Novavax Kicks Off Late Stage Covid-19 Vaccine Trial; Shares Drop 10%

Novavax announced the initiation of the pivotal Phase 3 study of NVX-CoV2373, its COVID-19 vaccine candidate, in the US and Mexico after delaying the start twice. However, shares closed almost 10% lower on Monday as it looks like investors took the opportunity for some profit-taking.

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Specifically, Novavax (NVAX) disclosed that the Phase 3 trial will evaluate the efficacy, safety and immunogenicity of NVX-CoV2373 in up to 30,000 individuals aged 18 years and older compared with placebo. The trial will be based on research from Phase 1/2 studies, which showed that the vaccine induced a robust immune response, generated “highly” neutralizing antibodies against the virus, and was generally well-tolerated.

NVX‑CoV2373 is a stable, prefusion protein made using Novavax’s recombinant protein nanoparticle technology and includes the company’s proprietary Matrix‑M adjuvant. The purified protein is encoded by the genetic sequence of the SARS-CoV-2 spike (S) protein and is produced in insect cells. It is stable at 2°C to 8°C and is shipped in a ready-to-use liquid formulation that allows distribution using standard vaccine supply chain channels.

“With the COVID-19 pandemic raging around the globe, this trial is a critical step in building the global portfolio of safe and effective vaccines to protect the world’s population,” said Novavax CEO Stanley C. Erck. “We thank our colleagues and partners who continue to work with us to urgently advance our commercial-scale manufacturing processes, and we are grateful for the hard work and assistance from Operation Warp Speed, the US FDA and the government of Mexico on this program.”

Additionally, Novavax is conducting a large pivotal Phase 3 clinical study in the UK, a Phase 2b safety and efficacy study in South Africa, and an ongoing Phase1/2 trial in the US and Australia. Data results from these trials are expected in the first quarter of 2021.

Meanwhile, shares have dropped 16% over the past month, but are still up a whopping 2,833% year-to-date. (See Novavax stock analysis on TipRanks).

Commenting on the trial start announcement, J.P. Morgan analyst Eric Joseph said that he believes that the patient and endpoint selection, and interim and full efficacy analyses are “fairly consistent” compared to the Phase 3 study in the UK.

Joseph expects similar operational and data timelines to those of Phase 3 mRNA-based vaccine programs, and hence anticipates the release of interim efficacy data in March or April.

The analyst, who reiterated his Buy rating on the stock, continues to view NVX-CoV2373 as “well-differentiated in the overall COVID-19 vaccine space, both clinically and logistically.”

The rest of the Street has a cautiously optimistic outlook. The Moderate Buy analyst consensus is based on 5 recent Buy ratings versus only 1 Sell rating. What’s more, the average analyst price target of $183.20 indicates another promising 57% upside potential from current levels.