Novavax’s New Covid-19 Vaccine Might Be Late to the Party

Novavax shares jumped 5.4% Wednesday after the agency’s vaccine expert panel voted to recommend its two-dose vaccine. It is quite the victory for the 35-year-old Maryland biotech, which was running out of cash in late 2019 before the pandemic came to its rescue.

But the nod from the expert group comes as the pool of Americans seeking a booster shot continues to nosedive. The seven-day average for booster shots administered daily was about 55,600 this week, down from over a million in early December, according to data from the Centers for Disease Control and Prevention. The agency says only about half of booster-eligible people have gotten one so far—a clear sign of vaccine fatigue. These days, the bigger problem is a surplus of vaccines, with 82 million vaccine doses discarded over the past year and a half as demand declines.

Making matters trickier for Novavax, a likely FDA approval at this stage would only clear its shot for those who have yet to be vaccinated, not for those seeking a booster. Novavax says its shot, which uses a more traditional protein-based technology, could appeal to people reluctant to receive the vaccines made by

Pfizer

–

BioNTech

or by

Moderna,

which are based on the newer gene-based technology known as mRNA. The FDA advisers were skeptical of that argument, though they said it would be good to offer Americans more choices.

The real question for investors is whether an initial FDA approval this summer might presage approval for a Novavax booster and an Omicron-specific jab in a more timely fashion, allowing it to compete with Moderna and Pfizer this fall. Moderna on Wednesday said its modified Covid-19 booster shot provided a stronger immune response against the Omicron variant than the company’s original vaccine. Roger Song, a biotech analyst at Jefferies, said a Novavax booster, if approved, could eventually capture 10% to 30% of the U.S. market.

Even if Novavax grabs such a significant slice, there is still the bigger question of how big it will really be going forward. The short answer is no one knows. The elderly might continue boosting for a while, but will most Americans be willing to keep taking Covid-19 shots as the virus becomes endemic? Jared Holz, a healthcare strategist at Oppenheimer, says probably not, as long as hospitalization and death rates continue to fall. The emergence of a more severe strain would change that calculus, though.

Analyst projections for revenue at Moderna, which derives most of its sales from Covid-19 shots, predict a steep cliff, with sales dropping from $22 billion this year to less than $7 billion in 2024, according to data compiled by

FactSet.

That doesn’t bode well for a latecomer.

And a lot of expectations remain baked in. Novavax’s market value has shriveled to around $4 billion from a peak above $22 billion when pandemic deaths were near their worst in early 2021, yet that compares with a value of barely $100 million when the world first learned of a deadly pneumonia spreading in Wuhan.

Approval in the U.S. would still be a major win for Novavax, which already markets its Covid-19 vaccine in key countries and regions such as the European Union. The company posted $704 million in revenue in the first quarter and expects total revenue this year to be as much as $5 billion—a far cry from its cash-starved days.

FDA approval would offer Americans an alternative shot with strong safety and efficacy data that is very much comparable to the MRNA vaccines. How many Americans will take it is the more difficult question.