Under-the-Radar Novavax Can Still Make a Splash

Every once in a blue moon, a crisis is the perfect catalyst for a beleaguered company. That’s the rarefied air that Novavax (NASDAQ:NVAX) found itself in when the novel coronavirus became a pandemic. Prior to the global calamity, NVAX stock was on the verge of collapse, as the New York Times bluntly stated. Suddenly, though, Novavax’s specialty in protein subunit vaccines became immensely relevant.

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

So called because the approach utilizes a protein (or part of a protein) of the target virus, along with an adjuvant (immune-boosting compound) to spark an immune response, subunit vaccines were an ideal candidate for combating Covid-19. First and foremost, subunits are proven, as demonstrated by the hepatitis B vaccine. Second, they’re appropriate for people with underlying conditions.

With Covid-19 disproportionately impacting the older demographic and those with comorbidities, Novavax’s candidate, NVX-CoV2373, offered a small but substantive beacon of hope toward this terrible outbreak. Not surprisingly, NVAX stock went from its deathbed to meteoric heights.

But from its peak of late summer 2020, shares have settled down substantially. One of the major causes of the volatility in NVAX stock was competition. Primarily, messenger-RNA vaccines stormed to the forefront. Though nucleic-acid-based vaccines have never been approved by the Food and Drug Administration prior to the coronavirus-fueled emergency use authorization, the RNA-based approach offered one critical advantage – rapid manufacturing.

A few years ago, Harvard University explored the subject of novel biotechnologies to prevent and treat diseases. One that showed promise – particularly for virus outbreaks – was RNA vaccines. Studies demonstrated that they could be produced quickly (inside two months) at low cost, allowing them to be distributed during “epidemics even as they develop.”

Of course, time was of the essence. Therefore, RNA vaccine developers took control of the narrative, leaving NVAX stock trading horizontally for long stretches of time. But is that the end of the story for investors?

NVAX Stock Fortuitously Offers Coronavirus-Related Upside

Although competitors have been first to market in terms of distribution of their RNA vaccines, some evidence suggests that the platform may not be adequate to comprehensively address the Covid-19 crisis. This leaves an opportunity for Novavax, which by deduction can benefit NVAX stock.

First, RNA vaccines typically require frozen transport and storage, which greatly affects the overall logistics of distribution. Logically, this has less-than-favorable implications for international distribution, where healthcare infrastructures of certain nations could be inadequate. As well, the domestic rush to purchase ultra-cold freezers indicates that not all states are fully prepared for widescale distribution.

Here, Novavax has a pivotal advantage. According to the company’s website, “NVX-CoV2373 is stable and will allow handling in a liquid formulation that can be stored at 2°C to 8°C, allowing for successful cold chain management with existing infrastructure.”

Second and more critically, RNA vaccines are suffering a supply constraint. This has sparked debate among health experts as to next steps, ranging from delaying the second dose, giving people only one dose (as opposed to manufacturers’ recommended two doses), to mix-and-matching different vaccines.

Just by the constraint itself, Novavax as a viable alternative could help lift NVAX stock. But there’s also another factor involved – the RNA approach’s much-touted advantage of rapid production at scale was less of an impact than initially hoped. That’s the assessment from the Washington Post, which cited concerns that supply bottlenecks are making it difficult to vaccinate the population quickly enough.

Of course, this dynamic buys Novavax time. Further, the virus itself has cracked the door open for NVAX stock. There are growing concerns that a new variant of the SARS-CoV-2 virus identified in South Africa poses a greater risk than the strain discovered in the U.K. And experts are worried that a vaccine won’t be as effective against the former mutation.

In other words, we’re far from this crisis being over. And that keeps Novavax in the game.

Worth a Look for Speculators

Indeed, a football analogy would be appropriate for NVAX stock. Often, you’ll hear the coaching staff of a winning side implore its players to put the game away. Giving the opponent additional time through silly mistakes raises the risk of an unexpected come-from-behind rally.

But for Novavax, the situation is much more favorable for the speculator. While the vaccine leaders got off to an early start, they’re losing momentum through logistical challenges and recently discovered production disappointments. There are more than enough negatives against the competition that Novavax can exploit.

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

On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.


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