BofA Securities reacted to the recent developments at Novavax (NASDAQ:NVAX), a biotechnology company specializing in vaccine development. The firm's analyst, Alec Stranahan, adjusted the price target on Novavax shares to $14.00, down from the previous $17.00, while maintaining a Neutral rating. This adjustment came in response to a clinical hold placed on the Investigational New Drug (IND) application for Novavax's phase 3 combined influenza/COVID (CIC) and standalone flu trial.
The clinical hold was issued following a serious adverse event (SAE) involving motor neuropathy reported by a participant from the phase 2 study of the vaccine. The news negatively impacted Novavax's stock, which saw a significant decline of 17.2%, contrasting with a slight increase of 0.60% in the Nasdaq Biotechnology Index (NBI) on the same day.
The phase 3 CIC program was initially set to begin in the fourth quarter of 2024 in the southern hemisphere, with expectations for top-line results to emerge by the second quarter of 2025 and a Biologics License Application (BLA) submission by 2026. However, the recent clinical hold is anticipated to cause delays in the initiation of the phase 3 CIC trial.
The analyst's statement highlighted uncertainty regarding the cause of the motor neuropathy, especially considering the approximately 22-month period between the administration of the CIC vaccine and the reporting of the SAE. Despite this uncertainty, the anticipated delay in the phase 3 initiation led to the revised price target. The Neutral rating was reaffirmed, with the new price objective reflecting the potential impact of the delayed phase 3 CIC and standalone flu trial on Novavax's timelines and plans.
Novavax has experienced significant developments. The company's Q2 2024 revenue reached $415 million, largely attributed to a strategic partnership with Sanofi (NASDAQ:SNY). This alliance, valued at a minimum of $1.2 billion, allowed Sanofi to co-market Novavax's vaccine in most regions and use Novavax's COVID-19 vaccine in combination with its own flu vaccines.
Analyst firms B.Riley and Jefferies have maintained a Buy rating on Novavax. B.Riley increased the price target to $26.00, up from the previous $23.00, while Jefferies reaffirmed its Buy rating with a $31.00 price target. Both firms noted Novavax's strong COVID-19 vaccine sales outlook and potential for growth.
Novavax's Nuvaxovid COVID-19 vaccine received Marketing Authorization from the European Commission for individuals aged 12 and older. This updated vaccine is designed to target the JN.1 variant and its lineages. It is also authorized for emergency use in the United States.
The company has appointed Ruxandra Draghia-Akli, MD, PhD, as its new Executive Vice President and Head of Research & Development. Lastly, Novavax is exploring cost reduction strategies, including renegotiating or exiting Advance Purchase Agreements for vaccine distribution and considering the sale of its Czech Republic manufacturing facility.
InvestingPro Insights
Recent InvestingPro data provides additional context to Novavax's current situation. The company's market capitalization stands at $1.64 billion, with a revenue of $987.67 million over the last twelve months as of Q2 2024. However, Novavax faces challenges, as evidenced by its negative operating income of -$286.23 million and an operating income margin of -28.98% during the same period.
InvestingPro Tips highlight that Novavax holds more cash than debt on its balance sheet, which could provide some financial flexibility as it navigates the clinical hold on its phase 3 trials. However, analysts anticipate a sales decline in the current year, aligning with the potential delays in product development discussed in the article.
Despite these challenges, Novavax's stock has shown significant volatility and strong returns. The company's share price has seen a 215.79% increase over the past six months and a 90.05% rise over the last year. This performance suggests that investors may be weighing the company's long-term potential against its current setbacks.
For readers interested in a more comprehensive analysis, InvestingPro offers 8 additional tips for Novavax, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.