Novavax (NVAX) stock tumbles despite beating bottom line estimates in Q2

After Novavax (NASDAQ: NVAX) reported its progress on developing the COVID-19 vaccine at the end of February, the shares of the company started trading in double-digits after a long time. The late-stage biotechnology company’s stock hit the triple-digit mark last month and reached a new 52-week high ($189.40) last Wednesday.

Q2 results

Novavax reported a loss of $17.5 million or $0.30 per share for the second quarter of 2020. Revenue jumped to $35.54 million in Q2 from $3.36 million in the prior year. While the loss was better than the market’s estimated loss of 42 cents per share, revenue was below the consensus target.

COVID-19 vaccine

As stated by CEO Stanley Erck on the Q2 earnings call, “the last few months have been historic for Novavax”. The company had notched up $2 billion in funding for COVID-19 vaccine development. The company had secured significant manufacturing capacity and signed several research and manufacturing collaborations with organizations around the world. Novavax also delivered positive Phase 1 clinical data for the Phase 1/2 trial of Novavax CoV2373, the company’s COVID-19 vaccine. Novavax expects to move into Phase 2 trial this month.

Partnerships

Recently, Novavax initiated important partnerships for the global development and commercialization of its COVID-19 vaccine. In Japan, Novavax partnered with Takeda Pharmaceuticals for development, manufacturing and commercialization of the vaccine. Given Takeda’s presence in Japan, the company expects an annual capacity of over 250 million doses of the vaccine.

The company also joined hands with the Serum Institute of India for the development and commercialization of COVID vaccine in low-and middle-income countries and India. Serum is expected to manufacture 1 billion doses annually from their facilities starting in January of 2021, and Novavax will split the revenue from the sale of product, net of agreed cost with them.

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Praha Vaccines, which was acquired by Novavax and renamed as Novavax CZ, is capable of providing annual capacity of approximately 1 billion doses of antigen starting in 2021. To complement the efforts at Novavax CZ, the Gaithersburg, Maryland-based firm signed an agreement with Fujifilm Diosynth Biotechnologies for production in the North Carolina and Texas facilities.

Competition

Yesterday, Moderna (NASDAQ: MRNA) announced that the US government had entered into an agreement with the company to provide 100 million doses of its potential COVID-19 vaccine, which is worth around $1.5 billion. Moderna’s COIVD vaccine, mRNA-1273, had advanced to the final stage of testing and the testing is expected to be completed in September. 

It’s also worth noting the COVID-19 vaccine from Russia’s Gamaleya Institute, which doesn’t appear to have gone through the Phase 3 trial, has been making buzz even though the vaccine’s safety and effectiveness is questionable.

Stock movement

Novavax tumbled about 16% when the market closed yesterday. NVAX stock was trading up about 5% in the pre-market session today, thanks to yesterday’s Moderna deal. There could be a short-term fall in the Novavax stock, but for investors, it could be beneficial in the longer-term.

DISCLAIMER: The article does not necessarily imply the views of AlphaStreet, and contains opinions of the author alone.

Read the entire transcript of Novavax Q2 2020 earnings call