Moderna And Novavax Stocks Fall On IP Waiver Concerns, But Sell Off Is Overdone

Vaccine stocks had a rough week, with Novavax (NASDAQ: NVAX) stock down almost -25%, Moderna (NASDAQ: MRNA) down by about -9%, and Pfizer stock (NYSE: PFE) up by just about 2% despite posting a very solid set of first-quarter results. The decline is largely driven by the Biden administration’s support of the temporary waiver of intellectual property rights for Covid-19 vaccines, as it hopes that this will help to speed up vaccination efforts in developing markets. However, we think that the sell-off in vaccine stocks is an overreaction for a couple of reasons.

Firstly, vaccine production is complex and relies upon limited raw materials sources and manufacturing capacity and it could take a while for generics companies, even if they gain access to the required IP, to scale up capacity quickly. For example, even Novavax, which had a head start in the vaccine race, and has developed a highly effective Covid-19 shot, has yet to commence commercial deliveries due to the slow regulatory process and production-related issues. Secondly, the current Covid vaccine leaders are quickly scaling up capacity. Pfizer, Moderna, and Johnson & Johnson are targeting the production of three billion doses each in 2021 and Pfizer has been talking of offering shots at a not-for-profit price in some developing markets. This could likely reduce the need for generic vaccines. Moreover, the shots from Pfizer and Moderna use the novel mRNA technology which has a complex supply chain and limited expertise available outside of these companies, likely making it difficult for generics players to manufacture them.

See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-listed pharma and biotech companies. The theme is up 41% this year.

[5/3/2021] Why Covid Vaccine Stocks Are Back In Favor

Covid-19 vaccine stocks have fared well over the last month. Moderna (NASDAQ: MRNA) and Pfizer – two leading Covid vaccine suppliers – have seen their stock prices rise by about 37% and 7% respectively since early April, while Novavax (NASDAQ: NVAX), which is likely to begin commercial deployment of its vaccine shortly, saw its stock gain 33%. So what’s driving the surge in these vaccine stocks?

Firstly, global Covid-19 cases have been trending significantly higher with daily new cases standing at over 800k over the last week, driven partly by infections in India and South America. This is likely causing an urgency to boost vaccination programs. Although about 38% of U.S. adults have now received at least one dose of Covid-19 shots, per the Bloomberg Vaccine Tracker, the global rollout of vaccines has been much slower, with under 8% of the global population vaccinated.

Moreover, there’s a possibility the Covid-19 vaccinations will be an ongoing process, requiring periodic booster shots, likely with new formulations, to protect against new variants of the virus and potentially diminishing immunity. Both Pfizer and Moderna are working on developing booster doses of their respective vaccines and this could mean that vaccine makers will see recurring revenues from what initially appeared like a one-off vaccine product. The U.K., for instance, has ordered an additional 60 million doses of Pfizer’s Covid vaccine for booster shots in the Fall.

Although vaccine competition is mounting, Moderna, Pfizer, and Novavax are likely to hold their own with their highly effective vaccines. While China and Russia have been scaling up the production and distribution of their homegrown shots, they face some perception issues, given the way that clinical trials were handled and also due to the fact that they come from authoritarian states. Separately, vaccines from AstraZeneca and Johnson & Johnson – which are seen as key to the global vaccine drive – are being investigated for extremely rare, but potentially lethal, side effects of blood clots.

See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-listed pharma and biotech companies. The theme is up 44% this year.

[4/7/2021] Are Vaccine Stocks Still Worth Investing In?

Covid-19 vaccine stocks have had a solid run, driven by the urgency to end the pandemic and the unprecedented speed at which companies have developed highly effective vaccines. Our theme of Covid-19 Vaccine Stocks – which includes Moderna (NASDAQ: MRNA), Novavax (NASDAQ: NVAX), Johnson & Johnson, and Pfizer– is up by 22% year to date and by over 13x since the end of 2019. We’ve now reached the point in the cycle where most major players (except Novavax) are scaling up deliveries of their shots. About 690 million Covid vaccine doses have been administered thus far worldwide, per the Bloomberg Vaccine Tracker. With vaccinations happening at a rate of about 16.3 million doses per day globally and most vaccines requiring two doses, there’s still a long way to go before the global population of close to eight billion people is vaccinated.

So clearly vaccination programs are just getting started based on the larger scheme of things. However, the markets are beginning to look beyond the pandemic. With bond yields rising and the economy continuing to open up, investors have been rotating out of pandemic winners such as vaccine and work from home names to more cyclical and value stocks. For example, Moderna and Novavax – both viewed as a direct play on Covid-19 vaccines are down by about 28% and 44% respectively from their February highs. Moreover, the Covid-19 vaccine market is also likely to get increasingly competitive as time goes on, as new players enter the fray and existing players scale up capacity. Pfizer, for instance, says that it could scale up capacity from two billion doses this year to as much as three billion in 2022. Considering this, we think that investors will need to evaluate these companies based on the potential of their future pipelines, rather than just focusing on their Covid vaccines.

