NVAX Ownership, RSV phase 3

It had been trending down a bit, I think the old high was 83.1%, went just below 83%.  THis am is shows 83.23%, a new high per nasdaq site.  Just amazing.  I dont put much weight in these small little changes.  More data expected over the next two weeks, perhaps some bigger changes.

Price action seems slow.  While I would prefer a buildup in price, it mostly seems to me as a gentle shaking of the tree.  Emotions and expectations are high, I have some fear.  Selling out would relieve this pressure, I've done that before.  I am sleeping well.  My spouse is sleeping well.

Phase 3 data for elderly RSV could come any time.  I expect it could come before earnings so they get a chance to pound their chests a little.  Then perhaps further partnership info though I have no feel for that.


http://imgur.com/gallery/SjNdRXI

Other comps Anacor ANAC

Based upon the data here:  http://investor.anacor.com/releasedetail.cfm?ReleaseID=971005

A product with a peak sales of 2B has the company sold for almost 6B, a 3x rule of thumb applied to previously accepted sales figures for RSV of 5B yields future sales price based on market cap of 15B of at least $50.

Current market cap is 2.06B, price is 7.43
Future market cap is 15B, 7.28 times current price..
7.43 x 7.28 = $54.

Novavax NVAX $7 options

WOW!  Click image for larger...

Bill Gates mentions RSV

12 seconds into the video here:

http://www.bloomberg.com/news/articles/2016-06-30/bill-gates-calls-u-s-drug-pricing-system-better-than-most

The price action in NVAX

yesterday, today, and the rest of the week will be the tale of the tape for end of quarter positions.  Nobody can read the cards that the large professional investors hold yet, but what is happening now will be known in about 45 days when filings are done.  Volume today is running high and the NVAX recovery is stronger than the market recovery.  Draw your own conclusions, I know what mine are.

Click image if you want

NVAX in 1997

1996 here:    http://4nursebee.blogspot.com/2016/06/novavax-in-1996.html


Feel free to skip, not much was done.  I don't think much happened clinically

2.4 M shares registered for sale. 1.2 M to Anaconda, plus 1.2 M in warrants to same, privately placed.
11.8M shares total
18 employees, 11 are R&D
The JnJ lawsuit was settled without liability
1058 stockholders, just under 40% show up as reportable
Net loss 5.494M

The depth of data discussed in modern filings is so much more, likely due to changing regulation and complexity of the company.

Novavax in 1996

Previous year here:  http://4nursebee.blogspot.com/2016/06/the-corporate-history-of-novavax.html


In 1996 Novavax had two proposed share offerings, the first for 240K shares, the 2nd for 505K shares.  Documents explain more of the formation of several companies becoming the new independent NVAX.  There products and research had been focusing on several products:
1.  Oral and topical delivery of liposomes (the IGI products of which were being used in cosmetics).
2.  Micellar nanoparticles (MNPs)
3.  Estrasorb
4.  Non antibiotic Helicore for treatment of H Pylori
5.  Vaccine adjuvants.
6.  They received IND for 2 oral vaccine products.

Novavax suspended work on all to focus on Estrasorb and Helicore.  Marsh initially became chairman of the board, later in the year and new Chairman and CEO were brought in.

Mention is made of a lawsuit by J and J versus NVAX and IGI over a Nova skin product.

They have 36 patents.

There is some discussion about possible government price controls of pharmaceuticals.

Of note, after two P I clinical trials of the Helicore, data was insufficient to continue testing.

1997 here:   

http://4nursebee.blogspot.com/2016/06/nvax-in-1997.html

The corporate history of Novavax

1995 The spin-off

I first got into Novavax back in the bird flu scare days.  When I looked at the chart I could see they had been in existence for many years but I had little idea as to what that chart represented.  I did little reading of official paperwork at the time but now enjoy reading current SEC filings on companies I follow.  This is the first part of what I expect will be a long running corporate history of Novavax as gleaned from the corporate filings that I can find.  When I have slow days I will slog thru another year and summarize the info here.  As I complete another year I will go back and add links to the next year.

I do this with the following thoughts:
1.  The history of this company has little impact on the current company.
2.  I will focus on what has happened with the current leadership and board to see if they are worth keeping around.
3.  Focus on products and sales.
4.  I expect that too much attention to a lengthy history could influence me to sell out a useless company.

