(Bloomberg) — Declining interest in Covid-19 vaccines has left a longstanding drug developer, Novavax Inc., struggling to stay afloat and short sellers taking a windfall.
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Bets against the company have netted about $2.7 billion from the stock’s 2021 high through Wednesday, data from S3 Partners shows. It is also the most profitable short among biotech companies since the stock peaked at the height of the breakout, according to Matthew Unterman, a director at S3.
Novavax’s dramatic defeat is typical of the declining demand for pandemic protection.
The 30-plus-year-old biotech boomed amid the lucrative race to develop a vaccine, giving it a chance to get a product to market quickly, but falling behind other jab developers. The US market would be dominated by the shots developed by Moderna Inc. and the partnership of Pfizer Inc. and BioNTech SE. Novavax finally received emergency clearance from US regulators last year and has faced disappointing adoption ever since.
“It’s a very difficult time for the company, even after a much-needed leadership change,” said Max Nisen, senior associate analyst at Bloomberg Intelligence. “They have significant costs after trying to build global manufacturing capacity and keep up with Pfizer/BioNTech and Moderna, a dwindling cash pile and very uncertain revenue prospects.”
In 2021, the pandemic and a frothy rally in the biotech sector pushed the Gaithersburg, Maryland-based company’s market value to more than $20 billion. The stock now trades at a fraction of that value and a warning from Novavax about its ability to stay in business this week has only compounded its woes.
Shares fell 26% on Wednesday after the company cast doubt on selling its 2023 shot, pushing shares that once traded above $300 to below $7 per share. The quarterly loss was also larger than analysts had expected. The company declined to comment on the share price. Shares rose 1% on Thursday, while the share price has fallen by about a third at the start of the year.
With short-term interest rates exceeding a third of the stock’s market price, it ranks among the highest in the industry, according to data from S3 Partners and Bloomberg.
Novavax isn’t the only supply of Covid-19 vaccines to take a hit as concerns about the pandemic ease. Moderna Inc. is down about 72% from its all-time high in 2021 and was the most profitable U.S. publicly traded short during the first two months of 2023, according to Unterman.
(Updates with Thursday trading.)
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