Novavax (NASDAQ:NVAX) announced on Nov. 9 that the Food and Drug Administration had granted it fast track designation. The news sent NVAX stock up by double digits in early trading.
While the announcement couldn’t match Pfizer’s (NYSE:PFE) news — Pfizer revealed Nov. 9 that its vaccine candidate has shown in early Phase 3 trial analysis to be 90% effective against the novel coronavirus — it means that Novavax’s Phase 3 clinical trials in the U.S. and Mexico could begin by the end of November.
While there are no guarantees NVX-CoV2373 will make it to the finish line, if you are one of the poor souls who bought NVAX stock in August when it was trading at an all-time high of $189.40, you’ve got to be breathing a big sigh of relief.
Investors who haven’t bet on Novavax, but are thinking about it, have got to be thinking that this latest piece of news is the affirmation needed to pull the trigger on an investment.
I would suggest it is. Here’s why I feel this way.
NVAX Stock Looking Up
In my last article about the company in October, I argued that if you’re placing bets on vaccine winners, Novavax should be on your list.
My optimism stemmed from the fact it had a major manufacturing partner on board and that its Phase 3 clinical trial in the UK was getting underway. Now that it’s gotten good news from the FDA for here in the U.S. Furthermore, in Mexico, the company’s Covid-19 vaccine is very much in the running.
Pfizer, Moderna (NASDAQ:MRNA), and Johnson & Johnson (NYSE:JNJ) might be in line to get the leading parts of this tragic play, but Novavax looks ready to make an important contribution to bringing Covid under control around the world.
What is that worth in dollars, I couldn’t say. However, the fact that it has a pipeline that extends beyond NVX-CoV2373 means that the company can get its Covid-19 vaccine through Phase 3 without forcing the issue.
As President-elect Biden likes to say, the science will rule the day, as it should.
In the meantime, consider what the company had to say about its latest announcement.
“The FDA’s decision to grant Fast Track Designation for NVX-CoV2373 reflects the urgent need for a safe and effective vaccine to prevent COVID-19, and we look forward to working closely with the agency to accelerate access to this vaccine,” said Gregory M. Glenn, M.D., President of Research and Development, Novavax.
“While the regulatory review of this clinical program will be expedited, Novavax remains committed to a data-driven and scientifically rigorous approach in demonstrating safety and efficacy, which we believe will support confidence in the vaccine in the U.S. and globally.”
More importantly, it stated that interim data on its U.K. Phase 3 trial could be available early in the first quarter of 2021. Pfizer’s same-day announcement was based on interim data for its Phase 3 trial.
If Novavax delivers good news early in the new year, that would definitely bode well for its Phase 3 trial in the U.S.
It’s not a sure thing at this point, but it’s getting closer by the day.
In the Meantime
By now, people are already starting to get the seasonal flu. Potentially dangerous at the best of times, Covid has made it even deadlier.
In my October article, I pointed to InvestorPlace’s Chris Markoch for inspiration. He highlighted NanoFlu, Novavax’s first vaccine it’s successfully brought to market. It is one of the many highlights of chief executive officer Stanley Erck’s 33-year career developing vaccines.
In Markoch’s latest article from Nov. 9, my colleague discusses the pros and cons of buying its stock. NanoFlu being very much a part of the reasons why you might want to speculate on Novavax.
“Even without a Covid-19 vaccine, Novavax may find success with NanoFlu, its influenza vaccine candidate. Before the Covid-19 pandemic, the company had a very successful phase-3 trial of NanoFlu in March. The company will likely receive approval to market the vaccine, which has the potential to deliver over $1.5 billion in sales,” Markoch wrote.
“Novavax is not without risk, but if you believe in the profile of its vaccine, then that reward may be well worth the risk now.”
Sanofi (NASDAQ:SNY) is its biggest competitor in the flu game. It trades at three times sales. Based on $1.5 billion in NanoFlu sales, NVAX could be worth $4.5 billion. It currently trades at a valuation of $6.1 billion.
That means investors are valuing NVX-CoV2373 and the rest of its pipeline at $1.6 billion. That’s ludicrously cheap when you consider that Pfizer gained $15.7 billion in just the first hour-and-a-half of Nov. 9. trading.
As I said in October, I was willing to make an exception with Novavax, recommending that even regular, risk-averse investors could put 2% to 3% of their portfolios in NVAX without too much consternation.
The fast track designation definitely helps. As I said before, until I hear bad news from Novavax, it remains a long-term buy.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
