There’s an interesting subtext to pharmaceutical companies’ battle against COVID-19. Taming the “invisible enemy” is undoubtedly the main objective, but the race for a vaccine or treatment has also created a David vs. Goliath narrative between the companies chasing solutions.
July 1 provided a good example of this subtle duel.
Pharma giant Pfizer and its partner, BioNTech, presented the first set of positive data from a Phase 1/2 study of their experimental coronavirus vaccine.
All 24 participants who received two doses (of either 10 or 30 micrograms) of its BNT162b1 candidate produced neutralizing antibodiesseven days after the second dose.
As a result, shares of other “big pharma” companies spent the session in the green, while the smaller names slipped into the red. Among those posting losses was high flying vaccine specialist Novavax (NVAX), whose slight retreat brings the year-to-date gain to ‘only’ 1,866%.
Obviously, investors believe Pfizer’s progress is to the minnows’ detriment. But should small-cap players start packing up the lab equipment and move on to other matters? Not according to B.Riley FBR analyst Mayank Mamtani, who argues the news is not necessarily bad for Novavax.
The 5-star analyst said, “We are encouraged by this first-of-its-kind detailed update for a clinical stage COVID-19 vaccine, and note this to be de-risking to mRNA platform broadly, especially the self-amplifying format such as ARCT's LUNAR-COVID19. However, we don't believe this to confer negative readthrough to alternative platform approaches, in particular the adjuvanted recombinant protein nanoparticle platform pursued by NVAX for NVX-CoV2373. Hence, we recommend investors take advantage of the stock weakness, i.e., -5% vs. flat for XBI.”
BNT162b1 was administered at three different dose levels - 10, 30 and 100 µg – each eliciting a different reaction. This, in Mamtani’s opinion, might prove to be an important detail as the trial develops.
“Safety and dose-dependent effect could emerge as key differentiating factors for NVAX, in our view,” the analyst concluded.
To this end, Mamtani reiterated a Buy rating along with a $106 price target.(To watch Mamtani’s track record, click here)
Turning now to the rest of the Street, Novavax currently has a Strong Buy consensus rating, based on 4 Buys and 1 Hold. The average price target, however, at $75.80, implies possible downside of 30% from current levels. (See Novavax stock analysis on TipRanks)
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