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This week will be a big one for Novavax (NVAX). On Tuesday (June 7), the FDA's Vaccines and Related Biological Products Advisory Committee (VRBPAC) will meet to discuss Novavax’s EUA application for the use of its Covid-19 vaccine NVX-CoV2373 as a primary vaccine for adults.
Ahead of the meeting, last week the FDA released briefing documents which put potential issues under the spotlight. These included the risk of myocarditis (inflammation of the heart muscle) especially in young men, one Guillain Barre syndrome, and concerns around CMC (chemistry, manufacturing, and controls) preparation.
Investors were not pleased with this development and sent shares down by 20% in the subsequent session.
While Jefferies' Roger Song “agrees with the uncertainties” laid out in the document, the analyst says investors should keep an eye on a couple of points which will come to the fore during the VRBPAC meeting and final FDA decision/label.
One revolves around the myocarditis issue. Explaining his view on the matter, Song said, “As the overall incidence of myocarditis was quite low and balanced between vaccine and placebo (0.007% and 0.005%), and importantly comparable to (if not better than) that of mRNA vaccines, we will be interested in seeing how the myocarditis will be perceived (pre-marketing vs post-marketing; natural history among young men; more vigilance due to incidence by mRNA vaccines) and incorporated in the final label - we note the label language will have sig implications to the adoption - box warning vs warnings/precautions like mRNAs'.”
The other concern is related to the CMC issues which have been partially responsible for the EUA submission’s delay. Here, Song will be keen to know “what is the status on the CMC and how ready it is for the EUA decision post the VRBPAC meeting.”
Overall, though, despite the uncertainties, Song thinks the odds favor Novavax, believing there’s a “high chance of ultimate approval with likely comparable label language.”
So, what should investors do? According to Song, the stock is a Buy while his $190 price target is the Street’s highest and set to generate returns of 300% in the year ahead. (To watch Song’s track record, click here)
Looking at the consensus breakdown, based on 5 Buys, 2 Holds and 1 Sell, the analysts’ view is that this stock is a Moderate Buy. The outlook is far more conclusive regarding the share price’s expected trajectory; the $131 average target might not be quite as high as Song’s objective but could still generate one-year returns of ~176%. (See Novavax stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.