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NVAX.US
id: 342
Novavax Vaccine Failure Case
On August 8, 2022, Novavax (NVAX) reported disappointing Q2 2022 sales results and announced the cut in half of its full-year guidance, sending the stock price down 30% the next day.
For investors, this was probably the final sign that marked the end to the ambitious plans and forecasts of the Company's leaders, particularly to finish 2022 in profit.
Going back, at the start of the coronavirus pandemic, many biopharmaceutical companies began to try their vaccine options. After the results of the first trials, a pool of leaders was formed, among them vaccines from Moderna, BioNTech, and Novavax. Compared to others, the NVAX candidate had a favorable side effect profile with similar efficacy and was developed using a fundamentally different technology.
However, as it became clear later, Novavax Leaders made a lot of mistakes and miscalculations, in which they were assisted by interested advisers, which led to an extremely late entry into the market and billions of underearned revenue.
Going back, Given the severity of the pandemic and the complexity of the potential challenges, leaders of the vaccine race immediately resorted to partnering with experienced players. BioNTech entered a partnership with Pfizer on March 17, 2020, which eventually led to first place in vaccine sales revenue. Moderna also almost immediately began to conclude partnership agreements. On May 1, 2022, an agreement was concluded with Lonza, a global expert in the field of production and related technologies. On June 25, a partnership was concluded with Catalent, on July 9 with Rovi, and a number of other agreements. Pfizer-BioNTech vaccine received its first approval on December 11, 2020, and Moderna on December 18, 2020. Both companies have earned tens of billions to date.
To look at a similar path for Novavax, it becomes clear why the company received approval in the US only in July 2022, and in Europe on December 20, 2021. The first money received for research from various organizations was spent on the purchase of Praha Vaccines in the Czech Republic for $167 million from the Serum Institute of India. A very strange choice for the potential production of 1 billion vaccines per year. But this deal was strongly supported by advisers from the law firm Ropes & Gray. Later Serum Institute contracted to sell to low-income countries, and production problems became one of the main reasons for delays.
In the absence of collaborations, it was difficult to blame the Company. But later on July 23, Novavax signed an agreement with FUJIFILM Diosynth Biotechnologies, on August 10 with AGC Biologics, and on August 13 with SK Bioscience. These companies are vastly different in terms of their experience with the breakthrough technologies like Novavax's vaccine, and their sheer size is much smaller than those with whom BioNTech and Moderna have collaborated. The European regulator approved SK Bioscience as a supplier to produce the vaccine only on July 7, 2022.
Later in October 2022, Novavax disclosed ongoing payments of $185M to FUJIFILM Holding as a result of ending manufacturing as part of a commercial supply agreement.
As we can see, the Leaders and Advisors of the Company had all the chances and resources to succeed, but at each stage of the development of the situation, they chose their own specific path and approach, and the set of their choices eventually led to the loss of almost all the chips at the table. Either overconfidence, greed, or negligence has led to the fact that the company has underearned tens of billions of dollars.
Case Status
Inactive Investigation
Alleged Offence
Mismanagement,
Misleading Statements,
Financial Misrepresentation,
Failure to Disclose,
Malpractice,
Negligence,
Omissions
Suspected Party
Directors,
Management,
Service Provider
Security Type
Stocks
Trade Direction
Long
Shock Event Date
08/08/2022