After a massive slip up last year, the tide appears to be turning for small cap vaccine maker Novavax (NVAX). In Wednesday’s trading session, shares took off and surged as much as 15% after the company announced that it had received fast-track designation from the FDA for its NanoFlu vaccine in adults at least 65 years old.
CEO Stanley Erck stated that the designation “reflects the urgent unmet medical need for a more effective vaccine against influenza, particularly in the older adult population which often experiences serious and sometimes life-threatening complications, of the disease.”
The news comes as a pleasant surprise for the company, which happens to be down 90% over the last twelve months largely as a result of its Phase 3 ResVax failure that occurred back in early 2019.
As of January, the CDC stated that between 9.7 million and 14 million people in the U.S. have already gotten the flu, adding that this season is poised to be one of the worst in decades. The high incidence of the viral infection is due to the fact that this year’s flu vaccine is “not a very good match” for a common strain, B/Victoria, according to Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases.
Bearing this in mind, the implications of a new flu vaccine are monumental. This fact hasn’t gone unnoticed by the Street, with B. Riley FBR analyst Mayank Mamtani pointing out that there are additional tailwinds that could propel NVAX forward ahead of its upcoming Phase 3 NanoFlu 28-day immunogenicity readout.
First and foremost, the data from Phase 2 already indicated that the vaccine is superior to FluZone, current market leader Sanofi’s equivalent product. It should also be noted that in October of 2019, there was a rapid, three-week trial enrollment period of about 2.7 thousand healthy elderly adults, and there has been a presidential order to update the modern influenza vaccine to boost public health and national security, both of which are encouraging signs.
Having said that, Mamtani does warn investors that a significant improvement to NVAX’s balance sheet might not take place right away. “We note that balance sheet overhang significantly weighs on stock reaction, since a commercial launch is guided for 2021’s flu season, and the ensuing strategic transaction with a large vaccine maker for global commercialization might not occur immediately, post-data,” he explained.
Still, the five-star analyst remains confident that NVAX can come out on top in the long run. “NVAX has gained agreement with the agency on an accelerated approval pathway, upon positive Ph. III results, which likely deems our current 35% probability of technical success as conservative,” he commented.
Based on all of the above factors, Mamtani decided to stay with the bulls, reiterating a Buy rating and $12 price target. Should the target be met, shares could be in for a 169% twelve-month gain. (To watch Mamtani’s track record, click here)
What does the rest of the Street think? According to the consensus breakdown, it has been relatively quiet when it comes to other analyst activity, with only 2 other analysts reviewing the healthcare name in the last three months. However, as both are also bullish, the message is clear: NVAX is a Strong Buy. In addition, the $18.83 average price target implies impressive upside potential of 331%. (See Novavax stock analysis on TipRanks)