Novavax, Inc. (NASDAQ:NVAX) has been an extremely interesting story to our team since we began posting our analysis in August. We expressed our bullish view starting in early September, and got somewhat lucky when that bet paid off on a dramatic shift from an axe analyst (as we covered here). Our overall view has not really changed.

The story sets up as follows: the company has two strong assets moving toward late-stage development. As we see it, they represent the “proving ground” assets. In our experience, the market tends to assign something like a credit rating to every biotech development program. And when it successfully develops an important asset, future assets in the pipeline garner greater value as contributors to market cap.

Novavax, Inc. (NASDAQ:NVAX) has NanoFlu and ResVax heading for key data updates next quarter. But it also has a preclinical combination flu and RSV vaccine that has been estimated to be a potential $1.5-2 billion sales monster down the road.

Our sense is this: if NanoFlu and ResVax matriculate optimally, one not only has to include the impact of those drugs, but also must likely increase one’s appreciation of the odds of highly promising preclinical assets becoming marketable down the road.


A Shameful Bit of Speculation

Taking all of that into consideration, we find it interesting that the company just announced the appointment of Rachel King, Co-Founder and Chief Executive Officer of GlycoMimetics, Inc., to its Board of Directors.

It’s interesting because Ms. King has late-stage development, VC, and Big Pharma experience. It’s also interesting because her compensation is well above a typical board appointment (receiving $40k and 160,000 shares of the company) and because her term as a director expires next year.

“We are thrilled to welcome Rachel to our Board,” said Stanley C. Erck, President and Chief Executive Officer of Novavax. “Her broad experience with late-stage assets will undoubtedly be valuable as we prepare for clinical data readouts in the first quarter of 2019 from our two lead programs, ResVax™ and NanoFlu™.”

According to the release, Before founding GlycoMimetics, Inc. in 2003, Mrs. King was an Executive in Residence at New Enterprise Associates (NEA), one of the nation’s leading venture capital firms. Mrs. King joined NEA after serving as a Senior Vice President of Novartis Corporation. Before Novartis, Mrs. King spent ten years with Genetic Therapy, Inc. (GTI) through the company’s early stage, initial public offering, and eventual sale to Novartis, after which she ran GTI as a wholly owned subsidiary of Novartis. Mrs. King worked previously at ALZA Corporation and Bain and Company.

“I am excited to join the Novavax Board,” said Mrs. King. “I look forward to contributing to the company’s efforts of advancing these important vaccines as they approach potential licensure.”

You will note that shares of the stock took flight in response to this announcement last week. Draw your own conclusions. But, if one was so inclined, one might connect some dots.

If the company was aware that ResVax and NanoFlu data were both progressing well, and if the company was aware that this might dramatically increase interest from other major players in the healthcare landscape in some strategic arrangement, this type of board addition would make clear sense. And a term that was set to expire next year would also be understandable.

Please note that this does not mean we have special access to any confirmation of this theory. We are only speculating to connect those very same dots, and to offer one potential reason for why shares of the stock bolted 15% higher to close out last week following this board announcement.

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