Covid-19 vaccine maker Novavax struggles

Waning interest in covid-19 vaccines has left a longstanding drug developer, Novavax Inc., struggling to stay afloat — handing short sellers a windfall.

Bets against the company have earned shorts about $2.7 billion since the stock’s 2021 zenith, S3 Partners data shows.

Novavax’s dramatic rout is emblematic of the dwindling demand for pandemic protection. Regulatory delays and a commercial disappointment have also made it the most profitable short among biotech companies since the stock’s peak at the height of the outbreak, according to Matthew Unterman, a director with S3 Partners.

The biotech company of more than 30 years soared amid the lucrative race to develop a coronavirus vaccine, which gave it an opportunity to quickly get a product on the market, but fell behind other developers. The U.S. market was ultimately dominated by shots developed by Moderna and the partnership of Pfizer and BioNTech. Novavax finally won emergency use authorization from U.S. 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, Md.based company’s market value to more than $20 billion. The stock now trades at a fraction of that value, and a warning this week from Novavax about its ability to stay in business has only deepened its woes.

Shares of Novavax Inc. dropped 26% Wednesday after the company flagged doubts over 2023 sales of its shot, taking the stock that once traded at more than $300 per share to less than $7. Its quarterly loss was also wider than analysts expected. The company declined to comment on its stock price.

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.

Shares of Moderna Inc. is down about 72% from its 2021 record high and has been the most profitable U.S.- listed short through the first two months of the year, according to Unterman.