Last month, Novavax published preclinical data showing that its H1N1 virus-like particle (VLP) vaccine candidate (based on the 1918 Spanish influenza strain) protected against both the Spanish flu and an H5N1 avian influenza strain. Nonetheless, even in the midst of a pandemic threat, it is highly unlikely that the Food & Drug Administration would approve an anti-viral with limited testing in (healthy!) humans.
With a quarterly cash burn of $8 million, Novavax does not have enough monies ($34 million at December 31—actually, $27 million if you back out the portion invested in auction rates securities) to shepherd its pandemic and seasonal flu vaccine candidates through human clinical testing. In our opinion, the recent $11 million capital infusion by India’s Cadila Pharmaceutical only delays an eventual restructuring of the company (including the suspension of other R&D vaccine programs). A read of the 2008 annual report shows that $22 million in 4.75% senior convertible notes comes due on July 15 (although $11.0 million of the debt can be satisfied with the issuance of common stock).
The biggest asset on the company’s balance sheet is something called “crisis.” Back in 2005, this former distributor of soy-based lotions to prevent hot flashes in perimenopausal women repackaged itself as a (self-proclaimed) leader in the development of bird flu vaccines. We are still waiting for that SARS (severe acute respiratory syndrome) antidote, too.
Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.