Novavax vaccine delays slump stock, Abbott Labs raises guidance, Biogen beats Q3 estimates

Yahoo Finance's Brian Sozzi, Brian Cheung and Julie Hyman break down how Novavax, Biogen, and Abbott Labs are faring in Wednesday’s market

Video transcript

JULIE HYMAN: All right, that's the opening bell on this Wednesday morning. Our opening bell coverage is brought to you by PIMCO. We want to dive into some of the individual movers here, especially with not as much movement on the top line for the major averages. Novavax really catching our eye when we came in this morning. That company has been making, or trying to make, an experimental COVID 19 vaccine. And now Politico is reporting that there is going to be a delay potentially in registering its candidate with the FDA, because of what Politico says are inadequate purity levels. Now, Novavax is out with a statement saying it's on track to submit its emergency use authorization. And that it is not seeing any delay here. It's going to happen, it says, before the end of 2021. But investors, Brian Sozzi. They're selling that thing.

BRIAN SOZZI: Yeah, really quickly, Julie, going back to what you were just saying on earnings. I encourage everyone to check out China. Really be focused on China, all things China in earnings with calls moving forward here. What P&G said yesterday on its earnings call with China, pretty disturbing. And I think that slowdown we're starting to see, it's starting to pick up. But Novavax here, the analysis is very simple. When you're a biotech company that is unproven and you can't get your product to market, you're going to get hammered on any slight bad news. And that's what you're seeing from Novavax here. It has commitments with the US and key players overseas to get their COVID 19 vaccine into the arms of human beings to help the pandemic. But they can't get it done. And I think you're obviously seeing the market reaction accordingly.

BRIAN CHEUNG: Yeah, and just one reminder. I mean, I think that this company has never brought a vaccine to market. They've worked on researching a number of vaccines, but never brought one successfully to market. This is really a massive moonshot for them. But I think we just have to acknowledge that aside from the stock price, side from the margins, aside from the revenue, I mean, this is just a net negative for the world, right? I mean, this was supposed to be a major supplier to that covax facility that was supposed to be bringing these easily distributable simple shots around the world to a lot of these third world countries that really need the help right now. I think the IMF had some statistic that in many of these developing countries, up to 94% of the population is unvaccinated. Covax has its own logistical issues, there were concerns about how countries were prioritizing orders for their domestic usage versus how much they wanted to put into the covax facility. But just broadly, this whole process has been really, really just discouraging for the ability to get the vaccination rate up in other countries and corners of the world.

JULIE HYMAN: Yeah, and just to draw a point of comparison between the likes of Novavax and Moderna. Because both of those what they have in common, to your point, is that they didn't have a big product out before, right? With Moderna that moonshot worked. And the company's stock has behaved accordingly. However, Novavax is not using that MRNA technology, I don't believe, for its vaccine candidate. So that is of differentiation in addition to the fact that they have not yet come out with their vaccine candidate. Let's move on to some others in the medical community that have reported earnings this morning. Biotech giant Biogen coming out with its numbers. A lot of attention here of course on its controversial Alzheimer's therapy, which was approved but there are doctors who have said they will not administer it to patients because of its sort of cost benefit analysis, if you will. And the company says sales of that drug were $300,000 in the quarter, which is relatively low. Medicare has not yet decided whether it's going to cover it. Overall though, Biogen did raise its financial guidance for the full year, Brian Sozzi.

BRIAN SOZZI: Yeah, but I think the stock is going to trade off of this Alzheimer's drug, Julie. We saw over the summer, I believe it was early June, the stock went absolutely through the roof on news of this potential breakthrough drug here. And if those sales are going to disappoint, in large part because I believe it costs $56,000, if those sales are going to disappoint, if that uptake is going to disappoint, Biogen stock at least could give back a lot of those gains that were made back in the summer moving forward.

BRIAN CHEUNG: Yeah, and I think that kind of underscores how even if you have sales in the thousands, that's not that much if it's a $56,000 drug. But I think one other reason why we're seeing the stock up is just simply the financials, right? I mean, this company in the earnings release they raised guidance on revenue and earnings per share and they also lowered expectations for how much they'd be spending on Capex. So all of that is pretty good for margins. But again, a lot of outstanding questions about the ultimate take up of that Alzheimer's drug, which is called Agnew Aducanumab, I think it was renamed to Aduhelm-- not bad for pronunciation by the way, I just want to give myself a pat on the shoulder for that one. But also there's numerity I think we have to point out here. It's a multiple sclerosis treatment that they've also been leaning on as well. So it's not like it's just that one line of revenue that they're leaning on here. Their MS treatment drugs have also been very important to the company as well.

JULIE HYMAN: Yeah, massive company with a lot of products there. But just like Biogen, Abbott Labs is another that's out this morning. But to me, I'm interested in what they're going to say about their binaxnow testing. Remember, this is at home rapid test that is available to consumers, or not. Because remember earlier in the summer when it seemed like the COVID 19 case rates were improving, Abbott stopped making as many of these things. And as a result, when Delta came roaring through and there was a huge demand, you couldn't buy one. Even if you were trying to find them. So this all helped Abbott sales when it was able to make more of these things. And the company says it is now expecting higher profitability for the full year. Sales of COVID 19 test products, $1.9 billion last quarter, compared with $1.3 billion in the quarter before. I don't know if you guys ever walked into a CVS or Walgreens trying to find these things, it was not easy for quite a while.

BRIAN CHEUNG: No, certainly.

BRIAN SOZZI: I just walk in there myself really to get some meat snacks, right, Brian? Going to CVS?

BRIAN CHEUNG: Yeah. No one's going to get that reference, Brian, unless people are following us on Twitter. But OK. Let's focus on the tests themselves, Brian. I mean, obviously what is also good for these companies is just that federal mandate across the board for a lot of these employers that are large or medium size to require-- if they're not requiring a vaccination-- to require testing as well. There's going to be enormous corporate demand for these types of tests. And it's important remember it's not just Abbott that's making these as well. When you take a look at Quest Diagnostics, stock ticker EGS. That's also getting a boost, they actually raised their guidance as well. So for any company that's essentially in these tests, as long as they're robust tests, as long as they're a trusted test, and as well as they're manufacturable and easily distributable tests, I think it's going to be good for them over the next year. Or even beyond that, who knows.

BRIAN SOZZI: Two quick hot takes for me on this. One, Pedialyte sales for Abbott very strong again. Now, watch Pedialyte moving forward. Gatorade has just come out with a competing product that is gaining shelf space at meat stock favorite 7-eleven. Number two, look, let's put the pieces together. We had last week a very good earnings report in Outlook from UnitedHealth. Anthem out today, good earnings report. And Outlook Abbott Labs, good earnings report. And Outlook, I think if you want to trade this space because you could probably see a bunch of upgrades coming into health care off of these reports, you want to look at the XLV, the health care sector SPDR ETF. That can could be in play here.