Novavax shares fall 20% on vaccine trial concerns. Time to sell?

Posted: 3 June 2022 4:08 pm
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FDA raises a red flag over four cases of heart inflammation found during the Novavax COVID vaccine trial, adding another layer of uncertainty to the company’s sales outlook.

Novavax (NVAX) shares plunged more than 20% after the Food and Drug Administration expressed concern over cases of heart inflammation found in four patients who took the company’s COVID vaccine during trial.

“Multiple events of myocarditis/ pericarditis were reported in temporal relationship to NVX-CoV2373 administration, similar to myocarditis following mRNA COVID-19 vaccines,” the Food and Drug Administration staff said in a briefing document for the agency’s meeting on the Novavax vaccine June 7.

That’s “raising concern for a causal relationship to NVX-CoV2373,” the FDA said, referring to Novavax’s COVID vaccine. The cases of heart inflammation were found in a trial involving 30,000 adults ages 18 years and older.

The vaccine was found to be 90.4% effective against mild to severe COVID at least seven days after the second dose, according to results of the trial that studied patients between Dec. 27, 2020, to Sept. 27, 2021, when the dominant strain was the Alpha variant of SARS-CoV-2, before the Delta and Omicron variants were detected.

Does this make the stock now a buy, sell or hold?

Five of seven analysts are recommending that investors sell the stock, while two are suggesting buying it, according to data on the Yahoo Finance website.

CFRA Equity Analyst Stewart Glickman said Novavax’s financial success would depend on its COVID vaccine sales. Even before the FDA briefing document was released, he had a “hold” recommendation on the stock, given the uncertainty surrounding the company’s revenue outlook.

Gavi, the vaccine alliance, focused on helping emerging markets gain access to COVID vaccines, told Novavax that it plans to change the timing and number of doses it will buy from the company. Novavax is still waiting for a signed order, Glickman said in a note May 28.

The FDA briefing document adds another layer of uncertainty on Novavax’s vaccine sales and whether the cases of heart inflammation will be enough to outweigh the shot’s 90.4% efficacy. Another issue muddying the outlook is the effectiveness of the doses to prevent Omicron and Delta variants, given that the study was conducted before the two variants emerged.

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