After report alleges Novavax running into production problems with its Covid vaccine, the company said it sees an EUA filing coming before year end
Shares of Novavax (NVAX) are under pressure on Wednesday following a news report saying the company has consistently run into production problems as the methods it used to test the purity of its COVID-19 vaccine have fallen short of regulators' standards. Commenting on the article, the company expressed "confidence" in its regulatory filing timelines as well as manufacturing quality. After meeting with Novavax's management, Cantor Fitzgerald analyst Charles Duncan highlighted that the company is past commercial scale-up activities and finalizing the regulatory submissions for its COVID vaccine, which should "dissipate the current debate of vaccine quality and the release assays, for which the company has received input and commentary by the agency as it was developing it."
PRODUCTION PROBLEMS: Citing multiple sources, Politico's Sarah Owermohle, Erin Banco and Adam Cancryn reported that Novavax has consistently run into production problems as the methods it used to test the purity of its COVID-19 vaccine have fallen short of regulators' standards and the company has not been able to prove that it can produce a shot that is "consistently up to snuff." Although Novavax recently attested to some of its analytics and testing issues in a quarterly filing with the Securities and Exchange Commission, the company's issues are more concerning than previously understood, two people with direct knowledge of the matter told the publication. The Food and Drug Administration works out purity levels with each manufacturer according to June 2020 guidance for coronavirus vaccines, but it is generally understood that each vaccine batch should reach at least 90%. However, Novavax has struggled to attain anywhere close to that, one of the people with direct knowledge of the situation said. Another person familiar with the company's manufacturing process added that Novavax has recently shown purity levels hovering around 70%, Politico reported. Additionally, three people familiar with the matter said they are not confident that the company has the resources needed to reproduce a high-quality vaccine on a consistent basis.
CONFIDENCE IN FILING TIMELINES, MANUFACTURING: In response to the news article citing anonymous sources, Novavax confirmed "confidence in our ability to deliver our high-quality vaccine. Further, we underscore our ongoing commitment to the stringent standards of production and manufacturing for our recombinant nanoparticle protein-based COVID-19 vaccine candidate with Matrix-M adjuvant. Since March 2020, Novavax has worked diligently, methodically and transparently to develop our novel COVID-19 vaccine candidate, taking on the challenge of developing and producing at large scale a proven biologic-based vaccine amid unprecedented circumstances. Throughout, we have maintained active conversations with various regulatory agencies in key markets and have incorporated their feedback into the submissions for authorization that we are in the process of completing. We have made significant progress in mobilizing a global manufacturing network over the past 18 months with sites that are now routinely producing high-quality product at commercial scale at multiple sites across the world. Our global supply chain is expected to achieve a capacity of 150 million doses per month by the end of the fourth quarter."
"We expect to complete multiple ongoing rolling regulatory submissions within the next couple of weeks in key markets, including the United Kingdom, Europe, Canada, Australia and New Zealand. We, along with SII, have already filed for authorization in India, Indonesia and The Philippines, as well as for Emergency Use Listing with the World Health Organization. The WHO EUL will allow Novavax and SII to deliver on our combined commitment to the COVAX Facility for a cumulative 1.1 billion doses of our vaccine, around which we maintain ongoing conversations with CEPI, Gavi and UNICEF. Additionally, we expect to file for Emergency Use Authorization in the U.S. before the end of 2021," the company added.
SUBMISSIONS TO 'DISSIPATE CURRENT DEBATE': In a research note following the media report, Cantor Fitzgerald analyst Charles Duncan said he spoke to Novavax management and that it reiterated the company remains on track to submit filings to regulatory authorities, including the FDA by year-end 2021. The analyst also highlighted that Novavax y is past commercial scale-up activities and is finalizing the regulatory submissions for its COVID vaccine, with increased visibility soon. Duncan believes this "will dissipate the current debate of vaccine quality and the release assays, for which the company has received input and commentary by the agency as it was developing it." Furthermore, the analyst pointed out that Novavax is currently testing assays against product, prior to the submission of the final chemistry, manufacturing and control package. The company is also maintaining its guidance of 150M doses of monthly run rate capacity by the end of 2021, he added. Duncan has an Overweight rating and a price target of $272 on the shares.
PRICE ACTION: In Wednesday afternoon trading, shares of Novavax have dropped about 15% to $135.75.