The last time I wrote about Novavax (NASDAQ:NVAX) was in early October. NVAX stock was getting hammered on the news Merck (NYSE:MRK) and Ridgeback Biotherapeutics were developing an antiviral Covid-19 pill. I suggested its stock was cursed.
Fast forward to the end of October. Novavax stock was reeling once more due to the Oct. 19 article from Politico that alleged the company was over its head and wouldn’t be able to deliver a quality vaccine consistently.
“[T]hree people familiar with the matter said they are not confident that the company has the resources needed to reproduce a high-quality vaccine on a consistent basis — a benchmark Novavax must meet before that time,” Politico reported.
“Those same people said Novavax could potentially fix its manufacturing issues and reach full licensure by the end of 2022.”
Even though there’s some good news in the above quote, most investors only took away the first part. Or, they figured the opportunity would have passed by the end of 2022. Either way, NVAX stock was down 16% for the week ended Oct. 26, trading at its lowest level since May.
The company quickly responded to the Politico story, but the damage had already been done.
It seemed as though Novavax couldn’t catch a break. And then it got one.
NVAX Stock Gets U.K. Boost
The company’s big break may have come on Oct. 27 when it announced that it had filed for authorization of its Covid-19 vaccine candidate with the U.K. Medicines and Healthcare products Regulatory Agency (MHRA). It is the first protein-based Covid-19 vaccine in the U.K.
“This submission brings Novavax significantly closer to delivering millions of doses of the first protein-based COVID-19 vaccine, built on a proven, well-understood vaccine platform that demonstrated high efficacy against multiple strains of the coronavirus,” said Stanley C. Erck, president and CEO of Novavax.
NVAX stock gained 6% on the news. Investors are contemplating what the possible U.K. authorization means for its future revenue. It’s possible it could become the booster shot of choice outside the U.S.
It is certainly much-needed news.
The Risk-to-Reward for NVAX Stock Remains Favorable
As I said in the introduction, the company responded quickly to the allegations it couldn’t scale its supply chain to meet the worldwide demand for its vaccine.
“We have made significant progress in mobilizing a global manufacturing network over the past 18 months with sites that are now routinely producing high-quality product at commercial scale at multiple sites across the world. Our global supply chain is expected to achieve a capacity of 150 million doses per month by the end of the fourth quarter,” its Oct. 20 press release stated.
The statement went on to say that the next couple of weeks would see it complete necessary regulatory submissions in several developed countries — the United Kingdom, Canada, Australia, New Zealand, and the entire European Union — and some emerging markets, including India, Indonesia, and the Philippines.
If, and it’s a big if given the company appears cursed, it can convince some of these places that it can get the job done; November ought to be an explosive ride back to $200 or more.
So, an aggressive investor has to ask themselves whether another negative news story is enough to knock it down further? It hasn’t traded below $100 for more than a handful of days since July 2020.
However, the news from the U.K. has certainly stemmed the tide.
If you buy some now, with the possibility of purchasing some more later should it be trading closer to $100, you’ll get a much better average price.
Given the $1.75 billion it received from Operation Warp Speed, I would think there’s a vested interest in the federal government to see this through to its most positive conclusion.
While the Food and Drug Administration might not greenlight its vaccine until sometime in 2022, permissions granted in other countries such as the U.K. may keep it busy enough it won’t matter what it does in the U.S.
What we do know is that the trials have shown that Novavax’s vaccine has fewer side effects than either Moderna’s (NASDAQ:MRNA) or Pfizer’s (NYSE:PFE) vaccines.
I had the Moderna vaccine for my second shot and it knocked me on my ass for an entire day, and I’m a healthy 56. I would gladly take a Novavax booster to complete the Covid-19 trifecta of AstraZeneca (NASDAQ:AZN), Moderna, and Novavax.
Volatility Remains in Play
To buy NVAX stock at this point in the proceedings, you will need diamond hands. There can be no doubts in your mind why you’re jumping into the fray. Any bad news at this point — a rejection from the U.K. being a major negative — will almost certainly crush the spirits of those holding for the long term.
InvestorPlace’s Chris Markoch discussed its volatility in mid-October.
“There’s a lot of noise with NVAX stock right now. And to be clear, it’s not all bad news. Like changeable weather, there’s a range of outcomes that are possible with Novavax. If you’re comfortable with that, then my last piece of advice is to keep your eyes open and your stop loss orders in place,” Markoch wrote on Oct. 12.
In my colleague’s opinion, the best gains from Novavax stock have already been gotten — from May 1, 2020, to its all-time high on Feb. 8, 2021, the stock appreciated by approximately 1,800% — so the possibility of a repeat performance would require its current share price to rocket to over $2,400.
That’s not happening. Not even close. As my colleague has said, it has got to deliver answers sooner rather than later. As every day passes, investors get more pessimistic, not less.
The Bottom Line
I continue to lean toward a happy ending in the Novavax story. The U.K. announcement certainly helps. That said, I’m unwilling to recommend its stock for anyone other than the most risk-accepting of investors.
“Despite the Merck news, I still think Novavax shareholders will be rewarded in the future. So if you haven’t bought NVAX, now would be a good time to buy some shares leaving aside some cash in case it drops further,” I wrote on Oct. 8.
Since then, the Politico story dropped, and its share price fell further, leaving all but the most battle-tested investors quaking in their boots.
While Novavax couldn’t seem to catch a break, now might be the perfect time to take a chance on its Covid-19 vaccine. If you take a chance and buy some, you have a lot more courage than I do.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
