Since early 2020, Novavax (NASDAQ:NVAX) has received a lot of attention due to its efforts to develop a COVID-19 vaccine. That attention is deserved. The biotech's COVID-19 vaccine candidate NVX-CoV2373 appears to be quite promising.
Novavax has been at the center of attention more recently for great results announced last week from a clinical study of a different vaccine. This huge win could boost Novavax's fortunes -- and it has nothing to do with COVID-19.
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A malaria milestone
On April 23, results from a phase 2b clinical study evaluating malaria vaccine candidate R21 were published online in Preprints with The Lancet. The vaccine achieved an efficacy of 77%.
R21 was developed by the University of Oxford, which also created the COVID-19 vaccine marketed by AstraZeneca. So how does Novavax fit into the picture? The company's Matrix-M adjuvant is used to boost the malaria vaccine's immune response. Matrix-M is also used with Novavax's COVID-19 vaccine candidate as well as its flu vaccine candidate NanoFlu.
It seemed pretty obvious from the phase 2b results that Matrix-M helped increase efficacy. In the study, children between 17 months old and 5 years old were given 5 mg of R21 with either 25 mg or 50 mg of Matrix-M. Efficacy of 71% was achieved with the lower Matrix-M dose, while an efficacy of 77% was achieved with the higher dose.
In 2019, there were around 229 million worldwide cases of malaria with an estimated 409,000 deaths. Children under the age of 5 years old accounted for roughly two-thirds of those deaths. Although GlaxoSmithKline currently markets a malaria vaccine, its efficacy is only between 35% and 55%. If R21 is ultimately approved, it would truly be a milestone in preventing malaria.
Improving Novavax's fortunes somewhat
Recruitment has already begun across five trial sites in four countries for a registrational phase 3 clinical study evaluating R21. It's also possible that the University of Oxford could seek Emergency Use Authorization (EUA) for the malaria vaccine. Regardless, if R21 makes it to market, Novavax's fortunes will improve somewhat.
The Serum Institute of India (SII) holds the license to the experimental malaria vaccine. It plans to produce at least 200 million doses annually if R21 wins approval or EUA. Novavax will receive royalties on all sales of the vaccine.
Just how much money Novavax might make, though, remains uncertain. SII chairman and managing director Cyrus Poonawalla said that his organization plans to make R21 available after approval "at a very cost-effective price." GlaxoSmithKline charges around $5 per dose for its malaria vaccine.
However, Novavax also will be able to generate revenue in another way from R21. The company will have the right to sell and distribute the malaria vaccine in some countries, primarily targeting travel and military markets.
There's another potential benefit for Novavax as well. Matrix-M could enjoy higher demand as an adjuvant in other vaccines after it's seemed to work so well in boosting the immune response in R21, NVX-CoV2373, and NanoFlu.
The biotech's big game-changer
While R21 could be a game-changer in preventing malaria, the big game-changer for Novavax is still its COVID-19 vaccine. Although the U.S. already has enough doses ordered for vaccines that have already secured EUA to fully vaccinate all Americans this year, Novavax shouldn't be too late to the party to still be a winner in the U.S. market.
Novavax has stated that it hopes to file for U.S. EUA for NVX-CoV2373 in the second quarter of 2021. The company already has a deal with the U.S. government to supply 100 million doses of the vaccine. The high efficacy of its COVID-19 vaccine could help Novavax secure more supply deals for 2022 and beyond.
In addition, Novavax plans to soon advance vaccine candidates targeting coronavirus variants into clinical testing. If these candidates achieve impressive efficacy against the worrisome newer strains, it will almost certainly provide a major catalyst for the biotech stock.
