Without Positive Vaccine News, Novavax May Fall Further

November could bring increased news about biopharma firms, like Novavax (NASDAQ:NVAX), which are working on a Covid-19 vaccine. Since the start of the year, NVAX stock is up over an eye-popping 1,900%. Put another way, the proverbial $1,000 invested in NVAX stock would now be worth $20,000.

Novavax (NVAX) logo surrounded by medical supplies
Source: Ascannio/Shutterstock.com

Gaithersburg, Maryland-based Novavax is a late-stage biotech company. It specializes on vaccines to prevent infectious diseases. Until the Covid-19 pandemic, its work on illnesses, such as Ebola, MERS, SARS, or seasonal influenza, did not get much headline news. But as it joined a number of other companies to find a cure for the novel coronavirus, NVAX stock became a household name among biotech investors.

Since early spring, the company has been working on NVX-CoV2373, its vaccine candidate. NVAX stock price ebbs and flows with the newsflows from the company as well as from other firms that are in the race to develop a cure. Let’s take a look at what investors can expect from Novavax shares in the coming weeks.

Vaccine Development Is Difficult

Recent research led by Matthew D. Shin of the University of California San Diego, La Jolla, highlights, “The high infection rate, long incubation period, along with mild-to-moderate symptoms experienced by many, make COVID-19 a troubling disease. A vaccine is crucial, in particular because data indicate asymptomatic transmission of COVID-19.”

However, developing and commercializing such a vaccine require difficult and lengthy steps. The authors continue, “Challenges include the vaccine design itself, but also its manufacture and global distribution; cold chain requirements present logistical and fiscal barriers to the availability of important, life-saving vaccines in resource-poor areas of the world.”

On Oct. 27, Novavax provided a clinical update on NVX-CoV2373. Phase 3 clinical trial with 5,500 enrolments is continuing in the U.K. The company said, “interim data in this event-driven trial are expected as soon as early first quarter 2021. These data are expected to serve as the basis for global licensure.”

Phase 3 clinical trial in the U.S. will possibly start in the coming weeks, too. Put another way, investors in NVAX stock are unlikely to hear much positive news from the company for several months.

The World Health Organization (WHO) releases regular updates on all companies and research universities working on a cure for the novel coronavirus. Of the scores of names in the list, InvestorPlace.com readers are likely to follow several closely. They include AstraZeneca (NYSE:AZN), BioNTech (NASDAQ:BNTX), CureVac (NASDAQ:CVAC), GlaxoSmithKline (NYSE:GSK), Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE), and Sanofi (NASDAQ:SNY), among others.

According to recent corporate updates, Pfizer and drug partner BioNTech as well as Moderna may become the first ones to cross the finish line. Analysts believe positive news could come before the end of the year.

The Bottom Line on NVAX Stock

Globally, there are several vaccine candidates that aim to protect against Covid-19. Investors in NVAX stock hope all will go well with Phase 3 testing. Then management could apply for regulatory approval. Such a development would understandably push the shares up.

However, if the company cannot deliver on the promise of a successful vaccine, NVAX stock could easily decline further. In addition, the company is loss-making. It does not currently have any products on the market. Therefore, unless there is good news on the Covid-19 vaccine front, it is unlikely that NVAX stock will go up any higher.

If you are currently a shareholder experienced with options, you may also consider protecting some of your recent gains with a hedge. For example, a vertical put spread or an ATM covered call with a 2- or 3-month horizon could be an appropriate strategy.

Are you hoping to participate in the development of a vaccine in the coming weeks? You could consider buying an exchange-traded fund (ETF) that invests in a basket of companies the race, including NVAX stock. Examples would include ETFMG Treatments, Testing and Advancements ETF (NYSEARCA:GERM), the Spdr S&P Biotech Etf (NYSEARCA:XBI), the VanEck Vectors Biotech ETF (NASDAQ:BBH), or the Virtus LifeSci Biotech Clinical Trials ETF (NYSEARCA:BBC).

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

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. 

Article printed from InvestorPlace Media, https://investorplace.com/2020/11/without-positive-vaccine-news-novavax-may-fall-further/.

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