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Swine Flu Biotech Bubble Primed to Burst

Stocks in this article: NVAX VICL INO

Novavax in its release said that its vaccine outperformed Fluzone in protecting against one of the three strains, H3N2.

But, a little weirdly, the company made no mention of the other two strains and their performance in Fluzone. An observer might be forgiven for concluding that the company probably would have mentioned those two other strains had its own vaccine performed better than it did against Fluzone. As it stood, key information regarding the efficacy of the company's vaccine, on which many of its commercial hopes rest, seemed conspicuously absent.

In an interview, CEO Rahul Singhvi and Chief Medical Officer Penny Heaton had their explanations, arguing that, owing to the small size of the study, "no sweeping conclusions" could be drawn; that the study was meant only to prepare the company for a larger "more properly powered" phase II clinical trial in the elderly, which it says will begin "in the fall" after some delay and, later yet, a presumptive phase III trial; that it chose to include the H3N2 only because last year many big vaccine makers had problems hatching that strain in eggs in the traditional manner, underscoring, the company said, how Novavax's process is better; and that the main reason it didn't include the missing information in the release was that it wanted to save the data for a conference presentation. (Novavax is applying to take part in the annual meeting of the Infectious Disease Society of America in late October -- the deadline for abstracts is today.)

Further, Penny Heaton said, "I can tell you that the confidence intervals overlapped and the responses were indistinguishable between the Fluzone arm and ours." (Confidence interval is a term from statistics meant to indicate how reliable an estimate is.) Still, there will be no public numbers to back up that claim until the company chooses to publish its data.

Despite all the complexity, nuance and contention produced by close examination of a press release short on details and long on promises, Novavax shares surged as much as 22% on the day it was issued on super-heavy trading volumes, as investors and speculators reacted simply to the fact that a vaccine developer appeared to have received positive news in a clinical study related to influenza here on the cusp of swine-flu season.

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