#83833
Re: Farmas USA
Update de Piper Jaffray cortesia de Kiyosaki ( Gracias!! ).
Subo la parte de la conclusión, el doc en si es muy extenso.
PIPER JAFFRAY - FEBRUARY UPDATE - Novavax, Inc. (NVAX) - Overweight
Convert Strengthens Cash Ahead of Phase III RSV Elderly Data in 2H:16
CONCLUSION
Novavax issued a $300 million convertible note bringing pro forma cash to $521 million. With the $100 million BARDA contract and $89 million Gates Foundation grant, Novavax has access to >$700 million, which we project is sufficient to reach profitability. Novavax has immunized all 11,850 elderly subjects in the Phase III RESOLVE trial of RSV-F vaccine with top-line data this fall. Based on the positive Phase II data, we are confident RESOLVE will meet the primary endpoint of reduction in moderate-to-severe RSV-caused lower respiratory tract infection (LRTI) with a potential BLA filing in 2017. Novavax is also conducting the Phase III PREPARE trial in 5,000-8,255 pregnant women, which will take longer to enroll and is being funded with $89 million from the Gates Foundation. Novavax will also articulate seasonal and pandemic flu vaccine plans funded by BARDA. We reiterate our Overweight rating and $15 price target.
• RSV-F Elderly Read-Out in 2H:16. Novavax has completed enrollment and immunized all 11,850 elderly subjects of the Phase III RESOLVE trial. The study is >90% powered to show a 64% improvement on primary endpoint of reduction in moderate-to-severe RSV-caused lower respiratory tract infection (LRTI), which was
achieved in the Phase II study. We expect pivotal data late in 2H:16 leading to a BLA filing in 2017. We currently forecast peak RSV sales of $1.2 billion in 2022E.
• Maternal Immunization Phase III Underway. Although the elderly trial will serve as the primary driver, Novavax is enrolling 5,000-8,255 pregnant women in the Phase III PREPARE trial, which should take 2-4 years to read-out. The primary endpoint is prevention of lower respiratory tract infection and hypoxemia in infants during the first 90 days of life. The company received an $89 million grant from the Gates Foundation to conduct the Phase III trial.
• NVAX a Take-out Candidate? RSV has long been an unrealized goal for vaccine developers. We believe positive data in the RESOLVE trial could draw multiple take out bids from larger vaccine players.
• Future Flu Vaccine Plans in 2016. The Phase IIb study of Novavax' seasonal flu met the primary immunogenicity endpoint showing elevations in antibodies against hemagglutinin (HAI) and neuraminidase (NAI), a secondary endpoint. Critically, the vaccine showed improved efficacy for B strains (HAI titers improved by 50%), which had previously been an issue, demonstrating that Novavax's manufacturing modifications were effective. Novavax intends to review the full data with BARDA before deciding on the next steps for the seasonal and pandemic flu vaccines in 2016.
CONVERTIBLE NOTE STRENGTHENS BALANCE SHEET AHEAD OF PHASE III ELDERLY RSV DATA THIS FALL
Novavax is a fully integrated vaccine company with an experienced management team, late-stage pipeline, proprietary Matrix-M adjuvant, manufacturing facility and strong balance sheet. The company’s next generation vaccines employ recombinant nanoparticle and virus-like particle (VLP) technology. These subunit vaccines are safe because no virus is introduced and can be manufactured faster than traditional egg-based vaccines.
The company’s lead candidate is a nanoparticle vaccine targeting respiratory syncytial virus (RSV) fusion (F) protein. RSV is a prevalent, seasonal infection that presents more severely in infants and the elderly. RSV infection rates are comparable to influenza causing 177,000 hospitalizations and 14,000 deaths in U.S. elderly each year (Falsey, A. et al. Infectious Disorders 2014, 12(2): 98-102). F protein is highly conserved across both RSV A and B subtypes and is required for cell entry and the formation of syncytia or fusions between infected cells. F protein is also the target of MedImmune’s Synagis (palivizumab), a monoclonal antibody approved as prophylactic therapy in high-risk infants. A safe and effective vaccine for RSV has blockbuster sales potential.
