Many believe that Novavax (NASDAQ:NVAX) stock is late to the party with a Covid-19 vaccine.
The company has been struggling for a long time to win approval from the Food and Drug Administration for its coronavirus vaccine approved. Multiple players are already in the U.S. market, complicating the approval process and leaving little room for growth.
However, the company has massive potential to grow outside the U.S., including the highly lucrative booster market. NVAX stock offers an attractive risk/reward profile at this time that hasn’t fully incorporated the impact of Novavax’s pipeline and its global potential.
NVAX stock has been on a roll since the beginning of the year, rising 117% in value. Its returns have comfortably surpassed those of the S&P 500. It now boasts a market capitalization of over $16 billion, which still pales compared to industry stalwarts such as Moderna (NASDAQ:MRNA). Moderna’s market cap is over 9x that of Novavax.
Hence, there is still a hefty upside to Novavax, considering how the market hasn’t captured the full potential of its candidates.
An Exciting Combo
For Novavax to shift its priorities and focus on its Covid-19 program was a no-brainer. The opportunity was massive, and with the government throwing $1.6 billion it’s way to develop its vaccine candidate, it was an easy choice.
However, Novavax hasn’t forgotten about its promising NanoFlu vaccine and the unique combination it serves alongside the Covid-19 vaccine. The company announced promising preclinical data evaluating the combo. A Phase 1 study should begin in Australia later this year.
NanoFlu could become a key differentiator for Novavax in the future and has already demonstrated safety and efficacy. Add booster shots to the equation, and you have a mouth-watering value proposition with Novavax at the forefront.
Its one-of-a-kind coronavirus vaccine is developed using traditional vaccine development methods, giving it the edge in safety and trust. Efficacy rates are staggering and are over 90% for high-risk populations. The Serum Institute of India, its contract manufacturer, filed for a WHO emergency use listing last month. The institute also approved Phase 2/3 trials for the vaccine on people age 2 to 17.
The vaccine candidate is expected to release in India in October, which would be a robust catalyst in achieving approval in other countries.
The Demand For Booster Shots
The booster shots market is expected to grow at a healthy pace, bolstered by the concerns over virus mutation. A recent Reuters survey indicated that 76% of vaccinated Americans wanted a booster shot, while 18% were unsure. The concerns over the Delta variant and diminishing vaccine effectiveness indicate a massive market opportunity for boosters. Several countries, including the U.K., Israel, Germany, the U.S. and others, plan booster deployment to fight the virus.
The critical data from Novavax’s ongoing Phase 2 study for vaccine booster’s show has been impressive. The results indicate a four-fold increase in neutralizing antibodies versus the primary vaccines.
New Zealand’s Covid-19 response minister, Chris Hipkins, confirmed discussions over the use of Novavax as a supplier of Covid-19 booster shots. The early adoption of New Zealand’s booster shot can provide several key statistics on the shot’s effectiveness and lead to approval in more countries.
The Bottom Line on NVAX Stock
Novavax is a late entry into the coronavirus vaccine sphere. Its skeptics felt that it was too little too late for the company, but that couldn’t be farther from the truth. It has an exciting opportunity ahead in the booster market and has massive potential to rake in sizeable revenues from the international market.
Moreover, despite a healthy run-up this year, NVAX stock trades at an attractive valuation to its peers. NVAX stock is worth investing at current levels.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.