Novavax was incorporated in 1987.  In December 1995 IGI Labs (now still a business under the name Teligent (TLGT)) spun off Novavax as a separate company.  The new company was AMEX listed under symbol NOX.  One of the board members of IGI was Dick Cheney.  Perhaps the company was a collection of companies, Micro-Pak, Micro-Vesicular Systems, and Lipovax.  Novavax was the human vaccine component of an animal vaccine company.

Continue here:  http://4nursebee.blogspot.com/2016/06/novavax-in-1996.html

What Do You Think The Giants Are Going To Do?

It is an interesting time to be a part owner of a company with pending phase three trial results.  There is a lot that can happen, so many directions to go, ways in which the market can move.  Overall market conditions might well dictate, especially in an election year.  But after the big plunge last summer my GUESS is that the worst is over and what will move this stock is what professional money does from here.  Up to now they have been overall buying albeit in the setting of rising short interest.

The bearish argument is that the risk is high.  P3 results could be bad, best to get out and wait for published results.  Perhaps even the big money guys will do the same.  Perhaps push the stock to retail then shake them around to buy back if results are good.  There is also the thought that despite good results we are still perhaps years away from an actual product with actual sales.  No need to buy or hold if that is the case.  Is big money bearish?

The neutral price argument holds up only if bullish and bearish forces remain equal.

Bullish argument centers on hopes for future product, the idea to invest now for future earnings.  Big money continues buying up shares.  Gates/Path add to what they have been helping with.  Big pharma partners and helps build out new facility.  If Big Pharma were to want to buy they would have to bring on market actions to get shares...  Is big money bullish?

I think a lot of retail follows a lot of the drivel in the press.  Conflicting opinion from "The Street" and "The Fools" makes it difficult to buy and/or hold.  The IBD crowd can't even find this one (and I think you have to buy earlier than the IBD crowd-they are the ones that get distributed to).  The value players find nothing tangible of value.  I think smart money is buying.  I do not know what Soros will do though.

The thing to do is to come up with an overall investment plan and stick to it.  I like to invest in growth companies that I can understand, come up with future estimates for, and sleep well at night holding.  Novavax fits this well for me.  They have a leadership team that has grown pharmas before and sold them at a premium.  They have good P2 results derisking a lot.  They are bringing in key people and executing well on plans.  They have things thought out with regard to how to move forward.  They are talking to Big Pharma about partnering.  They are working with Gates/Path.

I think the giants are buying and holding.

Novavax History

So the photo in my last post comes from former location of Novavax (NVAX) on Lapp Road in Malvern PA.  I've been reading back on old proxy and annual reports to catch more of the story with them.  These old reports are like a history lesson as the company developed from what it was to what it is and hints at what it can be.  They used to work on products for menopause and female sex drive!  They had stuff that they developed and sold!  Little remains of the company it once was, I salute whatever got them to focus on what they are focused on. (My hat is off to you grey heads still on the board!)

The RSV product development has progressed at a good pace in comparison to a great book I read on the subject.



It is a little bit exhilarating waiting for the next moves and news in Novavax.


Wikinvest has older stuff also, neat site.


2009 Annual report: shows preclinical stuff related to RSV:   http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/10-K/2009/F5387159

2009 Proxy materials  http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/DEF_14A/2009/F5387152

2010  Annual
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/10-K/2010/F47051008

2010 Proxy
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/DEF_14A/2010/F62457356

2011 Annual

http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/10-K/2011/F94896115

2011 Proxy  First time I see quality money investing- Black Rock 5%

http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/DEF_14A/2011/F95464843

2012 Annual
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/10-K/2012/F100726546

2012 Proxy
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/DEF_14A/2012/F101402421

2013 Annual
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/10-K/2013/F107428358

The proxy was gibberish on this site, could not be read.

14 Annual
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/10-K/2014/F116065852

14 Proxy  Two big investors show up, black rock and Fidelity

http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/DEF_14A/2014/F116687464

15 Annual
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/10-K/2015/F122276170

15 Proxy  Five are listed at >5% owner.
http://www.wikinvest.com/stock/Novavax_(NVAX)/Filing/DEFA14A/2015/F123436548

History lesson- click image for larger.

NVAX price target 2

OKAY, how about a little help figuring out future price targets.

Two pharma companies I missed out on owning were ALXN, on my watch list years ago at $25, and JAZZ which a chat room I was in was being touted when around $30. I could not wrap my head around those drugs, nor come up with decent analysis for growth.