Last summer, Novavax reported positive Phase II data for RSV-F vaccine in 1,599 elderly subjects. Vaccinated subjects saw reductions in symptomatic RSV disease by 44% (p<0.05), lower respiratory tract infections by 46% (p=0.03) and a significant 64% reduction in "more severe illnesses". F protein IgG and palivizumab competing antibodies (PCA) were elevated by 4x in 90% of patients. The immune response was both rapid and durable peaking at day 14, but plateauing through day 56 pointing to a seasonal immunization. Critically, the vaccine's safety profile was comparable to placebo.
Novavax has already completed enrollment and immunized all 11,850 elderly subjects in the Phase III RESOLVE trial. The study is >90% powered to show a 64% improvement on primary endpoint of reduction in moderate-to-severe RSV-caused lower respiratory tract infection (LRTI), which was achieved in the Phase II study. We expect pivotal data this fall leading to a BLA filing in 2017. We forecast U.S. elderly RSV sales of $1.2 billion in 2022.
Novavax is also enrolling 5,000-8,255 pregnant women in the Phase III PREPARE trial, which we estimate should take 2-4 years to read-out. The primary endpoint is prevention of lower respiratory tract infection and hypoxemia (low plasma concentration of oxygen) in infants during the first 90 days of life. The company received an $89 million grant from the Gates Foundation to support the Phase III PREPARE trial.
In addition to RSV, Novavax is developing a quadrivalent seasonal flu vaccine comprised of antigens for two A and two B influenza strains. A Phase IIb study met the primary immunogenicity endpoint showing elevations in antibodies against hemagglutinin (HAI) and neuraminidase (NAI), a secondary endpoint. Novavax will review the full data with BARDA before articulating next steps this year. Novavax is also developing a pandemic flu vaccine against H7N9 +Matrix-M adjuvant. These programs are supported by a BARDA grant that was extended and expanded last year for an additional $100 million.
Novavax is also developing a vaccine against the Ebola virus. The company reported preclinical data on a vaccine against the 2014 “Makona” and 1976 “Mayinga” strains of Ebola virus. Last March, Novavax reported 100% survival in immunized non-human primates. In July, Novavax reported positive top-line Phase I safety and immunogenicity data of the Ebola vaccine + Matrix-M adjuvant in healthy volunteers.
NVAX has not been immune to share price weakness of the broader biotech markets now trading at a market cap of $1.4 billion. Novavax recently issued a $300 million convertible note with a 3.75% coupon maturing in February 2023. In conjunction with the offering, Novavax entered into privately negotiated capped call transactions intended to reduce potential dilution upon conversion of the notes. The cost of these anti-dilutive hedges has not been disclosed. Novavax ended 2015 with cash of $230 million, equating to estimated pro forma cash of $521 million. Importantly, with the expanded $100 million BARDA contract and the $89 million Gates Foundation grant, we estimate Novavax has access to >$700 million. We project these funds should be sufficient to gain approval and launch the RSV vaccine in the elderly, as well as register both the seasonal and pandemic flu vaccines.
Upcoming Catalysts
- Determine next steps for seasonal and pandemic flu vaccines with BARDA
- Report Phase III RESOLVE data for RSV-F vaccine in 11,850 elderly subjects this fall
- Potentially partner RSV-F vaccine overseas
- Provide update on RSV-F pediatric and pentavalent RSV+ Flu vaccine programs
- Report Phase III RSV-F maternal vaccination trial in 2018 or later
INVESTMENT RECOMMENDATION
We reiterate our Overweight rating and $15 price target based on an increased projected enterprise value of $3.92 billion, up from $3.86 billion, discounted back through YE:16. We value Novavax’s RSV-F vaccine program at $2.65 billion, up from $2.25 billion, by applying our standard 5x multiple to 2021E U.S. sales of $1.6 billion discounted back at 25% now through YE:16. We value Novavax’ seasonal flu program at $974 million, up from $854 million by applying a 5x multiple to 2020E revenues of $556 million discounted back at 30% now through YE:16. We add $100 million each (vs. $250 million each previously) for the company’s pandemic flu program, pentavalent flu/RSV vaccine and Ebola GP vaccine, to reflect their current stage of development.
To this we now add YE:16E cash of $356 million, up from mid‘16E cash of $157 million, accounting for the recent convertible note offering. We also now subtract out the full value of the $300 million convert, which matures in February 2023. We divide our projected market cap of $4.0 billion by 272 million YE:16E shares to arrive at our $15 price target.
