My price target for NVAX is $13 - $16 which presents around 150% upside.
Below is my valuation model with assumptions. It only considers NVAX's lead vaccine candidate, RSV F for older adults.
For my model, I have chosen a conservative vaccine sales price of $80 which less than similar vaccines like Pneumovax and Prevnar which sell for around $100 and $200. Using a market penetration rate of 40% and an 80% likelihood of clinical success and then discounting 50% I calculate peak sales at over $600M. Applying an x8 Price to Sales ratio gives NVAX a Market Cap of $5.0B which is well above its current $1.8B valuation. Note my model only considers NVAX's lead indication.
I see NVAX as a very attractive investment idea.
The company has a promising vaccine platform that has been used to produce several different vaccine candidates. These candidates have produced positive clinical data and have received FDA Fast Track designations .
NVAX's vaccine candidates are for the following indications; RSV Flu (elderly, maternal, & pediatric), seasonal influenza, RSF/seasonal Flu combo, Ebola, Avian flu (H7N9), and MERS.
NVAX’s most lucrative vaccine candidate is for the RSV indication. Currently there are no FDA approved vaccine's for this indication making this space an area of unmet need. RSV Flu is a common respiratory disease, according to the company, severe cases put a large burden on the healthcare system with over 200k hospital admissions and causing 16k deaths. The total cost burden on major markets NVAX estimates at approximately $88B.
NVAX is leading the race to provide a treatment for this RSV Flu indication. Other companies addressing this indication are GSK and Medimmune with candidates at the Phase2 clinical stage. NVAX's vaccine is the first to demonstrate efficacy in this indication. In Phase2 testing, their vaccine's immunization efficacy was measured at 41% with p=0.041. These results compare very favorably to approved vaccine Prevnar which showed a lower immunization efficacy of 31% with p=0.008.
NVAX has benefited from funding support from organizations like BARDA and the Gates Foundation. They are now in a strong financial position with over $430M in cash. These reserves will be adequate to advance their various vaccine candidates well into the future.
I estimate NVAX's vast pipeline of vaccines may eventually yield well over $1B in peak sales. Its current low Market Cap of $1.8B lies well below its true potential and now offers investors a very attractive entry point.
The company has a promising vaccine platform that has been used to produce several different vaccine candidates. These candidates have produced positive clinical data and have received FDA Fast Track designations .
NVAX's vaccine candidates are for the following indications; RSV Flu (elderly, maternal, & pediatric), seasonal influenza, RSF/seasonal Flu combo, Ebola, Avian flu (H7N9), and MERS.
NVAX’s most lucrative vaccine candidate is for the RSV indication. Currently there are no FDA approved vaccine's for this indication making this space an area of unmet need. RSV Flu is a common respiratory disease, according to the company, severe cases put a large burden on the healthcare system with over 200k hospital admissions and causing 16k deaths. The total cost burden on major markets NVAX estimates at approximately $88B.
NVAX is leading the race to provide a treatment for this RSV Flu indication. Other companies addressing this indication are GSK and Medimmune with candidates at the Phase2 clinical stage. NVAX's vaccine is the first to demonstrate efficacy in this indication. In Phase2 testing, their vaccine's immunization efficacy was measured at 41% with p=0.041. These results compare very favorably to approved vaccine Prevnar which showed a lower immunization efficacy of 31% with p=0.008.
NVAX has benefited from funding support from organizations like BARDA and the Gates Foundation. They are now in a strong financial position with over $430M in cash. These reserves will be adequate to advance their various vaccine candidates well into the future.
I estimate NVAX's vast pipeline of vaccines may eventually yield well over $1B in peak sales. Its current low Market Cap of $1.8B lies well below its true potential and now offers investors a very attractive entry point.
Disclosure - NVAX is a core holding of my Marketocracy fund. I do not short stocks
Hi Branko,
ReplyDeleteThank you for the informative post. I've shared your analysis with a Novavax investors community. We wanted to ask you about your slide/image above regarding Peak Revenue. The subtext reads "(2023)". Are you stating you believe Novavax's PR will only reach 618m by that time? Many of us believe, alongside the company's guidance, that RSV elderly sales alone will far exceed that within two years. Hope to hear your thoughts. We'd also like to extend an invitation to you to join if you're interested (it's simply a Facebook group at this point).
Thanks for your time,
Matt
Hi Matt!
ReplyDeleteI have tried using conservative assumptions for my model.
The 2023 peak revenue date is based on +5 years after FDA approval. Historically it takes most new drugs around 5 years to reach peak sales so I used this figure as a starting point.
My $600M peak revenue figure assumes a 40% market penetration which may be low considering there are no other approved RSV vaccines however competitors are pursuing this same indications and may only be a couple of years behind.
Still my model shows excellent upside potential for NVAX and the upside is even greater if I have been too conservative.
Good Luck!
ps. thx for the invite to join your facebook group, I'll check it out.