Novavax Shorts on Edge as Russia Plague Fears Spread

A suspected plague death at a Siberian research institute has investors reaching for the pandemic playbook again. One of biotech’s most heavily shorted stocks is posting the biggest gain.

Novavax Inc. (NASDAQ:NVAX) shares jumped over 20% on Monday, near their 52-week high of $13.04, according to Benzinga Pro data.

The buying spread across vaccine names. Moderna Inc. (NASDAQ:MRNA) rose 7.1% to $203.43, and heavily-shorted biodefense supplier Emergent BioSolutions Inc. (NYSE:EBS) gained 15.3%.

Trouble in Irkutsk

A 28-year-old worker at the Irkutsk Anti-Plague Research Institute of Siberia and the Far East died, Reuters reported. Authorities quarantined dozens of people, and the head of Rospotrebnadzor, Russia’s health watchdog, flew to the region. 

Plague has not been confirmed and the Russian health agency said the worker was diagnosed with “pneumonia of unknown etiology.”

It added that expanded testing “had not detected microorganisms linked to the employee’s work,” according to CNBC. Local media reported that 189 people were being monitored.

Washington is watching too. A Trump administration official said the White House was “aware, monitoring the outbreak, and assessing options,” CNBC reported. 

Regional officials have tried to calm things down. “Importantly, over the past few days, no new cases of staff from the Anti-Plague Institute seeking medical attention have been identified,” Irkutsk Governor Igor Kobzev said, per Reuters. 

The Squeeze Math

Short sellers hold 30.43% of Novavax’s float, or about 49.9 million shares as of mid-September, according to Benzinga Pro. At the stock’s usual pace of about 5.3 million shares a day, covering that position would take roughly 10 trading days.

Monday’s volume alone equals about 40% of the short position. Bears who shorted the stock in the single digits are now losing money. A crowded short, an alarming headline and a burst of volume add up to a classic squeeze setup.

Covid Replay or Fear Trade?

The rally recalls 2020, when every outbreak headline sent vaccine stocks swinging, but this time the science points the other way.

Pneumonic plague is a bacterial infection, and doctors treat it with antibiotics. Novavax makes protein-based vaccines aimed mostly at viruses, so the rally is running on sentiment and short covering rather than any new revenue.

What comes next depends on the test results. If confirmed cases spread beyond the institute, momentum traders could keep pushing the stock higher. If tests keep coming back clean, the squeeze could fade as fast as it started.

NVAX Stock Price Activity: Novavax shares were up 20.08% at $12.56 during regular trading Monday and are trading lower by 0.29% at $12.52 in after-hours trading, according to Benzinga Pro data.

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