Novavax (NASDAQ:NVAX) is a contender in the race to deliver a novel coronavirus vaccine and as such, NVAX stock is, at times, a turbulent name.
A year-to-date gain of nearly 2,600% as of Aug. 28 is undoubtedly eye-popping. So was a decline of 25% last week, a period including news that Novavax is commencing Phase 2 clinical trials for its NVX-CoV2373 Covid-19 vaccine and speculation that the company could file for approval to bring that product to market in December.
With biotech companies, regardless of what drug, therapy or vaccine being worked on, clinical trials are vital and that’s certainly the case with NVX-CoV2373 stepping into the second stage. This trial is relevant because it will include testing on humans in age groups deemed highly susceptible to contracting Covid-19 and dying from the illness.
“The Phase 2 clinical trial expands on the age range of the Phase 1 portion by including older adults 60-84 years of age as approximately 50 percent of the trial’s population,” according to Novavax.
Data confirm just how crucial a vaccine is for that age group. The Centers for Disease Control and Prevention (CDC) use the age range of 18 to 29 as the comparison group.
Against that benchmark, folks ages 65 to 74 are 5x more likely to be hospitalized because of Covid-19 and 90x more likely to die. For the 75-84 demographic, the hospitalization and fatality rates jump to 8x and 220x, respectively.
Template Could Prove Valuable for NVAX Stock
A slew of biotechnology and pharmaceuticals stocks, Novavax included, are proving success on the coronavirus vaccine front is hard to come by, particularly under the time constraints (a vaccine was needed months ago) these companies are facing. However, Novavax does at least have a template for potential success here.
“Our Phase 3 trial of NanoFlu, which we reported in March of 2020, provided us with a deep understanding of the unique needs of older adults, who are particularly vulnerable to COVID-19,” said President of Research and Development Dr. Gregory Glenn.
There are some important facts that underscore the importance of Novavax’s experience in treating respiratory ailments and why the recent pullback in the stock could be an opportunity for prescient investors. First, the coronavirus vaccine market could be as large as $100 billion with profits topping $40 billion.
Second, NVX-CoV2373 doesn’t need an efficacy rate of 100%. If it makes out of a Phase 3 trial at 50% with reduced side effects, it could gain regulatory approval. An efficacy mark of 50% or better with minimal side effects could make the December filing timeline more reasonable than currently meets the eye and if that time frame is obliged, Novavax could potentially deliver big upside.
Catalysts Looming
The aforementioned Phase 2 trial is already underway, meaning a near- to medium-term catalyst could be lingering for Novavax, assuming it can deliver a positive update sometime in the next several months. “Several months” is considered the minimum time frame it takes a drug company to work through a Phase 2 trial.
The bottom line here is that although Novavax is more than three decades old and has enjoyed multiple clinical successes, markets now view it as a “coronaovirus company.”
That makes NVAX stock a high risk/high reward play. Interested investors must stay abreast of the company’s clinical trial news. If it can meet the rumored December filing goal, Novavax stands a reasonable chance of beating rivals to the vaccine punch, which market participants will view as material because the quest to preserve human life is very much a race.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
