Novavax stock drops 17% on possibility of further approval delays. Should investors worry?

Posted: 9 June 2022 6:12 pm
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The FDA reportedly needs time to review changes to Novavax’s manufacturing process before deciding whether to authorize its COVID-19 vaccine in the US.

Novavax (NVAX) stock tumbled as much as 17% Thursday after CNBC reported that an FDA decision on Novavax’s COVID shot could be delayed to review changes in manufacturing. This comes just two days after the FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) voted unanimously to approve the vaccine for emergency use.

Shares closed Thursday at $41.48.

What happened?

Investors, possibly those who had gotten in ahead of the potential FDA EUA, are assessing the possibility of another delay of Novavax’s COVID vaccine. The stock tumbled 17% Thursday after CNBC reported that the FDA might need more time to review new manufacturing data Novavax submitted just days ahead of the VRBPAC’s June 7 meeting.

Novavax said in its statement Tuesday in response to the committee’s recommendation of its shot that it had supplied the FDA with updated manufacturing data for an Emergency Use Authorization (EUA).

“Consistent with submissions to regulatory authorities worldwide, we have already submitted an amendment with updated manufacturing information for the EUA to the FDA for review,” said Novavax CEO Stanley C. Erck. “We look forward to collaborating with the FDA as it makes its final decision.”

The FDA, in a statement to CNBC, confirmed that Novavax submitted changes to its manufacturing process on June 3, days before the committee was scheduled to review the safety and efficacy data of its vaccine.

“FDA will carefully review this and any additional information submitted by the firm as part of its ongoing assessment and prior to authorizing the vaccine for emergency use,” FDA spokesperson Abby Capobianco told CNBC.

Stock is 87.5% off its high

It’s been a long wait for Novavax investors, who have been parrying news of setbacks and delays that have contributed to the stock’s massive sell-off with optimism that the biotech would secure its place in the COVID vaccine market. The stock is down 87.5% from its February 2021 high of $331.68.

Novavax has received authorization for use in individuals 18 and older from more than 40 countries in addition to Emergency Use Listing from the World Health Organization (WHO).

The Maryland-based biotech company submitted its application for US EUA on Jan. 31 of this year. On April 29, the FDA announced it had set June 7 as a tentative date to discuss Novavax’s application for EUA.

The FDA hasn’t moved as swiftly with Novavax’s application as it did with those from Pfizer (PFE), Moderna (MRNA) and Johnson & Johnson (JNJ) during the height of the pandemic. All three companies received FDA authorization the day after the committee recommended their use in the US. Novavax, which received its VRBPAC recommendation Tuesday, might have to wait longer.

Novavax was an original Operation Warp Speed funding recipient, awarded $1.75 billion by the US government to develop and manufacture its COVID vaccine. As a part of the agreement, Novavax was required to deliver 100 million doses of its vaccine to the US. But manufacturing issues last year forced the government to pause its funding.

Novavax said in an August 2021 quarterly filing with the Securities and Exchange Commission (SEC) that the federal government would not fund further manufacturing of its vaccine until the company resolved concerns of federal regulators about its processes.

Novavax’s COVID doses for existing authorizations are currently coming from its manufacturing partner, the Serum Institute of India. Novavax has said that it will later supplement these authorizations with data from additional manufacturing sites throughout its global supply chain, which include its plants in the Czech Republic, South Korea and Japan.

On Wednesday, Erck told Yahoo Finance Live that he doesn’t see this newest development as being an issue. He said the FDA has already visited and inspected the plant in India and signed off on it.

“They spent a lot of time there,” Erck said. “They had five people inspecting the plant. And we came away with a big pass. So we got good results there and I don’t think there’s a manufacturing issue.”

Erck told Yahoo that the company will ship doses of its COVID vaccine from India this month to the US in anticipation of authorization, with product available for shipment to clinics, pharmacies, and other locations that offer COVID-19 vaccines in the US soon after.

Thinking of buying Novavax stock?

Thursday’s news of a possible delay is likely nothing to worry about just yet, but it offers more frustration for investors who have been eagerly waiting for US authorization. The FDA gave the green light to Novavax’s current manufacturing process and the VRBPAC unanimously recommended its shot. It could be days, likely weeks, as the past has shown.

The question is, what happens to the stock after the drug is authorized?

The stock currently has a Buy rating, according to Yahoo Finance, and an average price target of $155.17. This is a 270% premium over its current price. But don’t expect the same volatile runup as we saw in the early days of the pandemic with shares of Novavax and other COVID vaccine stocks, especially in this current down market.

Long-term investors will have to continue to be patient as Novavax positions itself as a major player in the vaccine market — and the likely, but not guaranteed, EUA is a much-needed step in the right direction.

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At the time of publication, Matt Miczulski owned shares of NVAX, PFE and MRNA.

The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

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