Novavax Is Inching Closer, But Its Vaccine Better Be Special

These should be go-go days for Novavax (NASDAQ:NVAX). The vaccine maker said it’s commencing Phase 3 clinical trials for its Prevent-19 (NVX-CoV2373) novel coronavirus vaccine in the U.S. and Mexico. However, NVAX stock slumped nearly 10% on the news.

Novavax (NVAX) logo surrounded by medical supplies
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Sure, some of the news delivered on Dec. 28 was likely baked into NVAX stock. After all, the company submitted Prevent-19 for a U.K. Phase 3 trial three months ago, so investors were likely expecting similar headlines pertaining to domestic efforts.

Some of the problem here for Novavax is that it’s behind rivals such as Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). Vaccines produced by those companies are already being administered across the U.S.

It’s a good thing Novavax is part of the U.S. government’s Operation Warp Speed because some investors may be wagering the company is going to need the benefit of expedited approval timelines to position Prevent-19 to threaten established competitors.

NVAX Stock Shouldn’t Be Dismissed

In a competition as important bringing vaccines to market that fight a life-threatening pandemic, such as the novel coronavirus pandemic, it’s easy for investors to get caught up in first-mover advantage. Moderna and Pfizer have that. Novavax does not.

That doesn’t mean investors should be dismissive of Novavax over the near term. Over the course of the pandemic, experts in the investment and medical communities made clear that there will be room for multiple vaccines. On that note, a couple of points regarding Novavax are worth considering despite its laggard status.

First, the company isn’t a micro- or small-cap stock that’s being financially burden by speedy Covid-19 vaccine development. Novavax received $1.6 billion in funding from the Biomedical Advanced Research and Development (BARDA) for its efforts.

Second, the company said it will be able to produce two billion doses next year. That’s a hefty amount and one that should open plenty of doors for NVX-CoV2373 in and outside of the U.S.

NVX-CoV2373 has some other benefits that NVAX stock’s recent weakness belie, including its status as a protein-based alternative to some RNA-driven rivals.

“The purified protein is encoded by the genetic sequence of the SARS-CoV-2 spike (S) protein and is produced in insect cells. It can neither cause COVID-19 nor can it replicate,” according to the company.

Another advantage possessed by the Novavax vaccine is that it’s stable at 2 degrees Celsius to 8 degrees, or 35.6 to 46.4 Fahrenheit. That’s better than the super-freezing temperatures required for some competing products.

Catalysts Remain for Novavax

Down 4.3% over the past month, Novavax is receiving shoddy treatment by investors, which appear to be acting as though the name is bereft of near-term catalysts. The opposite is true, particularly with Phase 3 trials pending in multiple countries.

“The company is also currently conducting a large pivotal Phase 3 clinical study in the United Kingdom (U.K.), a Phase 2b safety and efficacy study in South Africa, and an ongoing Phase1/2 trial in the U.S. and Australia. Data from these trials are expected as soon as early first quarter 2021, although timing depends on transmission rates in the regions,” according to a statement.

Given the current state of Covid-19 affairs in the U.K., if NVX-CoV2373 passes muster there, that could be a significant spark for NVAX stock.

Obviously, the U.S./Mexico trial offers major potential for Novavax investors because, well, it involves the U.S. and will feature 30,000 participants, meaning efficacy and side effect clarity is reasonable to expect.

Bottom line: Markets appear to be overreacting to the fact Novavax doesn’t have a vaccine on the market yet, not the possibility that the company’s product could top those offered by rivals.

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

Todd Shriber has been an InvestorPlace contributor since 2014.

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