Novavax: Don't Fall For Coronavirus Hype

Jan. 27, 2020 10:33 AM ETNovavax, Inc. (NVAX)121 Comments


  • Novavax jumped to recent highs near $10 on hype surrounding a vaccine for the Wuhan coronavirus, inflicting China.
  • The company moved to quickly raise another $100 million for over 50% share dilution.
  • With a promising NanoFlu Phase 3 trial expecting results in late Q1, Novavax shouldn't be so aggressive to raise cash at these levels.
  • This idea was discussed in more depth with members of my private investing community, DIY Value Investing. Get started today »

Small biotech Novavax (NASDAQ:NVAX) was recently bouncing off all-time lows until the coronavirus hit China. The company specializes in developing vaccines that prevent serious and infectious diseases, especially respiratory infections. The stock has surged this week, but the major hiccup in the investment thesis is the inability to actually obtain FDA approvals while chasing all of the latest viruses to the detriment of shareholders.

Novavax logo

Image Source: Novavax website

The Next Ebola

Over a week ago, Novavax traded below $4 while the all-time highs are around $300 due to the reverse-stock split. The stock recently jumped to nearly $10 on the news flow of the Wuhan coronavirus hitting mainland China following positive news on the NanoFlu vaccine obtaining fast track designation from the FDA.

Gregory Glenn from Novavax went on CNBC and claimed the company could develop a vaccine for the coronavirus within two to three months. Yet, the company made similar claims on the Ebola and other virus outbreaks over the years. The key part of the interview missed by the market was the note stating a license could take years.

The Ebola program is only in Phase 1 clinical trials today when the outbreak took place back in 2014. According to the CDC the Ebola outbreak started in 2014 and lasted until early 2016.

Over the course of 18 months, a total of 28,616 cases of the Ebola virus and 11,310 deaths were reported in the West Africa countries of Guinea, Liberia, and Sierra Leone. The CDC reported an additional 36 cases and 15 deaths that occurred when the outbreak spread outside of West Africa, yet Novavax is still in early clinical testing stages for the vaccine.

Source: Novavax J.P. Morgan Healthcare presentation

In addition, Novavax ended the previous quarter with the NanoFlu Phase 3 clinical trial initiated while the

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Stone Fox Capital Advisors, LLC is a registered investment advisor founded in 2010. Mark Holder graduated from the University of Tulsa with a double major in accounting & finance. Mark has his Series 65 and is also a CPA.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.

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