Novavax, Inc. 

NVAX Details
 
Successful Clinical Trials to Aid Business Prospects: Novavax, Inc. (NASDAQ: NVAX), is a late-stage biotechnology company that provides improved health services through the discovery, development, and distribution of innovative vaccines used to prevent serious infectious diseases. On 26^th February 2020, the company informed its efforts to develop a novel vaccine used to protect against coronavirus disease COVID-19. As per the press release, NVAX has invented and is evaluating multiple nanoparticle vaccine candidates in animal models before identifying an optimal candidate for human testing, that is likely to be launched by the end of spring 2020.
The company’s prior experiences of working on coronaviruses including MERS and SARS, led it to act quickly against COVID-19. The company also notified about the successful completion of the critical preliminary steps to engineer viable vaccine candidates.

Q3FY19 Business Highlights for the Period ended 30^th September 2019: NVAX announced its quarterly results, wherein the company reported total revenue of $2.5 million as compared to $7.73 million in the previous corresponding period. The revenue was primarily comprised of the services performed under the Grant Agreement with BMGF and revenue from Novavax AB. The company reported lower research and development (R&D) expenses of $18.61 million as compared to $41.32 million in the previous corresponding period. The decrease in R&D was on account of lower development activities, including lower clinical trial costs of ResVax, lower employee-related costs and other cost savings due to the Catalent transaction. NVAX reported lower net loss of $18.043 million as compared to $44.570 million due to lower R&D costs and a $9 million gain from the Catalent transaction, which was partially offset by lower revenue under the Grant Agreement.


Key Income Statement Highlights (Source: Company Reports)

Key Balance Sheet Highlights: NVAX reported total current assets of $89.02 million, which includes cash and cash equivalent of $71.167 million and prepaid expenses of $13.5 million. The company’s total assets stood at $164.81 million and reported stockholder’s deficit of $189.838 million as on 30^th September 2019.

Outlook: For FY19, the company expects  lower development expenses primarily due to the completion of activities related to the conclusion of the Prepare trial and the expected impact of the Catalent transaction, and reductions in headcount and assignment of certain facility leases, which was partially offset by Phase 3 clinical trial of NanoFlu. The company expects its general and administrative expenses to remain in-line with FY18. The company expects results from NanoFlu Phase 3 clinical trial by the end of Q1FY20.

 Stock Recommendation: The stock of NVAX closed at $16 with a market capitalization of $513.96 million. The stock made a 52-week low and high of $3.54 and $17 and is currently trading at the upper band of its 52-week trading range. The stock jumped 107.25% and 133.918% in the last one week and one month, respectively on the recent update on the development of Novel COVID-19 Vaccine. The company has a proven track record of rapid manufacturing of innovative vaccine used against novel emerging viruses, including efforts to develop vaccines against the previous coronaviruses, Middle East Respiratory Syndrome (MERS-CoV), and Severe Acute Respiratory Syndrome (SARS). The company developed a safe and clinically immogenetic Ebola vaccine, which proved effective in primate studies. Considering the aforesaid facts, current trading levels, recent price movements, risk-reward profile and progress of the clinical trial related to novel COVID-19 Vaccine, we recommend a “Speculative Buy” on the stock at the closing price of $16.00, up 35.59% as on 28^th February 2020, taking cues from the release with regards to the advancement of novel COVID-19 Vaccine. 

 
NVAX Daily Technical Chart (Source: Thomson Reuters)

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