For those of you who are new to Novavax, the company is a specialty biotechnology company focused on the development of vaccines for high-need indications. In fact, over the years, the company has amassed a pretty impressive pipeline. The company is currently working on an RSV vaccine, a vaccine for Ebola, one for Zika, and there’s a combination respiratory ailments vaccine in the works. All of these vaccines are ranging in development from preclinical phases to Phase 3 clinical trials.
However, the most interesting vaccine that the company is working on, in my opinion, is a flu vaccine. The vaccine, known as NanoFlu (nanoparticle influenza vaccine) is making waves and has the potential to have biotechnology Goliaths shaking in their boots. Currently, the NanoFlu vaccine is in the midst of Phase 1/2 clinical trials and data is expected to be released by the end of February, which means a catalyst event is just around the corner.
Why I’m Watching NanoFlu So Closely
There are already flu vaccines on the market – vaccines that are commercialized by big names like GlaxoSmithKline (GSK) and Sanofi (SNY). Why is it that NanoFlu is so interesting? It all boils down to efficacy.
Recent studies show that currently commercialized flu vaccines simply aren’t working as well as they used to. In general, flu vaccines are about 50 to 70 percent effective, depending on the strain they are combating. However, according to a report from Canada, the vaccines are only about 17% effective when it comes to combating this year’s strain, known as H3N2. In a recent statement, Danuta Skowronski, Lead Author on the Canadian study mentioned above and an influenza epidemiologist at the British Columbia Center For Disease Control, recently had the following to offer:
The evidence is mounting, from Australia and now from Canada, that the vaccine protection is low [this year],
Considering the lack of efficacy that we’re seeing in flu vaccines around the world, there is an immediate need for a better option. NanoFlu may just be that option.
At the end of the day, NanoFlu approaches flu vaccination in a very different way than others on the market. In order to create the vaccine, Novavax used nanoparticle technology. Based on the hemagglutinin antigen (HA) found on the surface of the flu virus, NanoFlu takes a very unique approach to vaccinating against the flu, and it seems to be working. In fact, in preclinical trials, the company compared NanoFlu to Fluzone and Fluzone HD by Sanofi (SNY). Preclinical data suggest that NanoFlu is the superior option. All in all, if the data continues to be positive, NanoFlu could become the first-in-line choice when it comes to flu vaccines.
Novavax Is A Potential Takeover Target
Considering the preclinical data, if data from the phase 1/2 clinical trial is positive, there’s a strong argument for a takeover here. After all, at the moment, biotechnology Goliaths GlaxoSmithKline and Sanofi control the flu vaccine industry, taking the lion’s share of revenue in the space. However, if a more effective vaccine came into the picture, the revenues generated through competing flu vaccines could shrink.
Ultimately, this is setting the stage for a potential takeover. At the end of the day, the closer Novavax gets to regulatory approval for NanoFlu, the more threatening the company becomes to the big guys with deep pockets. Considering that Novavax only has a market cap of approximately $750 million, the price would be minimal to Sanofi or GlaxoSmithKline if they decided to take the company over.
Even Without A Takeover There’s Value Here
Even if there is no takeover to come down the line, Novavax is still pretty valuable. Think about it. The flu vaccine market is worth more than $3 billion per year and could grow to more than $5 billion per year according to most recent estimates.
Always Consider The Risks
At the end of the day, the value proposition surrounding Novavax is interesting, to say the least, in my opinion. However, it’s important to always consider the risk. When we talk about Novavax, we’re talking about a clinical phase biotechnology company. The success of the company is ultimately dependent on the success of future clinical trials, the company’s ability to obtain regulatory approval, and the company’s ability to either partner with a large company for help with commercialization or their ability to commercialize their products on their own. If any one of these factors is off, the stock could experience some serious declines. So, as with any clinical phase biotechnology company, make sure to do your due diligence and consider the risks before making an investment in NVAX.
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