Novavax Investors Betting They Have the COVID-19 Solution

Novavax (NASDAQ:NVAX) is the most popular COVID-19 vaccine stock out there, among plungers betting on the results of a clinical trial.

Novavax (NVAX) logo surrounded by medical supplies
Source: Ascannio/

The stock’s $7 billion market cap is entirely based on NVX-CoV2373, its COVID-19 vaccine candidate. The drug has only just entered a combined Phase 1-2 trial.

But early results, published by the company in the New England Journal of Medicine, seemed so promising our Matt McCall at Moneywire felt he could pound the table for the stock.

The question, as with all COVID-19 stocks, is whether NVX-CoV2373 is safe and effective. Since the publication, Novavax stock has had a hard fall, dropping nearly 20% on profit-taking, and a spectacular rise, bringing it near its pre-publication level, in a down market.

NVAX Stock Most Favored

Novavax is a vaccine specialist. It has done work on vaccines for the Ebola virus and seasonal flu. It has yet to bring a product to market. Two clinical trials of its ResVax, for a respiratory virus that attacks infants, failed. The company was forced to do a reverse stock split, turning 20 shares into 1, in 2019.

Yet no company has been as favored by policymakers during the pandemic. Novavax secured $2 billion in funding for its new vaccine through Operation Warp Speed, a Trump Administration program. It has global supply agreements for billions of doses.

CEO Stanley Erck has become a TV regular. The company has gone around the world with trials and deals.

But late stage trials are notoriously risky. Even the NEJM study, with just 108 people receiving the vaccine, saw one person getting a fever. Spread that across a larger trial and there’s risk.

The Secret Sauce

The “secret sauce” of Novavax isn’t the vaccine at all, but what’s called an adjuvant. An adjuvant enhances a vaccine, making it more potent and reducing the required dosage. Novavax’ is called Matrix-M. It was acquired with a Swedish company called Iscanova in 2013.

If its vaccine works, Novavax believes it can get billions of doses to market quickly thanks to the adjuvant. It signed an adjuvant manufacturing deal with Japan’s AGC, a chemical company best known for glass and ceramics, in August. Then came the Indian manufacturing agreement.

Beyond COVID-19, Novavax has also been pushing a flu vaccine for elderly people who don’t tolerate regular flu vaccine. There’s also a malaria vaccine candidate from the Jenner Institute in England, for which it’s supplying the same adjuvant used for the COVID-19 vaccine.

The Big Risk

Vaccines never go from design to Phase 3 study to market in less than a year. There’s a reason. People are different. Many drugs fail in Phase 3 studies, and most such studies take years to complete.

William Heseltine, known for his work on HIV-AIDS, has warned that rushing a vaccine through approval “may expose all of us to unnecessary dangers.” Vaccines built with adjuvants, like Matrix-M, may pose special risks to those over 60. The Novavax vaccine must also be administered in two doses.

A sub-optimal vaccine could end up reducing public support for vaccines in general, Heseltine adds. Experts are warning that early vaccines will have side-effects. At the same time testing, tracing, and quarantine could get COVID-19 infection rates down in weeks, if applied rigorously.

The Bottom Line

NVAX stock investors are being told that a company that failed in two Phase 3 vaccine trials now has a magic bullet that will solve a global pandemic within months.

If Novavax has a vaccine that can work on all people, without side effects, that would be great. But the chances of that being true are not nearly as great as investors are being led to believe.

Novavax isn’t science. It’s hope.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear,  available at the Amazon Kindle store. Write him at or follow him on Twitter at @danablankenhorn

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