It seems futile to argue in favor of Novavax (NASDAQ:NVAX) stock since the company has delayed Emergency Use Authorization (EUA) filings for its Covid-19 vaccine several times.
At this point, investing in vaccine stocks, in general, seems fraught with risk. A healthy chunk of the world is vaccinated, and the leading vaccine plays have already been identified.
Plus, Novavax’s EUA filing with the U.S. Food and Drug Administrator is expected to only happen in the December quarter. We do not have any firm timelines regarding the approval.
According to an Indian Economic Times report, India’s drug regulator has asked for immunogenicity data from the Serum Institute of India (SII), which has inked an agreement to produce up to 1 billion doses of Novavax’s vaccine. The absence of approval in America forces them to seek out new information about how well this vaccine works and if it produces a harmful effect on those who receive it.
On a brighter note, the biotech has filed for emergency use authorization in India, Indonesia and the Philippines. Novavax and SII have submitted documents to the World Health Organization for emergency use listing of Novavax’ vaccine.
NVAX stock was already playing catch up with the likes of Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ). The latest bit of news confirms NVAX stock bulls have to remain patient for the foreseeable future.
The positive is that the stock has fallen 28.0% in the last month. It now trades at a 45.25% discount to a 52-week high of $ 331.68 per share.
Considering how far it has fallen and the short-term catalysts ahead, NVAX stock is an interesting day trade.
Vaccines Are Here to Stay
Many analysts are bearish on vaccine plays these days because they feel the money has already been made in the space. Major pharmaceutical conglomerates have already worked their magic, and valuations in the biotech space have returned to earth. However, there are several elements to consider in this argument.
The whole world is not vaccinated at this point. As ace investor Louis Navellier points out, there is a chance the Covid-19 vaccine will be administered every year, much like a flu shot.
On that note, Novavax is working on a combination vaccine to address both Covid-19 and seasonal influenza. That’s doubly good for NVAX stock, as these vaccines can become a recurring source of cash flow for the company.
Plus, the need for booster shots is also rising due to dwindling antibody levels in already vaccinated individuals and the increased threat posed by the hyper infectious Delta variant.
This new type has caused many health scares across Europe. Although there are many arguments against giving the third shot to healthy people, there is mounting evidence that this could help stem the spread of the disease.
Healthy Results Boost the Bull Thesis for NVAX Stock
In June 2021, Novavax completed its Phase 3 clinical trial for its Covid-19 vaccine, NVX-CoV2373, with promising results.
The vaccine trial’s final results in the U.S., Mexico and Canada have been highly appealing. They demonstrate 100% protection against moderate and severe disease, 92.6% efficacy against Variants of Concern/Variants-of Interests, as well as a whopping 91% among high-risk populations.
The company will produce at least 2 billion doses of its coronavirus vaccine will be available in 2022.
At a Morgan Stanley healthcare conference, Novavax repeated that it would manufacture approximately 100 million doses per month by the end of this year’s third quarter. The figure will jump to 150 million doses in the fourth quarter.
Considering its several supply deals and the intense competition in the space, this is great news. The one area worth noting is that the vaccine production process depends heavily on Saponin.
It is a natural ingredient found in rare soapbark trees in Chile and is rare. So, one cannot say for sure if there is enough to facilitate large-scale uninterrupted production. Hence, this is a key area to watch for investors.
Cautiously Optimistic
NVAX stock bulls have little to celebrate. The delays in the filings are hurting investor sentiment. As we get further into the fourth quarter, we could be hearing positive news regarding these filings.
These will be short-term catalysts that will push the price up. Considering shares are down substantially from their all-time high, it is the right time to purchase a small position in this one and watch the price pop in the coming weeks and months.
However, if the company becomes a long-term investment, management has to build upon its production schedules. From the looks of it, the worst of the pandemic is over, but the long term effects of the virus will continue to affect the world.
Certain medical experts believe people should take vaccines every year as the flu shot. Vaccine manufacturers like NVAX will therefore gain momentum for a few more quarters before the momentum levels off.
On the publication date, Faizan 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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.
