Citi Cuts Novavax's Price Target From $12 To $1.50 Following Failed Trial

Following disappointing Phase 3 results for the RSV vaccine in older adults, Novavax, Inc. (NASDAQ: NVAX) reported mixed results for a Phase 2 trial of the vaccine on older adults who were reimmunized.

Citi’s Joel Beatty downgraded the rating on the company from Buy to Neutral, while lowering the price target from $12 to $1.50.

Related Link: Failed Trial Sends Novovax Shares Spiraling Down 85%

Near-Term Concerns

“We are Neutral rated because we don't expect results from the one remaining clinical trial (ph3 RSV vaccine in pregnant mothers) until 2019, and it remains unclear to us what NVAX's strategy will be for managing cash,” Beatty explained.

In the nearer term, the analyst expects the stock to be most impacted by Novavax’s pace of enrollment for its ongoing Phase 3 maternal RSV trial, as well as cash management and potential plans, if any, for the advancement of pre-clinical agents.

The Failed Trial

While greater detail on the failed Phase 3 trials for the RSV vaccine are expected at the company’s investor day on October 11, Beatty believes any favorable subgroup analysis would be unlikely, given the negative trend on the primary endpoint.

The analyst also believes that any further development of the RSV vaccine in older adults would only be likely at a high cost and risk.

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