Novavax craters after Phase III RSV F vaccine failure; seeks path forward

Novavax ($NVAX) saw its shares plummet afterhours yesterday when it announced a late-stage test of its infectious respiratory disease vaccine missed all of its marks across the 12,000-strong study.

In top-line data released just after the markets closed, the biotech’s RSV F-protein recombinant nanoparticle vaccine candidate failed to hit both its primary and secondary objectives, and most damning of all, did not demonstrate vaccine efficacy in the Phase III Resolve trial.

The drug was seeking to treat adults with respiratory syncytial virus (RSV), a respiratory infectious disease that causes serious infection of the respiratory tract, similar to influenza. The virus puts more than 200,000 over-65s in the hospital each year, and accounts for around 16,000 deaths in that age range.

The Gaithersburg, MD-based company, which until yesterday had a market cap of $2.2 billion, saw its stock plummet on the news, down by more than 83% afterhours--decimating its share price from $8.34 to just $1.40 in a few short hours.

Gregory Glenn, president of R&D at the biotech, said: “We are both surprised and disappointed by the outcome of the Resolve trial, which we recently unblinded. Our initial analyses and review of the key aspects of the trial do not indicate issues with trial execution, data collection, data integrity, or drug product quality. We expect to have preliminary immunogenicity data in the coming weeks to further our understanding of the trial results.”

Novavax also reported data from its Phase II rollover trial of the vax in around 1,400 older adults, which showed “immunogenicity in all active vaccine recipients,” according to Glenn. He added however that the company “observed similar low attack rates and absence of efficacy of a single immunization in this trial as was observed in Phase III Resolve trial,” but said that a second season immunization “could provide efficacy.”

He said: “Further understanding of these data may come forth with full evaluation of the immune responses.”

Just over a year ago the company had far better news--one which saw its shares surge--after posting positive data from a large mid-stage study of its vaccine. The Phase II study showed that its vaccine was 46% effective in preventing lower respiratory tract infections and 44% effective against all symptoms of RSV disease.

Cue blockbuster projections and its president and CEO Stan Erck telling Reuters in August of last year that it could be "the largest selling vaccine in the history of vaccines in terms of revenue."

In a far more tempered tone, Erck said yesterday in a conference call that the latest Phase III data were “surprisingly flat.”

He said: “It’s clear that there will not be a BLA filed for 2017 [for the vaccine]. We’ll have a better idea for a pathway and timing when we decide the nature of our next trials, which will start this fall, and how we decide to follow these trials up next year. I can’t say much more than that right now.”

He added that more updates should come in mid-October, alongside its annual analyst and investor meeting.

But there was no talk of dumping the program altogether, with Erck saying they will “continue to invest in this vaccine,” which he said based on patterns from other trials the vaccine can “stimulate a robust immune response…our vaccine works.”

Novavax is in addition to the adult studies also running mid-stage trials of its RSV F Vaccine to protect infants via maternal immunization. Glenn said on the call he didn’t think the issues with its Phase III in adults could be seen as a negative read-through for this program, which has been given a $89 million grant by the Bill & Melinda Gates Foundation.

J.P. Morgan’s Jessica Fye said: “We see a number of significant overhangs [Novavax] will need to address to restore investor confidence. Maternal immunization, for example, may still have potential, however data is years away and we do not expect the stock will get credit for this opportunity in the near-term, and similar thinking will likely apply to the platform and flu opportunities until further data proves such caution is unwarranted.”

The biotech is also working flu and Ebola vaccines, but doesn’t have any commercially available products.

There are other companies seeking to get a new RSV vax to market, with AstraZeneca’s ($AZN) MedImmune unit last April gaining an FDA fast track tag for its early-stage candidate MEDI7510.