[Editor’s Note: This article was updated on Aug. 3, 2020, to clarify a statement about clinical trials for NanoFlu.]
Novavax (NASDAQ:NVAX) is the only vaccine candidate that I haven’t covered so far in 2020. Up over 3,500% year-to-date, NVAX stock is the best-performing U.S.-listed stock in 2020 of those with a market capitalization over $2 billion.
Of course, Novavax didn’t start the year with an $8 billion market cap, but here we are.
Late to the party, and not particularly interested in biotech stocks, I believe the company’s trajectory isn’t something investors of any stripe should ignore. There’s a reason it’s jumped so far, so fast, and as far as I can tell, the reason has everything to do with execution.
Novavax Struck It Rich
As InvestorPlace’s Patrick Sanders pointed out July 27, Novavax’s $1.6 billion grant from Operation Warp Speed — the U.S. Department of Health & Human Services’ (HHS) plan to accelerate the development of one or more vaccines for stopping the novel coronavirus in its tracks — is the largest to date, an indication HHS believes in the company’s potential to deliver the goods.
What’s exciting about these latest developments, according to Sanders, is that Novavax’s flu vaccine candidate, NanoFlu, has concluded its Phase 3 clinical trials and is finalizing its fast-track application process for review and approval by the Food and Drug Administration (FDA).
Wouldn’t it be something for a company like Novavax, which had $18.7 million in sales in 2019, along with a net loss of $132.7 million, was to commercialize not one, but two successful drugs over the last two years? Especially since it has never successfully brought a vaccine to market.
No Overnight Success
Like a budding sports or entertainment star that comes out of nowhere, Novavax has put in a lot of time and effort over its 33-year history into fine-tuning its vaccine development skills. Now it appears chief executive officer (CEO), Stanley Erck, has the company on the precipice of success.
Erck’s been a director since June 2009, executive chairman between February 2010 and April 2011 and CEO since April 2011. Jumping into the top job, Erck was excited about taking the company to the next level using his previous experience developing vaccines.
“I am a strong believer in the potential of recombinant-based VLP vaccine technology and was delighted to join Novavax’s Board of Directors in June 2009,” Erck said on April 19, 2011.
“Today, I am honored to assume my new role and to lead Novavax in its next phase of growth, including the clinical, regulatory and business development activities that will be required to bring our vaccine candidates to potential commercialization.”
It’s taken Erck nine years to get to this point. Novavax is no overnight success.
Moving in the Right Direction
On July 21, Novavax’s President of Research and Development, Greg Glenn, while speaking at a virtual conference held by the International Society for Vaccines, provided some updates on its vaccine.
“Speaking at the scientific session, the group’s head of R&D, Greg Glenn, confirmed that clinical results for the trial of its NVX-CoV2373 vaccine would include detail on antibody as well as T-cell responses. Both will be key to determining how the company stacks up against the competition,” Evaluate contributor Jacob Pileth reported July 21.
Glenn also confirmed that while 5mcg and 25mcg doses will be tested, it is the 5mcg dose that will be the focus in future studies.
So, in the context of a football field, the offense is over the 50-yard line and into opposition territory, but it hasn’t even entered field goal range yet, let alone made it into the red zone (inside the 20-yard line).
NVAX Stock Likely to Hit $200
InvestorPlace contributor Ian Cooper recently suggested that Novavax is still a strong buy despite being up 800% since he first wrote about the vaccine developer in late February.
“As CNBC’s Jim Cramer wrote on July 24, ‘Our fate is in the hands of a few dozen companies with a dizzying array of clinical trials, and whoever gets there first is gonna make a fortune,’” Cooper wrote July 27.
“Of those, however, Novavax is my pick. Even after that rocket ride, I believe it could still run to $200 a share with its big catalysts.”
Until we get some news that says Novavax is on the wrong track, I agree with my colleague 100%. Something tells me this particular underdog has done the preparation work to meet the challenge at hand.
To me, $200 seems like a no-brainer by the end of 2020.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.