More than $1.5 billion vanished from vaccine developer Novavax's market value almost instantaneously Thursday afternoon after a late-stage trial of its vaccine for a common respiratory virus failed.
It's the worst nightmare of investors in biotech, but also a serious blow to public health. The company was trying to tackle a problem that's thwarted medicine for more than half a century.
RSV — or respiratory syncytial virus — is usually not a big deal for healthy people, but for two populations, babies and older adults, it can be extremely serious. According to the Centers for Disease Control and Prevention, RSV is the most common cause of pneumonia and another respiratory condition called bronchiolitis in babies under 1 year old in the U.S.
Each year it hospitalizes more than 50,000 kids under age 5, and leads to 14,000 deaths among adults older than 65. It was that older population in which Novavax ran its 11,000-patient study. Its vaccine failed to provide any protection, sending the stock down more than 80 percent.
"This has been a 30- or 40-year effort to get to where Novavax is, in terms of a candidate that goes into phase 3 trials," said Dr. Mark Feinberg, CEO of the International AIDS Vaccine Initiative, and former chief public health and science officer for Merck Vaccines, in a telephone interview Friday. "There's been a longstanding desire to have an RSV vaccine."
But it's been really hard to develop one. Efforts go back more than 50 years, and experts credit a trial done in babies in the 1960s with partially derailing the field.
Instead of providing protection from the virus, the experimental vaccine appeared to cause more serious infections in infants who were exposed to RSV, and two infants died.
"That's been a major deterrent to vaccine development, because you're always concerned about vaccine-induced pathology," Feinberg said. "That's a big safety hurdle that any vaccine developer would have to go through."
Because of the seriousness and prevalence of RSV, a safe and effective vaccine for it could be routinely recommended by public health authorities for both adults and children, which would give it significant commercial potential, Feinberg said. In fact, as Bloomberg News pointed out, Novavax CEO Stan Erck has said the product would be the world's best-selling vaccine.
Meanwhile, Novavax is seeking answers about what went wrong in its trial, blaming a weaker-than-usual RSV season among older adults on Thursday.
Historical "attack rates" of RSV are typically between 3 and 7 percent in older adults, Dr. Gregory Glenn, Novavax's president of research and development, said in the company's statement. In the failed trial, the rate was 2 percent, he said.
Yet, as EP Vantage's Jacob Plieth pointed out, Glenn said in May "this RSV season has remained consistent with previous years."
Novavax's Erck said Friday the company's observations were based on publicly available surveillance data, which he said focuses on children rather than older adults.
"Only after the unblinding of our data did we know the attack rate in older adults this season and our data indicates the pediatric surveillance data does not relate to the older adult population," Erck said in an email through a spokesman. "Our attack rate data from this trial clearly indicates that this season was an outlier and that is certainly something we need to look into further."
The company says it still believes there's a path forward for its vaccine. And importantly, given the history of RSV vaccine development, it said its vaccine was at least well-tolerated.
(UPDATE: This story was updated to include a comment from Novavax CEO Stan Erck.)