The Government’s Covid Casualties

Novavax and Lucira are case studies in the cost of FDA regulatory delay

WSJ editorial.

"Pharmaceutical development is intrinsically risky, but all too often companies succeed or fail owing to the whims of government. Consider the travails of Covid vaccine maker Novavax and the testing start-up Lucira Health.

Novavax warned investors last week that it may not be able to stay in business. Its stock has plunged to $7.69 a share from a high of $290 two years ago. The Covid vaccine was Novavax’s first and only commercial product in its 36-year history. Although succeeding in clinical trials, the vaccine has been a commercial flop owing to regulatory delays and manufacturing hiccups. 

Operation Warp Speed awarded Novavax $1.6 billion to cover the costs of testing and manufacturing its experimental vaccine in exchange for 100 million doses if it was authorized by the Food and Drug Administration. Its vaccine uses an older technology that includes a protein and adjuvant to amplify the immune response.  

Unlike mRNA vaccines, Novavax’s shot doesn’t require super-cold storage. This made it a favorite of the global public-health crowd. But the small company early on struggled to scale manufacturing, which delayed the start of its late-stage U.S. trial to December 2020. By that time the FDA had authorized the Moderna and Pfizer vaccines.

Yet there was still expected to be enormous demand for its vaccine in low-income countries and among Americans hesitant to get mRNA shots. Novavax announced in June 2021 that its vaccine was 90.4% effective against symptomatic infection and offered 100% protection against moderate and severe illness—similar to the mRNA vaccines.

But Novavax continued to struggle to procure raw ingredients to make its vaccine, including plastic bags to grow cells. Rather than help Novavax increase manufacturing—one purpose of Operation Warp Speed—Biden officials bullied Moderna to donate more doses to low-income countries to compensate for the Novavax shortfall.

Meantime, the FDA dragged its feet on approving the Novavax vaccine. Not until last July did the FDA finally authorize it for emergency use—seven months after the World Health Organization and Europe. Why the hold-up? Anthony Fauci said in January 2022 that “we don’t need another vaccine.” He also disparaged Americans who didn’t want to get mRNA vaccines and were holding out for others. “It just seems rather unusual that people are waiting for something else when you have vaccines that have been given to now nine billion people,” he said.

Demand for Covid vaccines in the U.S. and overseas has since plunged as most people have been inoculated or gained natural immunity. Although Novavax benefitted from Operation Warp Speed early in the pandemic, the costs to develop and manufacture Covid vaccine weigh more on a small company like Novavax than a large one like Pfizer.

Novavax investors once hoped profits from the Covid vaccine would fund research and development of other vaccines in its pipeline, including for malaria, Ebola and flu. Instead, Novavax is bleeding red ink and slashing costs. Its struggles illustrate the challenges inherent in pharmaceutical development, including regulatory delays.

The Moderna and Pfizer vaccines have been enormous commercial successes because of their flexible mRNA technology and support from regulators who have accelerated their reviews. But all too often the FDA hinders rather than promotes innovation. As another example, consider the test-making firm Lucira Health, which filed for bankruptcy on Feb. 22.

In an investor report, Lucira blamed the FDA’s “protracted” authorization process for its combination Covid and flu at-home test. Lucira applied to the FDA for authorization of its novel test last May and expected to receive a thumbs-up by the end of summer before the flu season started. Canada authorized Lucira’s test last August.

The FDA finally authorized Lucira’s test on Feb. 24—two days after it filed for bankruptcy and past the flu season peak. The FDA then had the gall to boast that it “strongly supports innovation in test development,” and its authorization “is a major milestone in bringing greater consumer access to diagnostic tests that can be performed entirely at home.”

That’s no comfort to workers and investors. Lucira co-founder John Waldeisen quipped on Twitter: “Should all innovative [medical] device companies have to announce bankruptcy for their products to be cleared?”

FDA delays carry human and financial costs. Companies that succeed at developing innovative products shouldn’t fail because of government delay or bias."