Novavax (NVAX) has gathered a large group of masters and critics over the past 30 years as a public company. Having pretty much miffed their last RSV trial, precious few masters are willing to plunge their hard earned money for an opportunity to check out how the company is emerging. In fact, the latest search article with Novavax that I write is called "Novavax: No More Hope".
Since the article "No Hope" appeared, Novavax reported its income for Q4 2018. This current article is my effort to report if I found any hope again for Novavax shareholders after the report. This article will support the task described in the title.
However, Novavax's RSV program runs on smoke; it still has value
I last let rousted Seeking Alpha members for the cause of Novavax February 27, 2019. At that time we waited for Novavax promised Q1 2019 data release on its pivotal RSV F vaccine for infants via mothers immunization trials.
I expected the data to be favorable. I was wrong. Novavax announced its data the next day. Seeking Alpha's news meeting welcomed the report with the following telling the whole headline: "Novavax RSV vaccine flunks late-stage study, dividing 63%."
At least estimate of how Novavax shares would respond to negative data was accurate; they refueled. The headline above adds the numbers to it. The following graphics provide a better visceral representation:
This was not the first phase 3 data read rodeo for Novavax investors. Back in September 2016, the company reported disappointing data on its older RSV vaccine, its stock price collapsing from ~ $ 8.00 down to the $ 2.00 range.
During the last revenue in Q4 2018 CC, CEO Stan Erck put a brave face on Novavax's RSV situation. He emphasized how serious a condition it is both in the United States and globally. In the US, RSV is the main cause of hospitalization for infants during the first six months of life. Globally, it is the second largest cause of death for infants up to age.
He also emphasized the benign safety profile enjoyed by the Novavax RSV vaccine. The impetus in his position was to promote the vaccine as a modest effective therapy that did not harm and would be useful to a significant number of users.
It seems to work; As I wrote on the morning of 3/21/19, the Novavax shares showed a flicker of life that is quite noticeable given their latest dour mood per chart below:
Novavax's Influence Program Remains Impervious and Unresolved
After addressing its RSV program, CEO Erck moved smartly to his NanoFlu vaccination. First, he reminded investors how Novavax started 2018 with "highly encouraging" data from NanoFlu's Phase 1/2 clinical results, data later published in the New England Journal of Medicine, which he characterized as a significant difference to the results of early phase .
This is probably the case. On the other hand, it was published as a peer reviewed letter to the editor. This seems to carry less cached than an actual peer reviewed article. Anyway, the letter along with a detailed attachment are all available online. Readers can judge their importance for themselves.
This year, 2019, started with several results from NanoFlu. This time, Novavax reported the results of its phase 2 sample comparison: […] the safety and immune responses of various quadrivalent formulations of NanoFlu, with or without Novavax's Matrix-M ™ adjuvant, [against] US licensed influenza vaccines in 1,375 healthy adults 65 years and older. "
This trial, listed as NCT03658629 in clinical trials. Gave earned an important role for Novavax. Dr. Glenn Novavax's R&D president described it well in his 1/10/19 JPMorgan presentation as follows:
… the cure, the NanoFlu results we are quite happy with. The vaccine was well tolerated and similar to food at high dose. We met our primary endpoint to show the adjuvant effect that is a critical step to move forward. We showed co-formulation; We have a quadrivalent vaccine that is a major advancement, and we reproduced the data we saw in the first phase 1/2 trial where we see the immune response using a measure that usually felt to likely predict protection called ATI. We show that there is significantly greater response to H3N2 compared to the Fluzone high dose.
The bottom line remains the same or better for Novavax NanoFlu vaccine. It continues as an attractive resource that supports a hopeful rendition of the shares. Novavax plans that the FDA will provide the accelerated approval that will allow it to advance to a central trial and submit an NDA. Dr. Glenn said it as follows:
At this time next year (January 2020) I will come back here and talk to you about our important influenza data from – who would inform and accelerate the licensing of license agreements.
The offers are in the wind
With their RSV phase 3 test results in hand and the greeting NanoFlu path in anticipation, CEO Erck used "P" for the partner or not. words several times under Novavax's recent earnings CC. Nothing appears close, it was just another hint to keep the shareholders interested.
The following excerpts provide examples:
… we continue to consider the best partner for our ResVax program, and perhaps more partners with capabilities in different geographical areas. Partnering includes the potential combination with large multinational vaccine companies, smaller regional vaccine companies and hopefully one or more global health sponsors [or United nations] [ph].
We have new and ongoing discussions with all these types of partners and keep you updated as these discussions evolve. An important element for our potential partners is how our various regulatory discussions proceed. I believe that we will reach the conclusions on partnering shortly after we get more legal clarity.
The only word "partner" sounds a sweet tact to investors who have been worn out by Novavax's insatiable appetite for cash as described below.
Dilution remains the evil spell that holds Novavax shares below $ 1.00.
Novavax tries to play in the big leagues with its ambitious RSV programs on top of its NanoFlu efforts and others. As of 2018, 10-K (p. 45), Novavax consumes $ 184 million in 2018, an increase of over 27% from the $ 144 million table in 2017.
To date, there has been no need to interfere with product revenue. Its primary source of industry has been grants, loans and participation. Only this past quarter, it peaked its cash position with a $ 41 million cash prize.
The following footnote from 2018 10-K (p. 36) gives a picture of their cash increases over the past five years:  These share issues contributed to the total balance of 441,344,182 shares outstanding on 3/12/1999 pr. The above-mentioned 10-K.
The diagram below shows how this process has escalated over Novavax's long history.
So where do current investors leave? As suggested by the title of this post, there is room for hope. Time comes when all naysayers will be proven wrong. As a shareholder, it's my position and I stick to it.
To be honest, I would admit that I am uncertain about the value of my shares, but I like to believe that it is more than the price currently on offer. At least I have made my bed as they say, and I'm going to stay in it.
I would not recommend this stock to anyone. No matter how it goes in the market, it's almost not worth the deterioration. During the spring season, there is a convenient sackcloth if nothing else.
After I wrote and originally submitted this post, Novavax issued a letter to its shareholders suggesting that they vote for a 20-1 reversed share split. While theoretically it should not do anything for the value of the company, as long as it only cuts the same cake in fewer larger pieces, my expectation is that it will have a very negative effect.
The thesis of this article remains the same. Shareholders, whose shareholders are likely to soon be reduced in number with a ratio of 20 to 1, have reason to hope for good things from this company. I would not recommend anyone to buy stock.
Disclosure: I am / we are long NVAX. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for it (other than from Seeking Alpha).
Additional Information: I can buy or sell NVAX shares over the next 72 hours.
Editor's Note: This article covers one or more more microcap shares. Be aware of the risks associated with these shares.