlu vaccine top-line data release, one that could have been a key catalyst for the drug maker before the year closed, has now been pushed back to February 2018.

Cantor analyst William Tanner believes this “deferral” is the worst kind of holiday surprise for investors, going as far as to say the news “probably looks like a lump of coal to traders.”

In reaction, the analyst reiterates a Neutral rating on NVAX stock. However, despite the neutral stance and today’s deep frustration, Tanner still holds out hope within the next 12-months, as his $2 price target implies a nearly 74% upside from current levels. (To watch Tanner’s track record, click here)

“For reasons we still do not understand, management plans to release top-line data in February so that the vaccine’s possible effectiveness can be compared with commercial seasonal flu vaccines. We suspect the data are material, so we fail to see how they need not be disclosed if available. On the positive side, NVAX announced that the Prepare trial of the RSV vaccine in pregnant women would continue after conduct of an ‘informational’ analysis. According to management, undisclosed threshold criteria for a commercial product were met so subject enrollment will continue […] Although the study continues, we question whether investors will view the program as meaningfully de-risked. Management commented to us that the analysis could re-spark interest from partners. We wonder how likely that is as NVAX is, ostensibly, privy to little detailed information from the analysis and, presumably, prospective partners would be too.”

While the decision for NVAX to continue enrollment in its pivotal Prepare trial certainly is a “positive,” the analyst is concerned that the interim analysis could become crucial to assign “meaningful value” to this asset. As soon as 4,600 subjects are enrolled, anticipated to come to pass by the middle of next year, the company will conduct the analysis, and the primary readout should hit by the start of 2019. Until then, investors will be biting back the latest bitter lump of coal.

TipRanks indicates a largely cautious sentiment circulating among analysts on the Street when it comes to Novavax’s prospects in the biotech sphere. Out of 5 analysts polled in the last 12 months, 2 are bullish on NVAX stock but a majority of 3 remain on the sidelines, waiting to take the gamble. The 12-month average price target stands at $2.00, marking a 69% upside from current levels, and likewise revealing some optimism among analysts- even when they are deciding to play it cautious.


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