Re: Farmas USA
NVAX. Inicio de cobertura de CITIGROUP.
Novel Vaccine Platform and No Shortage of Need — We are initiating NVAX witha Buy rating and 12-month TP of $9. NVAX's unique vaccine platform has proven the ability to expeditiously make a broad array of custom vaccines, opening potential to large new and existing vaccine markets. Within the next 12 months we expect clarity for their RSV (respiratory syncytial virus) vaccine and their seasonal flu vaccine, with either being sufficient to support upside to the current valuation.
Differentiated Vaccine Platform Provides Multiple Advantages
— Key aspects of NVAX's cell culture based vaccine-platform are: ----
1) production of virus-like particles producing stronger immunization,
2) rapid optimization of the selection of nearly any antigen or combination, giving a meaningful advantage over existing approaches,
3) shorter and less expensive production vs. existing methods, allowing efficient scaling of production and attractive margins.
Further Validation from Data for RSV, Flu and Other Programs — NVAX's RSV vaccine has had encouraging data to date and could be the first to break into this elusive but potential multi-billion dollar market (Ph3 start ~`15). Their seasonal flu vaccine (Ph2 data 2H:14) could also prove highly competitive in this $3B market with Ph3 start ~YE:14. Physicians point to the RSV/Flu combination as a potential "home run" (Ph1 data 4Q:14) potentially transforming the market. NVAX's platform could receive further validation from multiple other candidates, including pandemic flu, which would highlight the platform’s differentiated efficiency and versatility.
--- Establising $9 TP —
Our $9 TP is derived from a DCF valuation that includesrisk-adjusted sales for RSV, seasonal flu, and combination RSV/Flu vaccines. Our valuation also includes $175M for the other externally-funded pipeline programs/platform, and FY1 cash. We see several catalysts over the next 12-months"
----- Valuation -----
We are establishing a Buy rating and 12-month TP of $9 based on a DCF valuation. Our model includes risk-adjusted sales for the RSV and Flu vaccine (40% and 40%, respectively) and the combination RSV/Flu vaccine (35% prob. of success), $116M in FY1 cash, and $175M of value for the other externally funded vaccine programs (pandemic flu) and modest value for the platform technology. We project peak US/EU penetration (~2030) of monotherapy RSV and Flu vaccines of ~40% and 13% respectively, and for the combination into RSV/Flu vaccines of ~30%. We see the pediatric RSV data, and the RSV/Flu combination data both by or around YE:14 to be important drivers, but also see updates on pandemic flu (H7N9; 4Q:14) and regulatory sign-off on the Ph3 seasonal Flu program (~YE:14) as important validating events for the programs and NVAX’s platform approach. We see potential upside to our estimates, however, it remains somewhat unclear what data could produce broad Street enthusiasm.
Investment Thesis
• Novel Vaccine Platform Proven to Be Versatile and Nimble
• Potential to Crack the RSV Vaccine Market
• New Approach to Seasonal Flu – There Is Certainly Room for
Improvement
• Flu/RSV Combo Vaccines Could Be a Home Run
• Current Programs Likely Only the Tip of the Iceberg for NVAX’s Platform
• Management Background a Key Asset
NVAX
