Novavax Rises 5% On Earnings; $2B Covid-19 Vaccine Funding

Shares in Novavax (NVAX) rose 5% in Monday’s trading after the late-stage biotech announced positive second quarter earning results. However the stock subsequently pulled back 2.4% in after-hours trading.

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The vaccine maker also stated that it secured $2 billion in funding for development and commercialization of NVX-CoV2373, a vaccine candidate engineered from the genetic sequence of SARS‑CoV‑2, the virus that causes Covid-19 disease.

The funding consists of up to $388 million from the Coalition for Epidemic Preparedness Innovations (CEPI); up to $60 million from the U.S. Department of Defense (DoD) funding; and up to $1.6 billion from the U.S. Government funding through its Operation Warp Speed project.

“Novavax’ unprecedented development activities for NVX-CoV2373 and progress continued through the second quarter,” said Stanley C. Erck, CEO of Novavax. “Since identifying a candidate vaccine to address the COVID-19 pandemic in March, we’ve secured significant funding, implemented global manufacturing capacity and completed and reported our successful Phase 1 trial.”

“We’ve also expanded our senior leadership team to advance our efforts to bring NVX-CoV2373 to market as rapidly as possible and grow our infrastructure to support commercial stage operation” he added.

Indeed, NVAX aims to deliver 100 million doses of NVX‑CoV2373 beginning as early as late 2020 and has already secured the required global manufacturing capacity thanks to several manufacturing agreements. This includes the acquisition of Praha Vaccines for $167 million.

Meanwhile, Novavax reported Q2 GAAP EPS of -$0.30 which beat Street estimates by $0.23. Revenue of $35.54 million topped Street expectations by $29.87 million- and represented an incredible year-over-year increase of 960%. Cash, cash equivalents, marketable securities and restricted cash of stood at $609.5 million, up from $82.2 million at the end of last year.

Due to optimism over its coronavirus vaccine candidate, NVAX shares have exploded by 4,385% year-to-date. The vaccine candidate’s Phase 1 study results recently prompted H.C. Wainwright analyst Vernon Bernardino to raise his price target to a Street-high $290 (62% upside potential) from $132 and reiterate a Buy rating.

“We look for the company to become a major player in vaccine development in the near future,” Bernardino told investors.

“There is upside potential to our projections, as our models assume: (1) a price per dose of $20, which is in line with the low end of prices recently negotiated by some of Novavax’ competitors for vaccine supplies they’ve agreed to provide to the US government; (2) distribution of approximately 137M doses worldwide in 2021; and (3) the potential for the dose-sparing effects of Matrix-M adjuvant to double the number of doses of NVX-CoV2373 that could be available,” the analyst said. (See Novavax stock analysis on TipRanks).

The rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus shows 4 Buy ratings versus 1 Sell rating. The $227.60 average price target now indicates 28% upside potential from current levels.