As the Covid-19 pandemic spread last year, one of the most promising vaccine makers was Novavax (NASDAQ:NVAX). Folks who held on to NVAX stock were handsomely rewarded – but lately, the shares have been volatile.

A competing biotech company had a breakthrough recently, which could be great news for the world. On the other hand, it may present a challenge for Novavax and its stakeholders.

Some traders might even be tempted to sell their shares of NVAX stock on the news. However, panic selling the shares isn’t necessarily the best strategy now.

The rival’s treatment is definitely worth discussing. Yet Novavax isn’t a one-trick pony. As we’ll see, the company’s pipeline is diverse enough to sustain it through any competitive challenges.

A Closer Look at NVAX Stock

While many stocks entered into a bear market in March and April of 2020, NVAX stock reached new highs.

Amazingly, the stock climbed to $170 in August of that year, after starting off 2020 at just $4.

Another vertical share-price move happened in February of 2021. This time around, it’s possible that Reddit traders were involved in the rally.

Or maybe it was spurred by the market’s concern over the variants of Covid-19. Either way, NVAX stock soared to $331.68 in early February.

It was such a steep price move that the rally just couldn’t be sustained. Thus, seven months of choppy price action followed as Novavax’s investors were subjected to a veritable roller coaster.

The past several weeks were especially rough, with NVAX stock plunging from $270 to $167.

Don’t worry; Novavax didn’t do anything wrong. There was no major scandal or failure on Novavax’s part, but a more famous drug maker seems to have gotten the upper hand.

Merck’s Game Changer

In early October, pharmaceutical giant Merck (NYSE:MRK) shook up the medical market — and Wall Street, too — with a major development.

Reportedly, Merck’s oral Covid-19 anti-viral pill jointly developed with Ridgeback Therapeutics, molnupiravir, was found to reduce the risk of hospitalization or death among Covid-19 patients by around 50%.

As InvestorPlace contributor William White clarified, a Phase 3 trial is evaluating the effectiveness of treating “at risk, non-hospitalized adult patients with mild-to-moderate COVID-19” with molnupiravir.

Moreover, Merck announced today that it had submitted an application for Emergency Use Authorization for molnupiravir to the FDA.

Obviously, the interim results of the trial of  molnupiravir are highly encouraging. The introduction of a potentially lifesaving oral Covid-19 treatment is, indeed, a game changer.

Already, Merck has agreed to supply the U.S. government with 1.7 million courses of molnupiravir.

This event might lead some investors to worry that Novavax’s Covid-19 vaccine candidate, NVX-CoV2373, will get left in the dust.

A Diverse Pipeline

However, Jefferies analyst Michael Yee isn’t overly concerned about that.

Apparently, Yee doesn’t believe that Merck’s molnupiravir news will materially impact  demand for vaccines. The analyst noted that “vaccines…prevent getting sick to begin with.”

That’s a fair point. Just as relevant as Yee’s statement, however, is the fact Novavax isn’t a one-trick pony in the pharmaceutical market.

For example, another star player in Novavax’s pipeline is seasonal influenza vaccine NanoFlu.

Not long ago, the results from a Phase 3 clinical trial of NanoFlu with a Matrix-M adjuvant were published in The Lancet Infectious Diseases.

The study concluded that NanoFlu was well-tolerated and “produced significantly enhanced humoral and cellular immune responses versus the comparator vaccine,” according to Novavax.

Other powerful  components of Novavax’s pipeline include ResVax for respiratory syncytial virus, as well as vaccine candidates for Ebola, Middle East respiratory syndrome (MERS) and severe acute respiratory syndrome (SARS).

The Bottom Line

It’s important to acknowledge the threat to Novavax from Merck, but Novavax’s investors don’t have to respond by dumping their shares.

As Yee pointed out, the vaccine market won’t be upended by Merck’s progress.

Furthermore, there’s more to Novavax than its Covid-19 vaccine candidate.

The company has enough breadth and diversification to withstand its competitors and succeed in the pharmaceutical market over the long-term.

On the date of publication, David Moadel 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.