Things Novavax Should Do
Novavax should do the following things as soon as possible, and investors should contact the company to demand action on them. This is an early rough draft, and some of the items aren’t complete and will be written in the future:
Share buybacks to take advantage of the low share price plus support investors
In the past few years, investors have been greatly diluted by issuance of new shares. Many were issued at prices 70% to 100% higher than the current price. Now, Novavax has more than $1.4 billion in cash, and will have a much larger amount in a year. Doing $300 million of buybacks will allow it to buy back 4 million shares at the current price. Buybacks have the following advantages:
- It clearly conveys that Novavax thinks it’s worth much more than its current very low share price, and that will help the share price.
- Even without the above, buybacks reduce the share count, which instantly makes the remaining shares worth more.
- It increases the company’s ability to raise money in the future. By buying back some now, it will have more shares it can issue in the future if needed.
- It rewards long-time loyal investors who stuck with the company during very, very hard times.
- It creates trust with investors. If Novavax has hard times again in a few years, it’s essential it has investors’ trust. If it needs to raise money by diluting investors, investors will trust that the company will reward them later if things go well.
Attempt to make a deal with China to get Novavax doses
The largest city and region of China, Shanghai, last week said it supports importing foreign vaccines: https://www.youtube.com/watch?v=iZP_KYidUKs
With the low efficacy and low durability of its vaccines threatening major lockdowns, China has a huge economic and financial incentive to use high-efficacy foreign vaccines like Novavax. Because it doesn’t require frozen transport or storage, Novavax is ideal. It also has far lower side effects, so Chinese citizens won’t react against it like they would against RNA. Also, Novavax has a huge amount of excess production capacity. So it should offer a good price in order to get a deal. Even if it’s only 100 million doses, it would be a huge PR victory to be the first foreign vaccine allowed into China. That would increase global revenues, and also greatly help the share price.
Start 1 or 2 new RSV trials ASAP to get the clock ticking, and show they’re in the pipeline
The maternal RSV trial had efficacy of 39%, just 1% short of its target of 40%. Results showed that when women were vaccinated during certain weeks of pregnancy, efficacy was 49%. So if Novavax simply does the trial while only vaccinating during those weeks, it has a high probability of gaining 1% efficacy and succeeding. The first trial took 3 years to conduct. The sooner Novavax starts the new one, the sooner it will be done. If Novavax decides to switch the adjuvant from aluminum to Matrix M, that would add about a year, which further increases the need to move forward now. The last phase 3 cost about $90 million, so Novavax can easily afford it. The trial design already exists, so would be low effort to do.
Be far more active in releasing positive developments via PRs and social media
This week an InvestorPlace author wrote: “the company does a terrible job disseminating good news like the kind out of New Zealand in early March. …. But, hey, most investors have grown accustomed to Novavax’s management zigging when everyone else is zagging. Somehow, someway, it appears that if Novavax just got out of its own way, the stock could rocket to $200 and beyond.” Novavax only does press releases and social media posts for about 10% of the positive developments it could share. To find the other 90%, investors need to scour hundreds of articles in newspapers around the globe each week. Very few investors do that, so most of the good news never reaches investors. That’s a major reason why the consensus price target is about 140% higher than the current price. Most investors won’t invest just based on a consensus target from analysts they don’t know and whose reports they don’t see. They need to see many positive new developments, especially if it’s a vaccine company during a pandemic.
Demonstrate how quickly a new variant vaccine can be created and manufactured
The perception of the market and of most governments is that it would take Novavax a really long time to create and produce a new variant vaccine. This is because: 1) RNA companies have hyped RNA as being far faster at this. 2) For the current vaccine version, it took Novavax 18 months. Thus, people assume they’d need 9 to 18 months to create and produce a new variant vaccine. It can actually do this in 3 months, which is almost as fast as RNA, because they simply tweak the code of the protein partially, then use the same production process.
But people won’t believe it until they see it. They don’t realize that in doing the 1st version, Novavax: a) didn’t receive serious funding until about 4 months after the RNA companies. b) the RNA companies were about 10 times bigger at the start. c) the RNA firms had major partners from very early on. BionTech had Pfizer and Moderna had the US government. d) It was the first time Novavax commercially produced a vaccine. e) Its biggest partner, SII, was delayed from starting production work by 5.5 months. f) Assays for new protein vaccines are more complex. All of those added time to be able to do the first version. But most of those don’t exist in changing to a variant. But investors and governments won’t believe it until Novavax shows it.
Accelerate development of the combination Covid-flu vaccine
Right now Novavax says a combo vaccine won’t be ready to ship until 2025.. It should accelerate this timeline through various means including running trials in both the Northern and Southern Hemispheres.
Make Israeli EUA a top priority because they’re a thought leader, plus will study the vaccine’s efficacy against current variants
The full text for this will be written in the future.
Get 2 new vaccines for other illnesses into pre-clinical and phase 1 trials ASAP to build the pipeline
One reason for the depressed share price is Novavax’s pipeline looks small compared to the RNA companies. While most of the RNA pipeline products may be long shots, it looks impressive. Building the pipeline would not only look good, it makes practical sense given how long it takes to get a vaccine from start to market.
Initiate a small dividend to support the share price and reward loyal investors
Even a small dividend would signal to the market that the company has a very strong balance sheet. It would also signal that the company is shareholder friendly, and aims to return capital to shareholders.
Respond to and rebut misinformation that hurts the company and share price
When news outlets post misinformation and attacks, Novavax normally either gives no response or only a vague response that doesn’t specifically rebut the claims. From there, other reporters read the misinformation and repeat it in their own articles. As a result, the share price suffers, and the image of the company suffers. When reporters contact the company with specific claims, Novavax should specifically rebut them. Also, the company should read the articles written about it, and when inaccurate things are written, it should request corrections.
Increase transparency
Novavax too often leaves investors in the dark. For example, in early November the company said it would be a matter of weeks, not months until it submitted its supplemental CMC package for its other locations to the drug agencies. Five months later, it hasn’t filed even one supplemental for even one other location … and hasn’t informed investors what’s going on. Most investors assume it means Novavax is having trouble making the vaccine at most of those locations. However, it could simply be that SII was able to supply enough to fill orders for the first 4 months of 2022, and so the company decided to put its regulatory bandwidth towards getting approvals for under 18 age groups and boosters now, and then do the supplementals. Either way, the company should tell investors what’s happening.
Partner with a few other governments to do real-world (unblinded) efficacy studies against current and future variants
The full text for this will be written in the future.
Tie management bonuses and options compensation to results
The full text for this will be written in the future.
Move Nanoflu forward towards revenues
It’s been two years since positive phase 3 results. Novavax has an accelerated approval pathway for Nanoflu, but that isn’t useful if Novavax doesn’t submit a BLA. It should either file a BLA soon or do an efficacy trial soon to move Nanoflu closer to commercialization.