Is It Too Late for Novavax to Profit From a Covid-19 Vaccine?


At the start of the year, Novavax (NASDAQ:NVAX) was a typical, small-capitalization biotech company, and NVAX stock was trading below $4 per share.

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But of course, things changed in a big way when the Covid-19 pandemic hit. After all, Novavax has had a long history in vaccine development, and it was able to leverage its expertise to develop a vaccine for the coronavirus.

By late July, NVAX stock soared to nearly $190. Yet the shares would then lose some steam. Its current stock price is $95, and its market capitalization is $5.8 billion.

So what now? Will there be another bull run? Or should investors be cautious?  Let’s take a look.

The Vaccine

Novavax’s Covid-19 vaccine is called NVX-CoV2373. It’s a protein that is based on the genes of the virus, and it uses recombinant nanoparticle technology to create antigens. In clinical trials, the vaccine was shown to have high microneutralization titers. That is a promising sign, suggesting that it will be effective in humans.

The company has been able to snag many contracts for the development and manufacturing of the vaccine. But the biggest contract came from the U.S. government’s Operation Warp Speed for a whopping $1.6 billion.

Another encouraging development is that the vaccine has entered a Phase 3 clinical trial with 10,000 individuals in the U.K,. It should launch a similar trial in the U.S. soon.

Meanwhile,   Novavax’s vaccine does not require sub-zero refrigeration, and the company has been aggressive in building relationships that will help it increase the production of its shot. Novavax believes that it will be able to produce about 167 million doses per month by the middle of 2021.

While all this is good, Novavax still has some drawbacks. Keep in mind that patients will likely have to take two doses of the vaccine. That not only increases the costs of the vaccine, but it also can mean less demand for it since some people will not return for the second dose.

Next, in light of President Donald Trump’s use of Regeneron’s (NASDAQ:REGN) antibody cocktail to treat his COVID-19, there may be more interest in investing in treatments of the disease. This may ultimately lead to less focus by investors on vaccines.

But perhaps the biggest issue is that other companies like Johnson & Johnson (NYSE:JNJ), Eli Lilly (NYSE:LLY), Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) are further ahead in their testing of vaccines than Novavax.

The Flu, Too

If Novavax’s vaccine does not get traction or fails, then all hope is not lost. The company still has NanoFlu, which is a next-generation flu vaccine. It has gone through a rigorous Phase 3 trial, which included 2,652 patients who are 65 and older. The trial yielded positive top-line results and achieved all its primary endpoints.

However, the timetable for the rollout is uncertain because Novavax is going all-in with the  vaccine.  But the NanoFlu shot could be a nice long-term revenue generator. According to data from the Centers for Disease Control and Prevention, the flu can impact between 9.3 million to 45 million people in the U.S. alone.

As for NanoFlu, it appears to have better efficacy then Fluzone, which was developed by Sanofi (NASDAQ:SNY).

The Bottom Line on NVAX Stock

The next few months will be critical for NVAX stock. During that time, we will get a better sense of the many vaccines in late-stage trials.  The upcoming Presidential election will also have an impact, in terms of vaccine policy and support for the shots.

Even though Novavax is behind in testing, the company still has a shot at being a winner.  “Novavax uses a tried-and-true method to produce immunity,” said Asher Rogovy, who is the Chief Investment Officer at Magnifina. “The news media and social media are almost certain to hype up reports of side effects during the first round of vaccination. Vaccine hesitancy is growing, and in 2018 almost half of US citizens refused a flu vaccine. Waiting a few more months for Novavax’s vaccine candidate would appeal to vaccine hesitant individuals who are not fully anti-vax.”

But then again, Novavax is really a speculative stock right now, as it has not been approved by the FDA. So investing in NVAX stock is only for those who have an appetite for risk.

On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence BasicsThe Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.

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