It's beginning to look like the COVID-19 vaccine horse race is grinding to a halt, as several candidates have emerged successfully. Just yesterday, Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) made substantial inroads on the reports that its candidate was better than 90% effective against the disease. What's more, it's not the only one; vaccine candidates have emerged from Arcturus (NASDAQ:ARCT), from AstraZeneca (LON:AZN) and several more besides are poised to either start rolling them out or release data on same in short order. Novavax (NASDAQ:NVAX), meanwhile, is now set to join the fray itself as its candidate has been put on the fast track with the Food and Drug Administration (FDA) as well.
A Great Year for Novavax, But Not What it Could Have Been
So far, Novavax has had an amazing year. The company's share price is up over 2,000% this year, part of a comparatively narrow field of drugmakers that have coronavirus vaccine candidates testing at the late-stage level. While this quarter didn't exactly turn out quite as well as the company might have hoped, there were still reasons for enthusiasm.
The good news for Novavax is that revenue is up for this year, and in grand style. The company brought in a hefty revenue figure of $157 million for the third quarter, and given that last year at this time, it had only brought in $2.5 million, that's a major leap forward.
The bad news, however, is that analysts were expecting a consensus figure of $230.6 million, which puts it well below estimates. Moreover, even with those massive gains in revenue, that still wasn't enough to generate a profit for the company. It posted a net loss of $197.3 million, which added up to a loss of $3.21 per share. That's actually bad news on two fronts: it compares terribly against last year's figures of an $18 million net loss, figuring to $0.74 per share, and it also craters against expectations, which were looking for earnings of $1.73 per share.
Snatching Victory From the Jaws of Defeat
As bad as that may seem—and it was bad enough to send the share price down about 4% in pre-market trading—it's actually not as bad as some may think, and for several reasons. First, the company's cash position is still quite robust. It's currently holding a stockpile of cash and cash equivalents measured at about $571.6 million as of September 30, which is up better than six-fold since the same time last year. Second, and perhaps best of all, is the point that it's now being fast-tracked with its COVID-19 vaccine candidate, known as NVX-CoV2373. As a result, the company now has several deals set up with the federal government that are worth about $2 billion in funding sources all told.
It was the pursuit of the COVID-19 vaccine in question that did the most damage to Novavax's bottom line; that access to $2 billion in funding came at the cost of about $294.1 million in research and development (R&D) expenses. That's up better than 10-fold from the same time last year, which only posted $18.6 million in R&D expenses. In fact, reports note that $187.2 million of that total can be traced directly to development of NVX-CoV2373, which means that nearly $200 million spent generated around $2 billion in fresh funding.
Going Forward from HereThe numbers are something of a mixed bag for the company, and the analyst community, based on our latest research, is at least a skeptical buy. The company currently has one “sell” rating and five “buy” ratings, just the same as it had last month and down one “buy” rating from three months ago. The consensus price target of $159.25 is unchanged from last month, but a long way up from the expected $40.25 of six months ago.
So how do we approach the company as it is today? Getting fast-tracked by the government, with all the funding in play, certainly doesn't hurt matters. Even if Novavax is late to the party, there's likely to be room for everybody here as supply constraints mean that we'll need several different vaccine sources to fully cover the expected demand, which will be just about everybody.
If Novavax can join the field of available vaccine providers, it should have a good run coming up as people will certainly seek out this product in a bid to protect themselves against COVID-19. There are still comparatively few such firms in the field, and adding one more to the lineup will still leave everyone involved with a healthy piece of the market. Novavax may still represent a good opportunity to buy in on a piece of coronavirus protection, and that's far from bad news for investors.
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