Novavax Pops 7% On South Korea Deal For Global Covid-19 Vaccine Supply


Shares in Novavax jumped more than 7% after the biotech company said South Korea’s SK bioscience will manufacture the antigen component of its COVID-19 vaccine candidate NVX‑CoV2373 to help boost global supply.

The stock rose to $133.28 at the close on Thursday and advanced another 1.7% in after-market trading. Novavax (NVAX) signed a letter of intent with the Republic of Korea’s Ministry of Health and Welfare for broad and equitable access to NVX-CoV2373 for the global market as well as to make the vaccine available in South Korea.

Under the terms of the collaboration, SK bioscience will manufacture the vaccine antigen component for use in the final drug product globally during the coronavirus pandemic. SK bioscience will this month start the production of the NVX-CoV2373 antigen at its Andong L-house vaccine facility in South Korea.

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.

“We are proud to partner with SK bioscience to fulfill our commitment to ensure global supply of NVX-CoV2373 in alignment with our partnership with Coalition for Epidemic Preparedness Innovations (CEPI),” said Novavax CEO Stanley C. Erck. “SK bioscience shares our sense of urgency to ensure broad and equitable access for our COVID-19 vaccine candidate around the world.”

Novavax has received $384 million from CEPI to conduct early-stage trial of its vaccine candidate. Phase 1 data from the company’s Phase 1/2 randomized, observer-blinded, placebo-controlled trial showed that NVX-CoV2373 was generally well-tolerated and demonstrated robust antibody responses, which were numerically superior to that seen in human convalescent sera.

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, Novavax has been awarded with $1.6 billion in funding to complete its late-stage clinical development, including a pivotal Phase 3 clinical trial of NVX‑CoV2373 and supply 100 million doses of the vaccine as early as late 2020.

In the run-up to developing a coronavirus vaccine candidate, NVAX has this year gone up almost 33 times in value. The stock is down 21% over the past 5 days. Meanwhile, the $227.60 average analyst price target indicates another 71% upside potential from current levels.

Last week, Ladenburg Thalmann analyst Michael Higgins cut the stock to Sell from Hold and maintained a $105 price target (21% downside potential), saying that the rally has gone too far.

“We believe Novavax’s current valuation overestimates the revenue and net profit opportunity, as we continue to reach our price target of $105, which produces our Sell rating from Neutral,” Higgins wrote in a note to investors. “There are at least three COVID-19 vaccines ahead of Novavax’s vaccine in the US.”

The analyst added that Novavax has yet to secure supply and distribution agreements with countries outside of the US.

The rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus shows 4 Buy ratings versus Higgins’ Sell rating. (See Novavax stock analysis on TipRanks)

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