Investing

Beleaguered Biotech Firm Novavax Jumps on Change of Leadership

Joshua Enomoto

Published: January 10, 2023 3:50 am

Last Updated: January 10, 2023 11:52 am

Deeply embattled biotechnology specialist Novavax (US:NVAX) popped dramatically higher on Monday, closing up 11.25% against the Friday session. Earlier on the day, the company announced a change of leadership, with Novavax President and CEO Stanley C. Erck stepping down. Taking Erck’s place will be industry veteran John C. Jacobs, who left the helm of Harmony Biosciences (US:HRMY).

Notably, while NVAX stock soared into double-digit territory, HRMY conversely gave up 16.10% of equity value. Still, against the trailing year, Harmony Biosciences currently stands on much higher ground, with shares gaining 20.47% while Novavax plummeted nearly 91% during the same period.

According to the accompanying press release, the change at the top will be effective as of Jan. 23, 2023. Further, Erck will serve as an advisor to Novavax for the next 15 months to facilitate a smooth transition.

“As we prepare for Stan’s retirement, the Board reflects on the incredible legacy he leaves behind,” said James F. Young, PhD, Chairman of the Board of Directors. “Stan led Novavax from a clinical development organization to a global commercial vaccines company during a worldwide pandemic. This foundation puts Novavax in a strong position to execute on its long-term strategy, and we look forward to supporting Stan and John through the transition.”

Young later noted that Jacobs is a  “seasoned industry leader” who will bring “deep industry expertise” to the biotech firm. Prior to his role as President and CEO of Harmony Biosciences, Jacobs held leadership roles at Teva Pharmaceuticals (US:TEVA) beginning in 2014. Also, he climbed the corporate ladder at multiple other healthcare enterprises, including Pfizer (US:PFE).

Although NVAX stock represented one of the top performers on Monday, the incoming leadership team faces significant challenges. Primarily, interest toward Novavax shares waned substantially since the final weeks of 2021. Once trading hands well into triple-digit territory, NVAX plunged briefly into single digits last month.

Adding to sentiment woes is Novavax’s history of insider transactions. Since the latter half of 2020, sales dominated the list. Indeed, the last insider purchase occurred on May 21, 2021, when Novavax director Rachel K. King purchased 700 shares of NVAX stock.

Scientifically, Novavax took a risk when it decided to forward a vaccine candidate for COVID-19 that utilized a more traditional subunit approach than the innovative messenger-RNA-based platform. According to the American Medical Association’s Sara Berg, MS, “[t]he Novavax vaccine is protein-based, which is a type of vaccine that has been widely used for decades. Some more familiar protein-based vaccines include those that protect against human papillomavirus, hepatitis B and shingles.”

However, BioPharm International notes that “[t]he time and money needed to develop subunit vaccines can pose additional challenges. While development timelines for these vaccines are shorter than those for vaccines based on whole pathogens, subunit vaccine development is still time-consuming.”

Nevertheless, not everyone carries a negative outlook on NVAX stock. In particular, the put/call ratio for Novavax options pings at 0.66.

According to Fintel, “[t]he Put/Call Ratio shows the total number of disclosed open put option positions divided by the number of open call options. Since puts are generally a bearish bet and calls are a bullish bet, put/call ratios greater than 1 indicate a bearish sentiment, and ratios less than one indicate a bullish sentiment.”

This article originally appeared on Fintel