WASHINGTON, Aug. 15 (UPI) -- Novavax reported a net loss of $6.4 million for the second quarter, but some analysts continue to rate the company highly because they think it will ultimately cash in on its flu vaccine technology.
"We believe Novavax's (virus-like particle, or VLP) vaccine technology represents one of the most promising alternatives to the cumbersome traditional egg-based technology platform as well as the mammalian cell based systems," Navdeep Jaikaria, an analyst with Rodman and Renshaw, stated in a research report.
He rated the company as "outperform," noting that the recent identification of a strain of low-risk bird flu in swans in Michigan underscores that the United States is not immune to the threat of a flu pandemic and will have need for improved vaccine technology.
"They're not an earnings-= driven story," Jaikaria told United Press International. "They've valued on the potential of their pipeline product," he said.
Jaikaria projects the vaccine will reach the market in a couple of years and "will be a desirable product" because it will offer significant advantages over other vaccine production methods. It could achieve sales of hundreds of millions of dollars, he said.
"We believe (NovaVax) is well poised and capitalized to develop its VLP and other platform technologies, and thereby drive shareholder value," he stated in the research report. "Novavax shares have traded down significantly from their 52-week highs earlier this year and present an attractive value for long-term investors, in our opinion."
Jaikaria wrote that he is also encouraged by Novavax's strengthening of its board of directors and the senior management and anticipates the company will hire a seasoned CFO this week.
He said he is also impressed by how fast Novavax was able to produce a vaccine candidate that might protect against the H5N1 clade 2 flu virus identified in Indonesia last winter.
"The speed at which Novavax was able to develop a vaccine against an emerging viral strain is very impressive given many traditional vaccine developers are still working on the clade 1 strain that was identified in 2003," he stated.
Another advantage of Novavax's vaccine is that animals studies have indicated it induces a protective immune response with a single inoculation and it does not require an adjuvant, whereas other pandemic flu vaccines in development require two doses and an adjuvant.
Novavax said it is in discussions with the Food and Drug Administration about the design of a human trial and its filing of an investigational new drug application.
The company did not respond to UPI's request for comment by press time, but in its earnings report issued Monday, it said its research and development costs rose 143 percent to $3.4 million due to increased spending on its flu vaccine program.
"Our scientific team is now largely in place, and we are making solid progress in our vaccine labs," Rahul Singhvi, Novavax's president and chief executive officer, said in a statement. "We are very focused on generating the data that will allow us to move a competitive product into human clinical trials," Singhvi added.
The net loss of $6.4 million for the quarter was an increase compared to the $5.7 million net loss in the year-ago quarter.
However, the company has $78.6 million in cash, more than double the $31.9 million it had on hand last December, and this may be enough to drive the development of its vaccine.
"We have sufficient cash on hand to support this increased research and development spending as our scientific team continues to move the vaccine development programs forward," Singhvi said.
Novavax's revenues for the quarter totaled $0.8 million, a drop from the revenues in the year-ago quarter of $2.3 million. The revenues achieved this quarter were due to sales of Estrasorb and Gynodiol and contract R&D.
