Novavax plunges on ‘harsh’ FDA review ahead of panel

Bloomberg: Novavax Inc slumped 20% after US regulators raised concerns over the biotech’s much-anticipated Covid-19 vaccine.

Briefing documents released by the Food and Drug Administration ahead of a meeting with experts noted some heart risks with the shot, though the agency was positive on its effectiveness against the Omicron variant and more severe disease.

The vaccine maker — which has lost roughly $17 billion in market value from last year’s highs — will finally get to face US regulators after months of delays.

With the stock down 86% from a February 2021 record, Novavax has underperformed even other slumping Covid-19 vaccine makers. Moderna Inc has lost about 26% over the same period as investors contemplate the increasingly crowded market for Covid shots and question the future demand for boosters.

Documents posted ahead of the meeting of agency advisers added to the selloff. It “seems like a really harsh review by the FDA,” said B Riley analyst Mayank Mamtani.

In response to the FDA’s commentary on heart-related inflammation, the company said in an emailed statement that “we believe there is insufficient evidence to establish a causal relationship.” The company will monitor for further adverse events.

An emergency use authorization would make Novavax’s jab the first protein-based Covid shot for adults in the US, though it comes more than a year after other vaccines were given the nod. The agency is not required to follow the advice of the panel, though it often does.

Mamtani still expects an almost unanimously positive vote given the scientific assessment, but said it’s “hard to handicap the risk that FDA has set this up to delay the EUA approval beyond next week.” He has a buy rating on Novavax.

Jefferies analyst Roger Song, who also rates Novavax a buy, said he expects the committee’s review to be positive and nothing in the documents is really a “deal breaker.”

Novavax awaits an emergency use authorization amid signs the pandemic is waning, and a potential nod could come more than 9 months after Pfizer Inc. and BioNTech SE’s jab won full approval. Meanwhile in Europe, regulators are evaluating Novavax’s shot as a booster for adults, and the company is studying a combination shot to protect against the flu and Covid-19.