(Bloomberg) — Waning interest in Covid-19 vaccines has left a long-standing drug developer, Novavax Inc., struggling to stay afloat and handed short sellers a windfall.
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Bets against the company have earned shorts about $2.7 billion from the stock’s 2021 zenith through Wednesday, S3 Partners compiled data show. It’s also the most profitable short among biotechs since the stock hit a peak at the height of the outbreak, according to Matthew Unterman, a director with S3.
Novavax’s dramatic rout is emblematic of the dwindling demand for pandemic protection.
The over 30-year-old biotech soared amid the lucrative race to develop a vaccine, which gave it an opportunity to quickly get a product on the market, but fell behind other jab developers. The US market would come to be dominated by the shots developed by Moderna Inc. and the partnership of Pfizer Inc. and BioNTech SE. Novavax finally won emergency use authorization from US regulators last year, and has since faced disappointing uptake.
“It’s a very difficult moment for the company even after a much needed change of leadership,” says Max Nisen, senior associate analyst at Bloomberg Intelligence. “They have significant expenses after attempting to build global manufacturing capacity and keep up with Pfizer/BioNTech and Moderna, a dwindling cash pile and highly uncertain revenue prospects.”
In 2021, the pandemic and a frothy biotech-sector rally drove the Gaithersburg, Maryland-based company’s market value over $20 billion. The stock now trades at a fraction of that value and a warning from Novavax about its ability to stay in business this week has only deepened its woes.
Shares dropped 26% on Wednesday after the company flagged doubts over 2023 sales of its shot, taking the stock that once traded above $300 to below $7 per share. Its quarterly loss was also wider than analysts expected. The company declined to comment on its stock price. Shares rose 1% on Thursday, while the stock’s price has dropped by about a third to start the year.
With short interest amounting to more than a third of the stock’s float, according to data from S3 Partners and Bloomberg, it’s among the highest levels in the sector.
Novavax is not the only Covid-19 vaccine stock that’s taking a hit as concern around the pandemic wanes. Moderna Inc. is down about 72% from its 2021 record high, and had been the most profitable US-listed short through the first two months of 2023, according to Unterman.
(Updates with Thursday trading.)
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