[1/29/2021] Novavax’s Vaccine Could Be A Game Changer

Novavax (NASDAQ: NVAX) has said that its Covid-19 shot is 89.3% effective, based on interim data from its phase 3 clinical trials conducted in the U.K. [1] The company expects to file for emergency authorization with U.K. regulators in the coming months. While the reported efficacy numbers seem to put the vaccine slightly behind Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA), who have rolled out vaccines that are roughly 95% effective, we think the Novavax shot holds more promise for a couple of reasons. Firstly, Novavax’s two-dose shot has shown efficacy against the new strains of the Coronavirus found in the U.K. and South Africa, making it the first company to prove this in clinical trials. So while the 89% figure looks slightly lower than Pfizer and Moderna’s reported results, the Novavax shot is at 95.6% effectiveness against the original virus — right in line with the two competitors. The shot should also be easier to distribute, considering that it doesn’t need to be stored in super-cold temperatures, unlike Pfizer’s mRNA-based vaccine. Novavax’s vaccine is also likely to be more reasonably priced – a deal with the U.S. government saw each dose priced at about $16, versus as much as $37 per dose for Moderna’s vaccine. Crucially, the company has also lined up a lot of production capacity, collaborating with the world’s largest vaccine producer Serum Institute of India with plans to produce its vaccine at a rate of 2 billion doses a year starting from mid-2021. See our updates below for more details on the Novavax shot.

See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-listed pharma and biotech companies. The theme is up about 4x over the last 2 years.

[1/27/2021] Novavax Updates

Novavax’s (NASDAQ: NVAX) experimental Covid-19 shot is being closely watched, given some promising early-stage data and the company’s move to line up significant manufacturing capacity. Here’s a quick overview of what has been happening with Novavax stock in recent weeks. Firstly, the company is looking to raise as much as $500 million in equity, in a move that should improve its liquidity position and help fund its R&D spending. This is probably a smart move, as Novavax stock is up almost 15x over the last 12 months, with its market cap standing at about $8 billion. Novavax also has three efficacy/safety studies of its Covid-19 shot underway in the U.K, South Africa, and the U.S., with some initial efficacy data expected to come out in a few weeks. The company could be looking to hedge its position before the data readout. Separately, interest in the vaccine appears to be increasing. Novavax has finalized an agreement with the Canadian government to supply as many as 76 million doses of its Covid-19 vaccine and there have also been reports that South Korea is in talks to buy around 40 million doses of the Novavax vaccine. Novavax stock has fared relatively well year to date, rising by about 12% since the beginning of January. See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-listed pharma and biotech companies. The theme is up about 4x over the last 2 years.

[1/4/2021] Why Did Novavax Stock Decline 20% In December?

Vaccine specialist Novavax (NASDAQ: NVAX) – which is seen as a key player in the Covid-19 vaccine space – saw its stock price decline by about 20% over December. Here are a few possible reasons for the decline.

Covid-19 vaccines by Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) received emergency approval from the U.S. FDA in December and inoculation drives have already begun in the U.K and the U.S. with these countries looking to get their citizens vaccinated as quickly as possible. For instance, the U.S. says that every American who wants a Covid-19 vaccine should have one by June. This likely means that demand for the Novavax vaccine – which is only likely to be available, subject to approval, in Q1 2021 or later – will be somewhat limited in the country. While Novavax has supply agreements with the U.S. and Australia, the company might not see much upside in developed markets.

Novavax announced that it was commencing phase 3 clinical trials for its novel coronavirus vaccine in the U.S. and Mexico last week. While this is good news, considering that Novavax saw multiple delays in starting late-stage U.S. studies amid manufacturing challenges, there are concerns whether the company will be able to meet its target of signing up 30k volunteers when there are two highly effective vaccines already available in the market. For example, prospective volunteers might be concerned that they are given a placebo or that Novavax’s candidate could be less protective or even if their involvement in the trial could impact their ability to take another vaccine.

See our indicative theme on Covid-19 Vaccine stocks for more details on the performance of key U.S.-based companies working on Covid-19 vaccines.

[Updated 12/23/2020] What Are The Risks For Novavax?

Vaccine specialist Novavax (NASDAQ: NVAX) has seen its stock price soar by roughly 25x year to date. While part of the gains was driven by encouraging results for phase 3 trials of the company’s NanoFlu flu vaccine back in March, a bulk of the price appreciation is due to the company’s development of a Covid-19 vaccine candidate. While we discussed some of the merits of the Novavax vaccine in our previous update (see below), in this note, we take a look at some of the key risks that it could face.

While Novavax entered the Covid vaccine race in the Spring, along with Moderna and Pfizer/BioNtech who have now started rolling out their vaccines, the company has faced delays in its timeline. The first readouts from its phase 3 trials are expected around Q1 2021 – likely one quarter behind the front runners. Only after these results are available will the company be able to file for emergency approval and roll out its vaccine. While this may not be a big deal considering that there’s enough room for multiple Covid vaccines, Novavax might miss out on relatively more lucrative orders from developed markets. For instance, the U.S. is now expected to increase its order for Pfizer’s vaccine to another 100 million doses.

