Novavax (NASDAQ:NVAX), the Gaithersburg, Maryland-based biotech company has yet to submit its Covid-19 vaccine for Emergency Use Approval (EUA) to the Food and Drug Administration (FDA). The company says it will do so by the end of January. But the market is skeptical and still waiting to see when the EUA will take place. As a result, NVAX stock stalled.
For example, Novavax stock hit a short-term high of $270.58 on Sept. 7, but has since fallen. In fact, as of January 13, the stock hit a new recent low of $112.37. This has taken it down $158.21 from its September 7 high, a decline of 58.4%.
It’s not good.
The market is tired of waiting for the company to perform well and accelerate its revenue generation.
Where are things with Novavax
For example, right now, even at today’s prices, its market valuation is $8.5 billion. This may still be too high even if EUA is granted, given that at some point Covid-related revenue may not prove to be as sustainable as initially expected.
However, despite Novavax’s procrastination with the FDA, it has made good progress overseas. For example, on January 12, Novavax received a Biologics License Application (BLA) from South Korea’s Ministry of Food and Drug Safety (MFDS).
That’s good, but Novavax will have to compete with vaccines made by AstraZeneca (NYSE:AZN), Modern (NASDAQ:mRNA), and Johnson & johnson (NYSE:JNJ), through its Jansen unity. This is according to a recent report by Reuters.
What’s more, Reuters says that Novavax submitted the request to the MFDS through a partnership with a South Korean company, SK Bioscience Co Ltd. It will therefore have to share the income, depending on the number of doses ordered by the government, with the South Korean firm.
According to Reuters, Novavax has already received EUA for its two-dose protein vaccine from the European Union (EU) and the World Health Organization (WHO). But so far, Novavax hasn’t seen significant revenue from either endorsement, although that may increase in 2022.
In addition, he received the EUA from Indonesia, in collaboration with the Serum Institute of India (SII). Additionally, Novavax has submitted EUA approval in the UK, Australia, India, Singapore, Canada and New Zealand.
Financial troubles also keep NVAX stock down
Novavax released its third-quarter financial statements on Nov. 4, showing revenue of $179 million, up from $157 million a year earlier. So far this year, it’s made less than $1 billion in sales, or about $924 million.
But he lost a lot of money. For example, it posted a net loss of $322 million, or $4.31 per share in the third quarter. For the nine months ending September 30, it lost $897 million.
So far, he can afford to lose money. As of September 30, it had $1.9 billion in cash, cash equivalents and restricted cash. But at some point next year it is due to start booking large quantities of sales of its Covid-19 vaccine.
Currently, analysts are forecasting 2022 sales of $1.38 billion in 2021, but significantly higher for 2022 – up to $4.62 billion (In search of the alpha and Yahoo! Finance forecasts).
But that assumes that large orders of Covid vaccines will arrive during the year. If there’s a delay in getting its EUA approved by the FDA, those revenue projections could be too high. So there is a risk here.
What to do with NVAX actions
This could be one of the reasons why NVAX’s stock has deteriorated. After all, at its market value of $8.5 billion, if revenue drops even 20% next year, it will be trading at 2.3 times sales (i.e. $8.5 billion dollars / $3.7 billion). This could be considered too high and the NVAX stock could drop further.
However, if the company gives a good outlook for its ongoing revenue for the first quarter of 2022, it could lead to higher overall revenue guidance for 2022. And the stock could rebound.
All in all, I think it might be time to accumulate some stock at this price. For example, some are already calling Covid-19 an “endemic” disease, comparable to the flu. This means there will be continued demand each year for a variety of Covid-19 vaccines, including from Novavax.
This will provide a secure and robust revenue stream for Novavax for a long time. This will eventually push the NVAX stock much higher.
As of the date of publication, Mark R. Hake did not hold any position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and run the Total Value of Return Guide that you can consult here.