- The Washington Times - Monday, October 13, 2003

Government approval of a new drug to fight the effects of menopause is likely to help Novavax Inc. in its effort to create a whole new platform of products, analysts said.

The U.S. Food and Drug Administration Friday approved Estrasorb, an estrogen-replacement drug that is absorbed into the skin like a lotion and has shown success in reducing hot flashes among menopausal women.

The drug, manufactured by the Columbia, Md., company, is the first of its kind and is expected to trigger the production of a line of drugs for other uses, including contraception.

Analysts said that while many investors will see value in the new drug and buy shares, most already bought in anticipation of the announcement. Many investors will hold off buying shares until after the launch of Estrasorb, which is expected to be costly.

Shares of the company fell 33 cents to close at $7.30 yesterday on the Nasdaq.

Ken Trbovich, an analyst with CE Unterburg Towbin in Denver said Novavax is trading at about the price he predicted in August, when he told investors that Estrasorb probably would be approved.

He said prices could climb to between $9 and $12 as Estrasorb hits the market. But he said investors who have not already bought shares are waiting to see if the company will make a public offering of additional stock.

“We don’t know what they’re going to do, but clearly, they are going to go out and raise some money,” said Mr. Trbovich, who does not own shares.

Novavax said it will partner will King Pharmaceuticals Inc. of Bristol, Tenn., to market Estrasorb, which was under development for nine years.

In a conference call Friday, Novavax executives said they believed the technology behind Estrasorb — which allows the drug to be absorbed into the bloodstream through the skin — will be a used as the base for an array of new products.

“[A]s opposed to a lot of biotech companies … who have developed a single product and have little if anything in the pipeline, the most exciting thing about Estrasorb from my perspective is that it is a platform technology,” said Novavax Chairman and Chief Executive Dennis O’Donnell. “This is the first of many products that we hope to commercialize using this technology.”

Mr. Trbovich said he expects as much as $100 million in sales of Estrasorb by 2006. That would be a big boost for the company, which saw its sales fall from $4.2 million in the second quarter of 2002 to $1.9 million in the second quarter of this year.

Analysts said the drug should be popular among many women, who have said in some studies that they prefer a lotion-based drug to a patch or pill. Estrasorb will be used only for short-term estrogen replacement.

Novavax reported a net loss of $5.03 million (17 cents per share) for the second quarter of 2003, compared with a loss of $5.8 million (24 cents) in the second quarter last year.

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