When I was really getting on board with TSLA, I again had a tough time figuring out a future price target. I asked for some help here, conversations got real perverted.

If I take a look at ALXN, it has 2B in sales and a 33.5B mkt cap. cap is about 16x sales.
JAZZ has 1B in sales and a 9.45B cap, about 9xsales.
NVAX working on RSV vaccines- published by many to be a 5B market each year.
5B multiplied by the above comps yields mkt cap of 45B-80B. Today it is roughly 1B, closed at $4.6.
So future price target based just on RSV sales could be $207-$368.

Price now should clearly be less based upon risk and time.
What is wrong with my analysis?

 

The above is from Aug 2014 thoughts, likely prior to some dilution.

NVAX fair price now and in the future.

Trying to come up with another realistic back of napkin price for Novavax based just upon RSV vaccine market.

Pregnant mother:  In the US there are about 4M live births/yr.  At $100 per dose, the potential yearly market US is 400M.  For sake of figuring, I’m gonna guess in the US that 75% get the vaccine so 300M sales each year.  In the world there are 131M births per year.  I’m gonna guess low that 25% get the vaccine and that it averages $25 each, so sales would be 818M, perhaps ½ goes to NVAX if they partner.  So total guess for maternal immunization using conservative guesswork 709M per year in sales.

Elderly:  46.2M population in US @ $100 per vaccine is 4.62B per year in sales.  World market adds over 600M more in population, figure 25% could take it (?) and price $25, sales would be 3.375B per year.

So potential sales could be 8.7B per year, at some point in the future, my guess is 5-10 years down the road.

Now, taking an old school run of the mill pharma like Pfizer, sales of 50.99 B, market cap of 214B, price to sales ratio is 4.2.  Reverse engineer a market cap for novavax gives 8.7B x 4.2 =36.54B market cap, this would yield a price 20.4 times the recent price of 6.5, or about $132 per share.  I really have no way of figuring a risk premium or time value of holding this for 5-10 years.  What I did figure in the past was to subtract 20% of the value each year.  If NVAX can execute the above sales figures in the next 5 years, I figure the present discounted value to be $43, if over the next 10 years, the discounted value would be $14.

Now let’s take a price to earnings approach comparing to Pfizers 28.93 p/e.  I assume the sales would be highly profitable, perhaps 50% profit, 4.35B/yr.  With roughly 280M shares of NVAX, this equates to EPS of $15.53.  Multiply this by the p/e of PFE to get a price of $294.  Discounted back over 5 years gets current price of $96, over 10 years gets current price of $31.

All bets are off if P3 sucks.

Not approved by IR yet!

Novavax 2016 Annual Shareholder meeting

No great words of wisdom to be spilled here, I think I will keep things brief.  I have followed this company since losing money back in bird flu days- caveat emptor.

First meeting:  http://4nursebee.blogspot.com/2013/06/novavax-shareholder-meeting.html
2nd meeting:  http://4nursebee.blogspot.com/2014/06/for-reactions-from-last-years-meeting.html

One can also do a search top left of this blog using phrase "NVAX" to see my history...

Okay, here it goes.

Stan showed slide where RSV adult showed stage 3 complete...

The parking lot was full, they really do put people to work.  499 as of this am, 500th soon.  They have hired "half of Medimmune".  They have picked and chosen amongst the local area and are now looking outside the region for new hires.  They look for those with a Can Do attitude.

The end of phase 2 meeting was November 3rd 2015, THEY WERE READY TO VACCINATE 4 days later, or something like that, just amazing claim.

Gates foundation recognizes that it takes 20 years for things to trickle down to poorer countries and are involved to speed that up.  I think Erck mentioned  they had just recently had their first face to face meeting with the foundation.

Product to be  launched out of Firstfield road where Stage 3 trial was made.

Scaleability made easier by GE Xcellerex reactors:  As they grow batch size, each larger reactor is just a larger scale version of the smaller ones, making things like oxygenation the same.  I like this, am glad to know it.

They contract out Fill and Finish.

Stan was questioned about partner news timing and seemed to confirm next 3-6 months (I am paraphrasing).

They have a lot of options with how they build out from here.  They seem to be considering all options, everything is being thought out in advance.  A lot is determined by who the partner is.

