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Novavax Inc (NASDAQ:NVAX): A Make Or Break Runner

Novavax Inc (NASDAQ:NVAX): A Make Or Break Runner
Written by
Chris Sandburg
Published on
April 11, 2017
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At the beginning of March we took this look at Novavax Inc (NASDAQ:NVAX), suggesting that while it was by no means a risk free allocation, there may be some value in taking a punt on some upcoming data. The company has lost a bit of strength since then, and currently trades in and around the $0.90 mark.Our competitors over at Fool look to have finally caught up with our analysis, and with the company picking up a bit of extra coverage across some of the mainstream outlets, we think it's worth going into a little bit more detail (than we did last time) as to what specifically we're looking for as potentially jump starting this company back into action.So, here goes.For those new to Novavax, it's a development stage biotechnology company that's working to bring a respiratory syncytial virus (RSV) vaccine to market. There's also a Zika asset a little it farther down the pipeline, but we aren’t attributing much value to that right now, so for the purposes of this discussion, it's all about RSV.So, the vaccine looked good until late last year, when it failed a clinical trial in an elderly patient population. The trial would have almost certainly underpinned an NDA approval if it had passed, and Novavax collapsed in value as these expectations dashed.So the company is now valued at little more than its cash on hand.Management held a conference call back at the end of February, and in that call (while it was pretty short) gave us some insight into what the plan is going forward. The company is doubling down on the elderly patient population, conducting a phase II in the already failed elderly population to see if a higher dose, or an adjuvant combination, can improve on the (what were admittedly dismal) results from the failed phase III.That's great, but it's not what we're looking at.There's an ongoing phase III study investigating the vaccine in pregnant women. Basically, dose the woman at various points throughout her pregnancy and then see if it results in the child being immune when its born. It's a pretty long study, and it's not going to wrap up until June 2020, but as detailed in the above mentioned call, management is in discussions with the FDA to allow it to take an interim look at the data-to-date by at the end of this year.The trial is just observer blind, meaning the company doesn’t know how it's going, but an independent data monitoring committee (DMC) does. This is key in these sorts of pregnant women trials (no company wants to have a serious safety issue in a trial involving pregnant women) and it opens up the potential for a half way (or thereabouts) look at how the drug is performing. That is, of course, if the company can get the FDA to green light an interim look.We know that the DMC hasn’t expressed any continuation issues, and that it looks at the data at the end of every month to try and identify any such issues. This means that the drug looks safe – to date, at least. If Novavax can agree an interim assessment and get the FDA to approve an unblinding of data so far, we could get some insight into the efficacy side of the equation. If the data shows a degree of efficacy, it could totally turn things around for Novavax.The data, if released, would focus on immunogenicity as opposed to biomarkers, and specifically, the infants, any reduction of RSV, and the number of infants that have hypoxemia and through 90 days of life. In other words, at interim, we should know whether the drug's working or not. There are thousands of patients in the study, spread across the globe. This means that it's not just one of those three or four patient interim reports. If there's efficacy, we'll know it's efficacy, and not a fluke. And if there is, this one's going to run.We'll say it again – this is a total one way or the other play. If the company can't show efficacy in the pre-natal population, we're called time on it. There's also cash concerns, so we're going to see some dilution likely before the end of the year. If the numbers point to green, however, none of this will matter.We will be updating our subscribers as soon as we know more. For the latest updates on NVAX, sign up below!Disclosure: We have no position in NVAX and have not been compensated for this article.

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