Novavax said on Friday that the US drug developer has entered into a purchase agreement with the UK government for the supply of 60 million doses of NVX-CoV2373, its COVID-19 vaccine, sending shares up 6% in pre-market trading.
The stock is currently advancing to $140.99 in Friday’s pre-market trading. The term sheet signed between Novavax (NVAX) and the UK government also includes a Phase 3 clinical trial to assess the efficacy of the vaccine in the UK population. Novavax will supply the NVX-CoV2373 doses to the UK beginning as early as the first quarter of 2021.
Furthermore, Novavax will expand its collaboration with FUJIFILM Diosynth Biotechnologies, which will manufacture the antigen component of NVX-CoV2373 from its Billingham site in the UK, in addition to its US sites in North Carolina and Texas. The FUJIFILM Diosynth Biotechnologies site in the UK is expected to produce up to 180 million vaccine doses annually to help meet global supply targets of NVX-CoV2373 for additional markets, should it prove to be safe and effective.
“We are honored to partner with the UK government to deliver a vaccine that could provide vital protection in the fight against the global health crisis,” said Novovax CEO Stanley C. Erck. “Our Phase 3 clinical trial in the UK will be a critical component to assess the efficacy of NVX-CoV2373, which in a Phase 1 trial has already demonstrated to be generally well-tolerated and to elicit robust antibody responses.”
The Phase 3 clinical trial will be a randomized, double-blind, placebo-controlled efficacy study conducted in about 9,000 adults between 18-85 years of age in the UK. The trial is expected to begin in the third quarter of this year, with the support and infrastructure of the UK government. It will assess the ability of NVX-CoV2373 to protect against symptomatic COVID-19 disease as well as evaluate antibody and T-cell responses.
NVX‑CoV2373 is a stable, prefusion protein made using Novavax’ recombinant protein nanoparticle technology and includes the company’s proprietary Matrix‑M adjuvant to enhance the immune response and stimulate high levels of neutralizing antibodies.
Novavax’s vaccine candidate has been selected to be part of Operation Warp Speed (OWS), a US government program that seeks to begin supplying millions of doses of a safe, effective vaccine for COVID-19 in 2021. As part of the program, the company has been awarded with $1.6 billion in funding for testing and manufacturing as well as the supply of 100 million doses of the potential vaccine to the US.
In the run-up to developing a coronavirus vaccine candidate, the stock has this year gone up almost 33 times in value. However, shares plunged some 21% over the past 5 days.
B.Riley FBR analyst Mayank Mamtani this week reiterated a Buy rating on the stock with a $257 price target (93% upside potential) saying that he remains a buyer on the pullback, which he views as largely profit-taking. (See Novavax stock analysis on TipRanks).
“We anticipate NVAX continuing to secure supply agreements to secure regions specific demand, totaling in ~2-3 billion ‘2373 doses delivered in 2021-22 timeframe,” Mamtani wrote in a note to investors. “Management noted for this distribution roadmap to become clearer in coming weeks, which we anticipate to then transition over to purchase agreement contracts with possibly disclosed terms on economics flowing to NVAX and ‘2373 pricing.”
The rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus shows 4 Buy ratings versus 1 Sell rating. Despite the stock’s strong rally so far this year, the $227.60 average analyst price target indicates another 71% upside potential from current levels.
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