The race to find a vaccine for the novel coronavirus is complicated, especially so when you consider how some companies of sterling reputation have run into roadblocks. So far, that has not been the fate Novavax (NASDAQ:NVAX). Thus, NVAX stock has mightily benefitted from its progress, either real or perceived. It soared an eye-popping 4,300% between Jan. 1 and Aug. 10. There’s Operation Warp Speed for ya.
But Johnson & Johnson (NYSE:JNJ) and AstraZeneca (NYSE:AZN) have seen unwelcome interruptions in their trials. And as for the rest of the field, investors face a curious and cloudy situation. Pharmas typically work in secret, so who knows for sure which company tops the lot in the Covid-19 vaccine hunt, or at least stands a fighting chance?
Well, I’ll tell you who — and it’s not some market analyst perhaps swayed by investor sentiment or a Magic 8-Ball. It’s Amy McKeever, a writer working for an authority whose academic and scientific acumen ranks as undisputed over generations: National Geographic.
In an article just published this month, McKeever in National Geographic listed Novavax among ten companies decisively in the hunt for a Covid-19 vaccine. And while not ranked in the order of a leader board, Novavax is listed first of all candidates with its entry, NVX-CoV2373. What might this mean in terms of the stock’s viability beyond just being a fan favorite? Roll up your sleeves, investors, as I take a shot at this.
NVAX Stock, Fundamentals and Forward Motion
Here’s what concerns me: In its last four reported quarters, Novavax has posted a loss. I’m not exactly sure how this squares with the whopping analyst average price target of $220. My best guess is that this figure fails to factor in how much the enthusiasm for NVAX stock has waned since mid-August. With little interruption, share prices have lost half their value since; NVAX stock now sells at $89 per share.
Still, this could be one of those instances where the Maryland-based company has little to prove profit-wise in a battle of such historical magnitude. The National Geographic article cannot, I repeat cannot, be discounted in its importance. McKeever has clearly done her homework; she cites a New England Journal of Medicine report from Sept. 2. That document discusses something I defy you to say three times fast: the recombinant spike protein nanoparticle vaccine (packed a peck of pickled peppers).
It’s at the heart of Novavax’s vaccine and as for the results from Phase 1 and 2 trials, and I’ll let McKeever translate from here: “The vaccine was safe and produced coronavirus antibodies at a higher level than is seen among those who have recovered from COVID-19.”
Vaccine-ing Is Believing
It’s important to note that where Novavax stock is concerned, the company is far from having clinched this thing. Right now, there are more than 150 coronavirus vaccines in development across the world. And the story raises other points investors will want to weigh.
Johnson & Johnson, for example, developed an Ebola vaccine. What’s more, interruptions in trials are routine and Covid-19 isn’t the end of the road where the stock market is concerned. If Johnson & Johnson loses the race, it would still rank as a solid investment with uninterrupted dividend increases dating to the swingin’ 60s.
Compare that to NVAX stock, which over its quarter century has shown the pronounced spikes and plunges that befit a vaccine development company without nearly as much diversification. It hardly qualifies as a long play, as share prices are a paltry 7% above where they stood when Novavax went public in December 1995.
Without continued investor enthusiasm, I have to wonder whether NVAX stock will eventually run on fumes. So much depends on a Covid-19 vaccine, and in the case of this investment, that means putting all your eggs in one clinical basket.
Novavax Could Still Thread the Hypodermic Needle
Oh, but what a basket it could be. Like, the size of a basketball court. While extremely doubtful we’ll ever see another 4,300% run-up, just an explosion of one-third that amount given a breakthrough would make 100 shares of NVAX today worth more than $100,000.
What’s more, the relatively small size of this company shouldn’t warrant confusion with other headline-grabbing long shots. Consider Inovio Pharmaceuticals (NASDAQ:INO). It has never brought a product to market in their 40-plus years in business.
In the end, I’d opt for a small play in NVAX stock. Given its history, Novavax has no defined future if it fails to capture the Covid-19 cup. That said, there’s still time for more rallying until the results are in and the National Geographic assessment deserves your consideration. Read the piece. It proves that not all the information investors need to stay truly informed emanates from the trading pit and the smoke-filled room.
Imagine. Finally. A Covid-19 vaccine. Courtesy of Novavax? For investors, that would be quite the injection.
On the date of publication, Lou Carlozo did not have (either directly or indirectly) any positions in the securities mentioned in this article.