Can Novavax Stage A Comeback In Q4? One Analyst Thinks So

Following the presentation of encouraging pre-clinical data from Novavax, Inc. NVAX's nanoparticle influenza vaccine, Ladenburg Thalmann upgraded shares of the company.

The rating on the stock now goes from Neutral to Buy, with a $1.60 price target.

The shares of Novavax were trading up 1.01 percent at $1 in pre-market trading after advancing over 2 percent Wednesday in reaction to the upgrade.

The Nanoflu is a nanoparticle influenza vaccine with Matrix-M adjuvant and the preclinical immunogenicity data released by Novavax suggested superior profile compared to Fluzone HD.

Analysts Kevin DeGeeter and James Colby noted that the company also outlined a clinical development strategy targeting older adults. The analysts are of the view that NanoFlu has demonstrated potential to be the potent vaccine for prevention of seasonal influenza.

Potential For Premium Pricing

If the product profile is borne out in clinical trials, DeGeeter and Colby believe the vaccine candidate is well positioned to command a premium price for dosing in elderly or other immune compromised populations.

Additionally, Ladenburg Thalmann thinks the nanoparticle construct could be compatible for dosing in combination with Novavax's RSV nanoparticle program in phase II development for elderly and phase III studies for maternal vaccination to protect newborns. These possibilities, according to the firm, could add additional commercial upside.

Vesting one more advantage, the firm pointed to the management's commentary that the ten-fold increase in yields and 95 percent purity from the manufacturing process would allow production of the vaccine at a lower cost than other influenza vaccine and potentially other therapeutic-like gross margins.

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Clinical Study Roadmap And Design

On the roadmap and design for the clinical program, the firm said it expects first-subject in its phase I/II study of NanoFlu compared to Fluzone GD in September, with 330 patients likely to be enrolled. The dosages to be tested include 60 microgram dose of FluZone HD, 15 microgram NanoFlu with Matrix-M adjuvant or 60 microgram NanoFlu with Matrix-M adjuvant.

The firm expects the immunogenicity data in the fourth quarter. If the trial results are positive, the firm noted that the management would hold end of phase II meeting with the FDA in the first quarter of 2018 and kick off pivotal immunogenicity trial in the fourth quarter of 2018, enrolling about 500 elderly subjects per arm.

The company hopes to file the BLA as early as 2019 or 2020.

"Notably, NVAX expects to leverage potentially positive Phase I/II immunogenicity data in discussions with potential commercial partners and non-dilutive funding sources, including BARDA," the firm said.

The firm sees a successful partnership to significantly de-risk future development and provides material upside to its conservative outlook.

The firm now expects an update on Phase III maternal RSV program in the second half of 2018. Accordingly, the firm forecasts 2022 influenza revenue of Novavax to be $375 million, accounting for 10 percent share of the market.

Separately, the firm noted that the company reported uneventful second-quarter results.