There seemed to be 20+ people there, most were quiet.  One guy seemed to be a scientist that was going to help them in some regard, had bought stock.  Someone from NIH (maybe retired?) was there.  High quality questions from most in attendance.  Only one shareholder looked familiar.

Thanks for the tour Mr. Hahn!

RSV F Fast track NVAX Let the bodies hit the floor!

NVAX update

Account balance has been painful.
I've added as able.
Top line results expected next 3 months.
Ownership >77% now with large short position.
More ownership data coming out over the next month, I expect good data.
If they execute and news is good I will hold.
If news is bad the trade is off.

Last place

It would be nice if the tides changed.  Ongoing results here:  http://libra-investments.com/hf/bh.html

Follow the big money

NVAX, the big flush

Click image for larger

INCYTE INCY

Timeline for blockbuster drug Jakafi
6/8/11  NDA
8/3/11 FDA accepts filing
11/16/11  1st approval, 2nd indication approval comes 12/4/14

This one made some wild moves:
2/11/8 $12.83   11/7/8   1.85, a whopping 86% decline, long recovery until 3/8/10   25 months
4/5/10   14.87    5/3/10   8.5   43% decline, recover 9/20/10    5 months
5/2/11  21.15    11/21/11   11.76  44% decline, recover 4/23/12   11 months

now above $108, a 745% gain since 2008

Lessons:
Bear market brutal but sitting tight can work out.
Options, I've used Leaps before, perhaps better to buy when they have declined 30-40% off a peak.

Click image for larger

ALXN

I followed this company back when it was trading near $25, kind of kicked myself for not buying in to it.  It is now 190ish.  Regulatory time frame for Solaris:
09/06  submitted for regulatory approval
11/06  FDA granted it priority review
03/07  approved
09/11  approved for an additional indication

Price action:
9/5 7.5      11/5 4.59    38% decline, 1/6 recover    2,400% gain since 9/5, 1.5 years prior to product.
3/6 9.55     5/6 7.45      22%, 11/6 recover
11/6  11.45  3/7 8.78    23%, 3/7 recover
10/7   20.03    3/8  12.32    38%  7/8 recover
It took until 2010 to clear out the $25 range

Lessons:
Lots of volatility in price
Price mostly recovers within a year.
The climb is not really fast, especially at the approval time frame.  Revenues really do matter, take time to recognize.
Price can double in the year or two before approval (double from previous peak even).
Gotta sit tight to be right.

A potential comparable

Tough to find old charts on this one.  Amgen received approval for Epogen in June 1989.  The share price had a steady albeit bumpy ride up until the approval, thereafter it took a while to grow.  In June 86 the price was about 51 cents, June 87 it was 75 cents, and about $1 when the product came on the market.

In 1992 the price had grown to a high of 9.72.  In Feb of 93 the price dropped as low as 3.97, a 59% drop!  Recovery was long and hard for this one, it took until 1995.

There were further bumps in the road for this one in 1997, when it declined 34% from May to September.  By July of 98 it recovered, and in March of 99 it had doubled.  January 2000 it was $75.

This company now trades in the 160's albeit 30 years past its pre approval stage.  320 times your money.  Good and bad times will come and go for the market, but buying and holding great product companies of the future can work well.

Click image for larger.

2015 year in review, reflections, thoughts

First off, and clearly a big deal to not forget, this was the 5th year in a row that my trading has beat the SP500.  Another clear positive was the dollar amount added, perhaps as much as gross income from day jobs.  The SP 500 was down 0.73%, my trading up 13.5%.

The tough thing to ignore reflecting back on 2015 is that a very large portion of my gains evaporated with the market downturn this fall.  I had been up 125%, over a million dollars!  It was a huge year for me in that regard and oh so difficult to think of the losses.  For years I've harbored thoughts of some professional money manager swooping in to hire me for big bucks, something like a hedge fund.  I bet they don't hire people that give back such a large portion of their gains!

Why did this drawdown happen?  Because the premise for trade entries remained, the end point had not been reached.  Because I set up some rules and while I am willing to be flexible and make spur of the moment decisions any decisions would have only reflected emotional trading.  Because I have enough money to live a comfortable life already, have a good job, and my goal is to have "F YOU" kind of money.

ZOES is not so interesting to me any longer.  Other ideas remain front and center as they have for years.

Retirement from normal work life likely awaits us at the end of 2016.

If your trading can't beat the SP500, perhaps just go buy a low cost index fund like a Boglehead and enjoy your life.

Have a good 2016.