Novavax Stock: Beware This Hypercoaster (NASDAQ:NVAX)

Novavax (NASDAQ:NVAX) has been on the brink of greatness several times over its long decades as a public company. It has always fallen short when it came to generating revenue. The pandemic has changed things for Novavax. As matters now stand. The Novavax story has become much more interesting.

I submit that it remains treacherous. Trading at ~$18.50 as I write on 09/29/2022, I rate it a hold.

Novavax rose from the dead like a mighty Phoenix and then flopped

On 05/08/2019 Novavax announced its imminent one-for-twenty reverse stock split:

…to increase the per share trading price of the Novavax’ common stock to enable Novavax to satisfy the minimum price requirement for continued listing on the Nasdaq Global Select Market

At the time it was trading <$0.40. Its reverse split bumped its shares up to $6.40 where they traded when the market opened following the split. It then meandered <$10 until late 02/2020 as the pandemic started to take hold and it bruited a vaccine to combat it.

By 07/2020, the Novavax’s COVID vaccine potential had its stock trading >$100. Subsequently it generally traded in triple digits, peaking >$330 in 02/2021, until 01/2022 when it pulled back decisively. During 2022 it has meandered on a generally downward path; as I write on 09/28/2022 it trades <$20.

For those interested in the why’s and wherefores of the Novavax path to $300, I recommend 02/04/2022’s “Novavax: So Much Nearer And Yet Still So Far“. It describes how Novavax’s successes in developing its COVID vaccine took it to the brink of success.

It goes on to explain why it was too little too late. The article’s conclusion noted:

A bet on Novavax has to be considered a long shot. It can hardly classify as an investment given the history of the stock and the challenges faced by the vagaries of the pandemic.

Interestingly, the latest Seeking Alpha authors opining on the stock are exemplifying the battleground character of its situation as shown by the excerpt below:

[… graphic with four Seeking Alpha articles shown, two listing Novavax as strong sell, two as strong buy.]

I expect that Novavax will muddle on, with plenty of thrills and spills. If you are a capable trader, this is a high quality trading vehicle. If you are an investor, think twice and then twice again.

This suggestion of “thrills and spills” and that investors should “think twice and then twice again” has proven itself. In the months following the article’s publication, Novavax has been a thrill seeker’s delight, but an investment nightmare as shown below:

Ever the optimist, Novavax sees big things ahead

Novavax management always presents an upbeat future for the stock. I reported its situation following its Q2, 2022 earnings call in “The Alphavaxers: Dynavax And Novavax, 2 Quarters On”. Since that time in two recent investors’ conferences Novavax has given late reports on its progress.

These include President, CSO Glenn and CBO, CCO Trizzino presenting at 09/12/2022’s “H.C. Wainwright 24th Annual Global Investment Conference” (the “Wainwright Conference”) followed the next day by their presentation at the “Baird 2022 Global Healthcare Conference” (the “Baird Conference”).

These conference have a bit of a Tweedledum, Tweedledee aura. Accordingly in this article I will focus on the latest, the Baird Conference. In his opening remarks at Baird, Trizzino led with the following points:

1. We have had over 50,000 subjects go through significant clinical trials over the last several years demonstrating that we have a very safe and very effective product… so the information – clinical information is strong.
2. We are now approved for use in over 43 countries around the globe.
3. We have got manufacturing infrastructure in place in three primary facilities, one an owned facility in Czech Republic acquired in May of 2020, plus our significant partnership with Serum Institute in India and lastly a strategic partnership with SK Bio in South Korea.
4. We are shipping product around the globe and establishing strong relationships as we move forward.
5. We have some great news from yesterday from the EU about the label approval for heterologous boosting, being able to vaccinate on top of any previous vaccination, a significant accomplishment for us.
6. Novavax obtained an FDA EUA for vaccination of adults 18 and older in 07/2022 with approval revised to include individuals 12 and up on 09/12/2022.

Its next important goal is to get FDA approval for its vaccine as a booster. Novavax filed its application for a booster approval as a homologous and heterologous booster in adults aged 18 and older with the FDA on 08/15/2022. During its Wainwright presentation, Trizzino indicated that:

We’re probably within weeks away from getting that booster label.

These are Novavax’s accomplishments and they are significant indeed. They reflect Novavax’s strategy of using 2022 to get its ducks in order so that it has the broad vaccine labels and the manufacturing capacity to service customers around the globe during 2023 and beyond.

Unfortunately for Novavax investors this is a strategy of necessity; not its choice. If the pandemic starts to ramp back up, one can see how these accomplishments might override Novavax’s deficits in terms of name recognition so that it could start to compete effectively as COVID vaccinations transition from a government funded perk to a private pay model.

Novavax is a tricky holding, it seems to always fall short when expectations get too high.

What is the size of the booster market? No one knows. During the Baird Conference, Trizzino addresses the issue in detail. He sees it as ranging:

…from a $5 billion a year market that looks a lot like flu to $30 billion market because there is going to be twice as many doses administered at 2x or 3x the price of a flu vaccine. So it’s tough to pin it down at the moment. But I think this transition at least for us, is important because the market is going to decide. Healthcare providers are going to decide. The consumer is going to decide what product they want and not some procurement department within each of these individual countries, and we believe that’s going to play in our favor.

So it’s a big deal. If Novavax was some undiscovered gem, I would say “go for it”. It is not; it is a heavyweight contender that has taken lots of punches over the years.

Neither of Novavax’s September conferences provide any financial data beyond the hyped blue sky of potential revenues. For cash balances, revenues, expenses, guidance and projections we must look to Q2, 2022 earnings reports and filings. The closest we get is Trizzino’s following somewhat sober assessment during the Baird Conference in response to an analyst question as to any drivers to boost Novavax share in 2023:

…vaccines … [have] come to [be] known by their company names, right? It’s the Pfizer vaccine or the Moderna vaccine. Novavax is a very unique innovator, but this is a first time licensed product. And so we’re not that household name yet, but we will get there. So I think name recognition and confidence in the product that we’re delivering. I think most people are aware that there are differences between mRNAs and recombinant protein vaccines, but I think a little bit more health care provider as well as consumer education is going to be needed. And I think – those are probably the three primary drivers about what we’re going to be putting in place over the next 12 to 18 months.

Conclusion

Novavax’s finances, cash balance, income, revenues and guidance are as stated in its Q2, 2022 earnings presentation slides 25-28. These spell out unabashed bad news. Perhaps the worst is its revised FY 2022 guidance for total revenues of $2-$2.3 billion down from previous quarter’s guidance of between $4 and $5 billion.

Guidance aside, its metrics and capacity for generating losses are truly exceptional. Seeking Alpha’s quant system ratings for Novavax rate it as 562 out of 572 companies in its industry.

Forewarned is forearmed.