Biotech ETFs Slip After Novavax Cuts 2022 Guidance | ETF Trends

Biotechnology sector-related exchange traded funds retreated with Novavax Inc. (NasdaqGS: NVAX), plunging after the vaccine developer cut its 2022 revenue guidance in half.

On Tuesday, the iShares Genomics Immunology and Healthcare ETF (IDNA) fell 4.1%, ETFMG Treatments Testing and Advancements ETF (GERM) dropped 4.3%, SPDR S&P Biotech ETF (XBI) decreased 3.4%, and ALPS Medical Breakthroughs ETF (SBIO) declined 3.3%.

Meanwhile, Novavax shares plummeted 29.6% on Tuesday, its worst intraday move since February 2019. NVAX makes up 4.4% of IDNA’s underlying portfolio, 3.8% of GERM, 2.4% of SBIO, and 1.3% of XBI.

The COVID-19 vaccine developer cut its full-year 2022 sales outlook by around 50%, with a projected $2 billion to $2.3 billion in revenue generated, as no new COVID-19 vaccine sales are expected for the rest of the year. In comparison, Novavax previously anticipated $4 billion to $5 billion in revenue.

“For the quarter revenue was $186 million, a significant shortfall from both the first quarter results, and as I said from our expectations,” CEO Stanley Erck told analysts during the company’s earnings call. “We are now projecting that we will have no new revenues in ’22 from the U.S. or from Covax.”

Erck explained that the company previously expected 110 million shots in the U.S. and 350 million total shots from Covax, the company’s COVID-19 vaccine. However, Novavax’s late entry to the market impeded its expansion as many received vaccination and booster shots from Pfizer and Moderna. Novavax received regulatory approval for its COVID-19 shots earlier this summer but 77% of adults were already fully vaccinated. The U.S. has only ordered 3.2 million doses of Covax.

“Management once again frustrated us and investors as shipment delays pushed second-quarter revenues into the third quarter,” Cowen analyst Georgi Yordanov said in a report. “Novavax has nearly reached a point to participate in – and capture – a small but meaningful share of the eventual future endemic market starting in 2023.”

Novavax may now be eying the global market as a way to expand its reach.

“With over 23 million doses delivered since the start of the third quarter, we are distributing our vaccine globally and have gained positive momentum as we move into the remainder of 2022 and into 2023. Through continued expansions to our label for adolescents and boosting and our vaccine’s competitive product profile, we are confident it will play an important role in the long-term COVID-19 landscape,” Erck said in a note.

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