A Move Into Novavax Stock Makes Sense Ahead of Several Near-term Catalysts

Novavax (NASDAQ:NVAX) is racing to obtain approvals from the World Health Organization (WHO) and the U.S. Food and Drug Administration (FDA) for its Covid-19 vaccine NVX-CoV2373. Understandably, investors have balked at these delays, sending the NVAX stock price down considerably from its 52-week high.

Novavax (NVAX) logo surrounded by medical supplies
Source: Ascannio/Shutterstock.com

Considering the delays and manufacturing issues, many might feel NVAX stock is yesterday’s news. But the vaccine race is not over. Several developing countries are still struggling to contain the virus. And even if we take conservative estimates, half of the world still needs vaccines.

In addition, experts agree that an alternative non-mRNA booster shot may be beneficial. It is mainly due to side effects observed in the mRNA 2-dose regimen, such as heart inflammation, leading to myocarditis or pericarditis for some patients at risk of these complications. Doctors have advised those who experienced the side effects of switching to an alternate non-mRNA vaccine.

This is great news for Novavax’s vaccine. Its clinical trials show minimal and mild reactions so far, with no major issues seen yet in patients after vaccination shots.

For all these reasons, NVAX stock represents an enticing opportunity. Shares are trading at a huge discount to their 52-week highs. That will not remain the same for long as the biotech will submit documents with the FDA this quarter, and other filings in India and the Philippines should also bear fruit soon. Indonesia has already approved the vaccine, leading to massive gains. Hence, this is the ideal time to load up on this one.

What Sets the NVAX Vaccine Apart?

The protein-based Novavax vaccine is great at increasing protection, even if someone has taken an mRNA vaccine previously. The use of the spike protein in their vaccines offers an advantage because it can’t replicate on its own, making it easier for your immune system’s natural defense mechanisms against these viruses to work properly — without any complications or side effects.

So, NVX-CoV2373 is more reassuring for those skeptical about mRNA vaccines due to the lack of side effects and complications. Apart from this, there is another advantage Novavax has from using this approach. Modern flu vaccines, HPV vaccines and HepB vaccines all use this process to produce powerful immunization against the diseases they target. It makes these vaccines cheaper to make.

In contrast to Novavax’s manufacturing partners, whose lab technicians can be upskilled and continue using existing infrastructure to transition from traditional vaccine technology, mRNA manufacturers need new employees with different skill sets. They also require upgrading their production facilities’ equipment or risk losing market share because they cannot produce enough doses for public health emergencies on short notice.

Flexibility is key if you want to remain ahead of the game. Novavax has slipped up in terms of its filings. However, the manufacturing process, alongside the high efficacy rates from the clinical trials, are enough reasons for bulls to celebrate.

Risks With the Thesis

Since early 2021, Novavax has been delaying its EUA application to the US FDA. It previously cited delays in analytical works and quality control which led them to miss their goal of scaling up the production process. This left other companies like Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) to pick up the pieces and run. Now they seem light years ahead of NVAX, and the stock is taking a beating as a result.

In addition, the FDA has suspended funding for Novavax’s vaccine production until the company can assure consistency across different manufacturing facilities. With tens of millions of doses already manufactured, there is an outside chance that they might need to write these off due expiry dates — which would be devastating news given all their hard work.

Finally, Novavax has noted that it’s still facing challenges to meet the submission requirements for its clinical data. The company is working with regulators and officials from around the world. Still, there have been some hiccups along the way, which could jeopardize their progress towards a successful launch, especially if those issues aren’t cleared up soon enough before the end of the year.

NVAX Stock Is a Cautious Buy

NVAX stock has oscillated sharply in the past few months. The company is still fighting to overcome supply chain issues and get its EUA. Some investors may be hesitant due to multiple delays or manufacturing issues. This could provide huge opportunities for growth-oriented investors.

One of Warren Buffett’s most popular investment sayings is, “Be fearful when others are greedy. Be greedy when others are fearful.” It certainly rings true for Novavax.

The shares lost billions in value over the last few months, with the NVAX stock price off 18.6% from August through October. However, it is now poised for a major recovery. The bearish narrative makes sense. Major pharmaceuticals are carving out profits for themselves. There might not be much left to go around once Novavax gets the necessary clearances.

But the larger issue is that the world still needs vaccines. And they are skeptical of the mRNA 2-dose regimen. Against this backdrop, it makes sense to treat this one as a contrarian play.

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 analyzing the stock market and was a former data journalist at S&P Global Market Intelligence.


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