Forget The Shorts And Buy Novavax Inc (NASDAQ:NVAX)

It has only been a week since we last looked at Novavax Inc (NASDAQ:NVAX) but recent events necessitate a follow-up early this week. In our most recent coverage, which is available here for anybody that missed it, we outlined three near-term catalysts that, if they hit press is positive, we suggested could really get the stock moving.At the time, the company was trading for in and around $1.45 a share. By the end of last week, Novavax had risen to just shy of $1.80 a piece. By market close on Monday, this had dipped to $1.51 and – pre-market on Tuesday – the company has lost a further 18% to set up a Tuesday session open in around $1.23.What caused the latest dip?Novavax just put out data from a phase 2 study of its lead development asset (the one we noted as being the most near-term in our above linked to coverage) and shorts are jumping all over the release. Most notably, Adam Feuerstein, who is now at STAT as opposed to his old haunt The Street, put out this Tweet rooted in the news:

$NVAX “positive topline data” relate to safety and immunogenecity of RSV vaccine, not efficacy. Smoke, meet mirror.

— Adam Feuerstein (@adamfeuerstein) July 24, 2017

First off, it is important to note that – once again – Feuerstein's take on the situation is misleading and outright incorrect. Whether that's intentional, of course, we can't say. He seems to be suggesting that safety and immunogenicity data is inferior to efficacy data and that, in line with this statement, the company is trying to deceive markets with its readout.Wrong.The study was set up to assess safety and immunogenicity. These sorts of studies (unless conducted as part of a season-specific investigation), by nature, cannot read out directly as relates to efficacy. Immunogenicity is the industry-standard biomarker used as an inference of efficacy in vaccine therapy. A physician isn't going to give a patient (in this instance, an elderly patient) a shot of the vaccine and then a month later infect them with RSV just to see if the vaccine works. Instead, the patients get the vaccine and we use medical imaging and biomarker analysis to determine how many antibodies have been created in response to the vaccine's introduction. The more antibodies created, the higher the immunogenicity and – by proxy – the higher the assumed efficacy.In this instance, we learned a couple of key things.First, that two doses improve immunogenicity in this population. That's standard in the world of vaccines; GSK's Engerix-B vaccine, for example, a hepatitis B drug, requires three doses over a three-month period to induce seroprotection. We also learned that the addition of an adjuvant to the vaccine improves immunogenicity. Again, that's standard in the space.As a bonus, we learned that a post completion analysis of the data from this study and the previous phase 3 in this population revealed a potential impact in patients with COPD. This makes sense, based on the underlying mechanism of action of the asset, but it needs confirming; the company plans to initiate a trial next year to do just that.Is not overly important, but we also learned that the vaccine remains safe. This is pretty standard for this generation of vaccines (we are well past the point of infection risk these days) but it's nice to bolster the data set with a bit of extra safety data nonetheless.So what's the take away on this?The bottom line here is that this company has taken a hit on nothing more than misinformed sentiment. The data is about as good as can be expected given the trial construction and there remain a number of key catalysts in place that could get this company moving well above and beyond its preannouncement market capitalization over the coming 12 months. That the latest gap down will close almost goes without saying. Once markets realize their error and the company rebalances to reflect its discrepancy in valuation, Novavax can resume its overarching bullish trend.Check out our previous coverage of this one here!We will be updating our subscribers as soon as we know more. For the latest updates on NVAX, sign up below!Image courtesy of California Cow via FlickrDisclosure: We have no position in NVAX and have not been compensated for this article.