Novavax Experiences Astronomical Growth

Novavax Inc. (NASDAQ: NVAX) claims to have a vaccine that is 89.3% to 100% effective against COVID-19.

Only 14 of 19,774 volunteers who received Novavax’s PREVENT-19 vaccine in the United States and Mexico in a recent trial caught COVID-19, NPR claims. To explain, Novavax (NVAX) gave two-thirds of 29,960 volunteers its two shot vaccine. Another 9,887 volunteers received a placebo.

I estimate around 50 of the volunteers who received the placebo caught COVID-19. That survey found that PREVENT-19 was 100% effective against the original SARS-CoV-2 strain.

In an earlier Phase-3 clinical trial in the United Kingdom, the PREVENT-19 vaccine was 89.3% effective against COVID-19, a Novavax press release claims.  In that trial, PREVENT-19; or NVX-CoV2373 showed significant clinical efficacy against the UK and South African variants of coronavirus. The UK study involved 15,000 people between 18 and 84 years of age.

The Novavax COVID-19 Vaccine

However, the PREVENT-19 vaccine showed 60% efficacy against the South African variant of COVID-19. Those results came from tests on over 4,400 people in South Africa.

Unfortunately, I could find no data on the PREVENT-19 vaccine’s efficacy against the Delta Variant of the SARS-CoV-2 virus. Epidemiologists fear the Delta Variant will wreak havoc in poorly vaccinated states such as Arkansas, The Washington Post reports.

The PREVENT-19 is a protein-based vaccine engineered from the genetic sequence of SARS-CoV-2, the virus that causes COVID-19. “The NVX-CoV2373 was created using Novavax’ recombinant nanoparticle technology to generate antigen derived from the coronavirus spike (S) protein and is adjuvanted with Novavax’ patented saponin-based Matrix-M™ to enhance the immune response and stimulate high levels of neutralizing antibodies,” a Novavax press release states.

The Matrix-M stimulates antigen-presenting cells to boost immune responses.

Novavax has nine vaccines in development

Novavax (NVAX) has nine vaccines in its development pipeline. Despite the pipeline, Novavax is not currently manufacturing any vaccines.

However, Novavax claims it could generate 100 million doses of PREVENT-19 a month by September 2021 and 150 million doses a month by the end of 2021, NPR claims. In contrast, Pfizer (PFE) and BioNTech (BNTX) claim they could produce three billion doses of their mRNA vaccine 2021, Fierce Pharma reports.

The vaccines in Novavax’s development pipeline include:

  • The NanoFlu Seasonal Influenza Vaccine for Adults over 65. There could be an enormous market for this product because there 52 million Americans over 65 in 2018, the Public Research Bureau (PRB) estimates. Moreover, that number could grow to 95 million by 2060 the PRB estimates. Additionally, Medicare pays for most healthcare including vaccines for people over 65.
  • The ResVax – RSV F Vaccine for infants for Respiratory Syncytial Virus.
  • The RSV F Vaccine for people over 60 for the Respiratory Syncytial Virus.
  • A RSV F Vaccine for children between six months and five years of age for Respiratory Syncytial Virus.
  • The Ebola GP Vaccine for the Ebola Virus. Ebola is still a menace. An Ebola outbreak killed 12 people in Guinea between February and June 2021, Politico reports. A 2014 to 2016 Ebola outbreak killed over 11,300 people in West Africa.
  • The Middle East Respiratory Syndrome (MERS) Vaccine. Epidemiologists have detected MERS in 27 countess. MERS has killed 858 people since 2012, the World Health Organization (WHO) estimates. Overall, 35% of people with MERS died.

Can Novavax Cash in Vaccines?

Thus Novavax (NVAX) could cash in on the next pandemic with its vaccines. Conversely, I think Novavax has some serious limitations.

To explain, I think Novavax is good at research and development but inexperienced in production. Hence, Novavax can develop the vaccines but has problems manufacturing them.

Fortunately for Novavax there are companies such as the Serum Institute of Institute of India and Bangladesh’s Incepta that can mass produce vaccines. The Serum Institute claims it can produce up to 1.5 billion doses of vaccines. Therefore, the resources to mass produce Novavax’s vaccines are available.

I think Novavax could make money by licensing its vaccines to companies such as Incepta Pharmaceuticals.

Novavax Experiences Astronomical Growth

Novavax Inc. (NVAX) loses money, it reported a quarterly operating loss of -$208.63 million on 31 March 2021.

Conversely, Novavax is experiencing astronomical levels of growth. In fact, Stockrow estimates Novavax’s revenues grew by an astounding 13,143% in the quarter ending on 31 March 2021. The growth levels rose from 3,017.18% on 31 December 2020 and -15.19% on 31 March 2020.

Similarly, Novavax’s quarterly gross profit grew from $3.38 million on 31 March 2020 to $447.23 million n 31 March 2021. Conversely, Novavax’s quarterly operating loss grew from -$22.90 million on 31 March 2020 to $208.63 million a year later.

In 2020, Novavax’s quarterly revenues grew from $3.38 million on 31 March 2020 to $447.23 million a year later.

How Much Cash Does Novavax Borrow?

The quarterly revenues match the quarterly gross profit because Novavax (NVAX) sells no products. Instead, the only money Novavax has coming in is what it borrows.

Accordingly, Novavax reported a quarterly financing cash flow of $576.99 million on 31 March 2021. The quarterly financing cash flow rose from $404.61 million on 31 December 2020, $416.62 million on 30 June 2020, and $185.92 million on 31 March 2020. Consequently, Novavax’s Total Debt grew from $322 million on 31 March 2020 to $463 million on 31 March 2021.

In contrast, Novavax reported a negative operating cash flow of -$128.57 million on 31 December 2020 to $663.09 million on 31 March 2021. Most of that operating cash flow came from borrowing.

What Value Does Novavax Have?

The only value I can see at Novavax Inc. (NASDAQ: NVAX) is a batch of potential vaccines.

Unfortunately, Novavax has no approval to sell those vaccines and apparently one marketable vaccine the PREVENT-19. The Food & Drug Administration (FDA) has not approved PREVENT-19 for patients in the United States.

However, The Atlantic proclaims the PREVENT-19 the best vaccine. Atlantic writer Hilda Bastian thinks the NVX-CoV2373 is better than the Pfizer-BioNtech and Moderna (MRNA) mRNA vaccines.

Thus, Novavax has a product for which there could be a vast market. Only 22.4% of the world’s population has received a COVID-19 vaccine Our World of Data estimates.

Demand could be high even in developed nations. For instance, only 53.21% of the US population, 51.86% of the German population and 30.13% of Brazil’s population received COVID-19 vaccinations, Our of World Data estimates. Plus, just they had vaccinated just 19.6% of the Japanese population  on 23 June 2021.

Finally, Novavax could have the technology to make vaccines to counter the next pandemic. Hence, Novavax could make enormous amounts of money if the vaccines and they can produce enormous amounts of vaccine.

Mr. Market Overvalues Novavax

Despite the potential, I think Mr. Market overvalued Novavax (NVAX) on $189.79 on 25 June 2021. I can see nothing in Novavax’s financial numbers that validates that price.

On the other hand, Novavax offers an enormous level of share value growth. Notably, Novavax’s share value grew from $77.50 on 24 June 2020.

I think investors need to Novavax because this company’s value is pure speculation. My suspicion is that a large pharmaceutical company such as Pfizer (PFE) will buy Novavax to get its technology.

Thus, Novavax could experience enormous levels of growth in the next months. However, I do not think that growth will add any value to Novavax.