Margins for the vaccine could also be a concern. Novavax’s vaccine is based on subunits – essentially using a fragment of the virus – and the manufacturing process is apparently more complex compared to the method used in messenger RNA vaccines including Moderna’s. This could potentially make the Novavax vaccine more expensive to manufacture. Based on a supply agreement with the U.S. government, the Novavax vaccine will be priced at about $16 per dose, below the $19.50 for Pfizer’s vaccine and as much as $37 per dose for Moderna’s. The potentially more complex manufacturing process and lower prices could mean that margins might be lower.

[Updated 12/2/2020] Does Novavax Covid Vaccine Still Matter?

Novavax (NASDAQ: NVAX) stock saw some volatility after the company said that it had rescheduled its Phase-3 clinical trial in the US, indicating that it could begin in the coming weeks, instead of starting in November. This marks the second time that the company has delayed its U.S. trials, amid some challenges with scaling up production. While the company currently has late-stage trials underway in the U.K, with a readout expected in Q1 2021, Novavax significantly trails frontrunners Pfizer and Moderna who have shown extremely high efficacy rates of roughly 95% and have already applied for emergency approval with the U.S. FDA. Considering that the Novavax vaccine could be at least one quarter behind the frontrunners, will there be a place in the market for the Novavax vaccine even if it proves safe and effective and wins regulatory approval? We believe the answer is yes, for multiple reasons.

While the Novavax vaccine might arrive later than expected, it still holds promise. Firstly, based on data from early trials there are indicators that it might be highly effective. For example, the antibody responses for the Novavax vaccine were meaningfully stronger than other vaccines that have been reported at that time, per data from its Australian trials that were available in August. [2] The vaccine should also be easier to distribute, as it only needs to be stored at refrigerated temperatures, unlike Pfizer’s vaccine which needs to be stored at ultra-cold temperatures. Novavax’s vaccine might also be more reasonably priced. Based on a supply deal with the U.S. government, the vaccine’s price is estimated to be about $16 per dose, compared to as much as $37 per dose for Moderna’s vaccine and $19.50 for Pfizer’s. If all goes well, Novavax could also scale up production fairly quickly. In September Novavax reached an agreement with the Serum Institute of India, one of the largest vaccine manufacturers in the world, boosting the company’s capacity to as much as 2 billion doses a year starting from mid-2021. [3]

Novavax’s vaccine could also emerge popular in low and middle-income markets. While the Oxford-AstraZeneca’s vaccine – which is likely to be priced at a few dollars per dose – is seen as key to fighting the pandemic in emerging markets, it now faces questions regarding the way phase 3 trials were handled, potentially resulting in delays and apprehension among governments. This could make the Novavax vaccine – which can be produced at scale and easily distributed – popular if the pricing is suitably adjusted.

[Updated 11/4/2020] Covid-19 Vaccine stocks

Our indicative theme of Covid-19 Vaccine stocks – which includes a diverse set of U.S.-based pharma and biotech companies developing Covid vaccines – is up by about 560% year-to-date, on an equally weighted basis, compared to the S&P 500 which has gained just about 4% over the same period. While most vaccine stocks declined last week, amid a broader sell-off in the markets, they are likely to come back into the spotlight as efficacy data from late-stage trials is expected from frontrunners Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) in the coming weeks. Below is a bit more on the companies in our theme of Coronavirus Vaccine stocks and their relative performance.

Novavax, a vaccine development company, began late-stage trials of its Covid vaccine in the U.K in September, and large-scale phase 3 trials are due to begin in the U.S. and Mexico this month. While the company doesn’t have any other products on the market yet, its flu vaccine NanoFlu could be ready for potential FDA approval. The company has received about $1.6 billion in funding from the Federal government. The stock has soared 2,000% year-to-date.


Moderna , a clinical-stage biotech company, is carrying out phase 3 trials of its Covid-19 vaccine, completing enrollment of 30,000 participants. The company is likely to have data on whether its vaccine works or not by this month, and has noted that it would seek emergency approval from the FDA if the vaccine is at least 70% effective. The stock is up 253% this year.

Johnson & Johnson: Unlike most other vaccine candidates, which are likely to require two shots, J&J is targeting a single-dose vaccine. While the company had to pause trials in mid-October after an illness was reported in a volunteer, the company is now preparing to resume trials. The stock is down by -5.1% this year.

Pfizer is working with German partner BioNTech on a Covid-19 vaccine. The company is likely to have efficacy data from late-stage trials available shortly. The company could supply about 40 million doses in the United States in 2020 if the data is positive and regulators approve the vaccine. The stock is down by about -7.6% this year.

While Vaxart may have moved a lot, 2020 has created many pricing discontinuities that can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Pfizer vs Merck.

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