Why Novavax Stock sank today

What happened

Actions of Novavax (NASDAQ: NVAX) fell 12.8% today after the company reported third quarter results after market closed on Monday.

Novavax reported third quarter revenue of $ 157 million, well below analysts’ average estimate of $ 230.6 million. It posted a net loss of $ 197.3 million, or $ 3.21 per share, a result much worse than analysts’ consensus estimate of $ 1.73 per share.

Image source: Getty Images.

So what

Should investors be worried about Novavax’s third quarter sales and profits? Not at all. These hiccups were just not a big deal. At this point, the company’s revenue consists of money received from outside entities to help fund its COVID-19 vaccine program. Novavax’s net loss reflects its significant spending to advance its candidates, in particular its experimental vaccine against the NVX-CoV2373 coronavirus.

The main financial metric investors should focus on for Novavax is its cash position – and the company is well positioned on this front. Novavax has declared cash, cash equivalents, marketable securities and restricted cash totaling $ 571.6 million as at September 30. This puts biotechnology in great shape to continue funding its pipeline efforts.

What really matters to Novavax is the advancement of its pipeline. If the company tests positive for NVX-CoV2373 in late stage testing, its third quarter results will quickly be forgotten.

Now what

We shouldn’t have to wait very long to find out how the latest NVX-CoV2373 studies are going. Novavax already has a Phase 3 study of the candidate vaccine underway in the UK and hopes to start an advanced stage US study later in November. The company plans to report its first efficiency results early next year.

There is also another potential catalyst for the biotech stock: the regulatory filing of the influenza vaccine candidate NanoFlu. Novavax plans to provide updates on its progress in filing for regulatory approval for NanoFlu once a team created to guide the process finalizes its strategy.