The last time I looked at Novavax (NASDAQ:NVAX) stock, I concluded that finishing third in the Covid-19 vaccine race may be good enough.
It has been quite good for Novavax shareholders. The stock is up 120% in 2021. That’s less than half the gain of rivals BionTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA), but they’ve both gotten Covid-19 vaccines approved and into production.
Novavax is still working on it.
Novavax isn’t really third, either. Johnson & Johnson (NYSE:JNJ) has had its vaccine out for months. AstraZeneca (NYSE:AZN) has a vaccine. There have been five Chinese vaccines and lots more are on the way.
But Novavax has a cunning plan that could still make it a big winner.
WHO Seeks a Low Price Leader
The new game starts with the World Health Organization. It badly wants cheap, effective Covid-19 vaccines delivered around the world, yesterday.
Novavax filed for an emergency approval from WHO on its Covid-19 vaccine. This is an end-run around western agencies that have yet to approve it.
The best vaccines, in terms of efficacy, seem to be those based on messenger RNA (mRNA) technology. Novavax’ is a protein-based vaccine, along with an adjuvant meant to increase its effectiveness. But our Louis Navellier still thinks Novavax can be a winner in this race. That’s because Novavax’ compound doesn’t require cold storage, like mRNA vaccines.
Novavax is working closely with groups like the Gavi vaccine alliance, which are focused on pooled procurement and equitable distribution. It has an agreement to produce its vaccine in India, and a manufacturing agreement in South Korea.
Manufacturing remains the big if. Novavax says it has production agreements for 2 billion shots next year. But so far, its only production is for clinical trials.
The good news is that if you got a Novavax vaccine in its U.S. trial, you’re now considered fully vaccinated. The bad news is that Novavax is still in the process of applying for an emergency use authorization (EUA), which would open the U.S. market.
Playing the Long Game
Novavax also has a flu vaccine in development, called NanoFlu. This failed in previous Phase 3 trials. But it seems to have succeeded in meeting primary endpoints in its latest trial.
This let Novavax begin work on a combined COVID-influenza vaccine, one that would be shelf stable and easily tolerated.
Novavax says it’s now up to policymakers, not corporations, to drive the use of vaccines. While it opposes a waiver on patents, Novavax’ work is aimed at making it the low price leader on safe, effective, combination vaccines for a global market.
If Novavax can manufacture its vaccine in quantity, it’s projecting 2022 revenue of $5.23 billion, with net income of $30.21 per share. That would make the current price of $232 look cheap. The stock would be trading at just 3.6x forward revenue and 8.5x forward earnings.
The Bottom Line for NVAX Stock
There remain big ifs around NVAX stock.
If it can scale production, and if it can get approval, and if it can combine its flu vaccine with the Covid-19, Novavax could be a home run for investors in 2022.
Novavax has been hiring experienced pharmaceutical executives, in hopes of getting across the finish line and proving its case to investors.
But there remain uncertainties in the Novavax story. The success of Pfizer (NYSE:PFE), Moderna and BionTech is certain. If you’re buying NVAX stock today, you’re speculating. At this point in the Covid-19 race that’s the best route to fat profits. But it’s also the riskier play.
On the date of publication, Dana Blankenhorn held long positions in MRNA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.
