Biotech company Novavax (NASDAQ:NVAX), one of several firms developing a vaccine to fight to novel coronavirus, is readying the start of a Phase 3 trial of its vaccine candidate in the United Kingdom. Not surprisingly, this recent news fueled gains in NVAX stock.
The Phase 3 announcement is crucial to the company’s vaccine efforts, as other companies are already into their Phase 3 activities.
Of course, the Covid-19 vaccine campaign is not a race like the Daytona 500, where the first across the line gets the checkered flag and all the glory. In this race, there may be more than one winner. But companies like Novavax that are behind other vaccine developers in this effort cannot afford to get too far behind. That’s what makes the announcement significant for the company and for Novavax shareholders.
NVAX Stock Stays on Stage
The Phase 3 announcement is good news. And we all know that good news often leads to gains in stock. That was the case for NVAX stock, which rallied about 10%.
Indeed, the market was primed for something like this. Shares of Novavax have soared – really soared – this year after investors realized the biotech could be a viable competitor in this high-stakes research. Investors around the world are seeking to make a profit by betting on companies that are potential winners.
NVAX stock, though, is keeping its volatile ways.
In just the last month, shares went from $114.62 on Aug. 26 to $85.31 on Sept. 8. Only eight days later, the shares reached $120.13. The stock headed into the last week of September trading around $113.
This movement is still far shy of the stock’s 52-week high: $189.40. At the other end of the spectrum, its 52-week low is $3.54. Did I say NVAX stock has been volatile?
More About That Trial
During the Phase 3 trial, Novavax aims to find out how its vaccine candidate fares in a broad-based application. Some 10,000 people in the U.K. will participate. A two-dose vaccine schedule will be tested with the doses being applied three weeks apart.
The Novavax vaccine candidate is protein-based, which is viewed as a more traditional approach. It differs from the modified DNA approach being tested by other companies.
In addition, the company has developed a regular flu vaccine and a smaller study is underway to test the impact of that flu vaccine with the Covid-19 vaccine candidate, Sarah Smith recently wrote in InvestorPlace.
Working to Catch the Others
Now that it is entering Phase 3 trials, Novavax is in some good company. Other firms whose vaccine candidates are in late-stage trials include some major names in the industry: AstraZeneca (NYSE:AZN), Johnson & Johnson (NYSE:JNJ), Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE). The lead these companies have built in the Covid-19 vaccine quest reflects their overall size and the depth of their research-and-development divisions. But it does not guarantee success.
Nevertheless, Novavax is making a mighty play to catch “the leaders.”
The company, based in Maryland, has expanded to keep up in this competition. It plans to hire about 200 more people in the U.S. in the near future, CEO Stanley Erck said recently.
“That will bring us from 165 people globally to around 1,000 people globally to be able to produce a vaccine,” he said.
Novavax also recently reached an agreement with a company in India to manufacture the key ingredient of its vaccine candidate. This and other alliances mean Novavax could produce 2 billion doses of its vaccine by the end of 2021.
To a world suffering under the weight global pandemic, development of an effective vaccine is widely seen as a requirement to safely resume our “normal” lives. The speed of the work of companies cited in this article is impressive but it is way too soon to say if they will succeed. In the meantime, and it could be a long time, Americans and others around the globe will have to take proven safety measures.
The Bottom Line
Vaccine investors trying to guess which company to bet on can only speculate. My colleague Lou Carlozo recently suggested in InvestorPlace that it may be premature to buy shares.
“Timing those developments is a game for medical researchers, not analysts, and even they will tell you that we’re in uncharted territory: that is, one where investment charts can do little good,” he says.
Opinions certainly vary. Carlozo’s insight is worthwhile. Even though the pandemic is not a “normal” circumstance, some of the basic guidelines of investing still apply. Chief among these is don’t go beyond your tolerance for risk. Don’t be swept away by the riptide of positive incremental steps in the vaccine process. Avoid making an emotional decision.
Another is to spread your risk. If you want to invest in this arena, buy shares of a few companies. A multi-company approach will give you more opportunity to invest in potential winners.
In light of its progress, Novavax has earned a place at that table.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.
