In recent months, several large companies, including You’re here and Square – collectively bought billions of dollars worth of Bitcoin. Cryptocurrency is obviously gaining in importance, which bodes well for the bullish case of the asset, which some investors believe will eventually replace fiat (or government-issued) currency.
Due to these factors (and others), Bitcoin has easily outperformed the broad market year-to-date performance. However, some stocks fared significantly better than the digital coin. Two of these stocks are Ocugen (NASDAQ: OCGN) and Novavax (NASDAQ: NVAX). Are these high-flying biotech actions purchases?
Bitcoin price data by YCharts
Ocugen hopes to make a name for himself by entering the COVID-19 vaccine market. The company is developing Covaxin, a potential vaccine against the disease, in collaboration with the Indian company Bharat Biotech. Bharat is conducting a Phase 3 study in India for this candidate, and according to interim results released by both partners in March, Covaxin was shown to be 81% effective in preventing COVID-19.
What’s more, there is some evidence that it is also effective against newer variants of the disease-causing SARS-CoV-2 virus, particularly those that have emerged in the UK and Brazil. Based on these results, Ocugen had planned to seek Emergency Use Clearance (EUA) from the United States Food and Drug Administration (FDA) for Covaxin.
Importantly, the company will have the right to market the vaccine in the United States and Canada if approved. Ocugen is only expected to keep 45% of the profits that Covaxin will generate in these countries. However, the biotechnology project of applying for an EUA encountered a major obstacle. On June 10, the company announced that, under the recommendation of the FDA, it would now pursue a Biologics License Application (BLA) for Covaxin.
This change is important for one simple reason. An EUA would only take a few weeks (at most) to be approved, whereas a BLA typically takes at least six months and can take up to 10. In other words, Covaxin isn’t coming to the market anytime soon. American market, which is horrible. news for Ocugen and its shareholders. It’s no surprise that the company’s shares have plunged on the news. But there is more.
The FDA has also requested additional information and data to support the company’s BLA for Covaxin, which means that even the six to 10 month timeframe to bring Covaxin to market seems optimistic at this time. By the time Ocugen’s candidate finally gets FDA approval, COVID-19 vaccines will likely be commonplace.
And no matter how much profit the company makes in the United States and Canada, Ocugen won’t even keep half of it. Additionally, the rest of the company’s pipeline is thin, and none of its other candidates are even close to reaching the late stages of clinical trials. For these reasons, investors would do well to stay away from this biotech action.
Novavax is also developing a vaccine candidate against the coronavirus, one called NVX-CoV2373. And while the company has yet to secure an EUA for its potential vaccine, there are a few things to consider. First, biotechnology has launched ongoing reviews for its candidate in several countries, including Canada and the European Union. The company plans to file an EUA application in the UK and US in the third quarter of its 2021 fiscal year.
Second, the Novavax vaccine was very effective in a Phase 3 clinical trial conducted in the UK, with an overall efficacy of 90%; it has been shown to be 100% effective against moderate and severe cases of the disease. NVX-CoV2373 also appears to be potent against severe cases of the disease caused by newer variants of the virus, such as those that have emerged in the UK and South Africa.
Third, Novavax has already signed agreements with several governments around the world to provide more than 300 million doses of vaccines. Even if the company arrives late in the market, it will at least generate a modest income from NVX-CoV2373.
Novavax has other things to do; two in particular deserve to be mentioned.
On April 23, Biotech announced that data from a Phase 2b clinical trial for a malaria vaccine called R21 was released in Preprints with The Lancet, an online journal that publishes unpaired medical research. R21 was developed by the University of Oxford and is licensed from the Serum Institute of India, but Novavax’s adjuvant Matrix-M has helped boost its effectiveness.
During the trial, the vaccine was 77% effective in the group receiving the higher adjuvant dose and 71% in the group receiving the lower adjuvant. The University of Oxford has already started recruiting participants for a phase 3 study. If this vaccine obtains regulatory approval, Novavax will hold the right to market the vaccine in certain countries.
Then there’s the company’s NanoFlu, a potential flu vaccine for adults 65 and older. According to the United States Centers for Disease Control and Prevention, between 70% and 85% of seasonal flu-related deaths have occurred in patients 65 years of age and older in recent years. There is still an urgent need for a vaccine that solves this problem.
In a Phase 3 clinical trial, NanoFlu demonstrated non-inferior immunogenicity (the ability to trigger an immune response in the body) compared to Fluzone, the leading influenza vaccine for seniors on the market. NanoFlu is likely to gain regulatory approval, making it another long-term opportunity for Novavax.
But the company has yet to seek FDA approval for the candidate, much to investors’ dismay. Still, in my opinion, the company’s latest generation pipeline (NanoFlu and NVX-VoV2373) could achieve combined annual global sales of several hundred million dollars. For a company that currently has no product on the market, this bodes well for its future. That’s why I think Novavax deserves serious consideration, especially for investors who are willing to be patient.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.