The race to manufacture a Covid-19 vaccine started with Novavax (NASDAQ:NVAX) among the major contenders. However, that seems like eons ago considering the state we find NVAX stock in today. Shares of the biotech have been losing steam for several months now. Although attributable to several factors, this is mostly the company’s own doing. This year, Novavax delayed submitting its application for U.S. Food and Drug Administration (FDA) Emergency Use Authorization (EUA) several times.
The main issue here is manufacturing. Novavax needs to set up an effective manufacturing roadmap to move forward with these filings. The U.S. government was impressed by the company’s prospects, which is why it invested $1.6 billion. However, NVAX has a history of production problems and shortfalls. According to a report from Politico, regulators found the methods the company used to test the purity of its vaccine were not up to standards.
The company is now expected to submit its EUA filing with the FDA before the end of the year. In addition, Novavax has filed the necessary documents with India, the Philippines and the World Health Organization (WHO) for an Emergency Use Listing (EUL), all the while pursuing rolling paperwork elsewhere. If the company gets a WHO nod, its protein subunit vaccine will be used under the Covax program. Plus, on a bright note, Indonesia has already approved a EUA filing for the vaccine.
Still, NVAX stock has several near-term catalysts coming up. The vaccine space is highly sensitive to news. A positive or negative press release can have a major impact either way. As such, a small position will not hurt for short-term gains. But take regular profits along the way as manufacturing issues point to the company’s unreliable nature.
NVAX Stock: Delays Are Hurting Investor Sentiment
It has been tough waiting for the regulatory filings from Novavax. Investors in NVAX stock have become discouraged by the delays. Not to mention that, in the investing world, vaccines are looking like yesterday’s news. The frontrunners in the race have been established and are already reaping the rewards.
The delays are happening in part due to the U.S. Defense Production Act, which has created major obstacles in the shipment of supplies to other countries. That said, Novavax is still set to manufacture 150 million doses per month by year-end. The company has also recently signed agreements in South Korea and Japan. However, the Serum Institute of India (SII) is NVAX’s main partner and is having trouble due to the Defense Production Act. Broader supply-chain issues are also compounding this.
Because of this, Moderna (NASDAQ:MRNA), Johnson & Johnson (NYSE:JNJ) and AstraZeneca (NASDAQ:AZN) have all galloped ahead in the vaccine race. Still, the Novavax vaccine has excellent efficacy rates and approvals should be around the corner. Concerns regarding mRNA-based vaccines are also a boon for Novavax, which offers a protein-based vaccine instead.
Based on the company’s Phase 3 clinical trials, NVX-CoV2373 has significantly lower rates of side effects than mRNA vaccines. That could be a game changer, particularly in regard to emerging economies and those who have been reluctant to take a Covid-19 vaccine.
Healthy Orders Highlight Opportunity
The world wants to be protected from infectious diseases, as evidenced by Novavax’s orders of 2.06 billion doses. India and the E.U. will take a bulk of these vaccines. But more importantly, this enormous number of doses highlights the fact that the vaccine race is not completely over. Approximately half of the world still needs vaccines — and many of these can come from Novavax moving forward.
Most experts now agree that Covid-19 will not completely go away. Therefore, this is not one potential windfall of cash for vaccine manufacturers either. Rather, vaccination and booster shots will be an ongoing issue and vaccine companies will have a recurring revenue stream that they can rely on.
All told, if you need a reason to hold onto NVAX stock and other vaccine plays for the long term, this is perhaps one of the most important points to consider.
NVAX Stock Is Good in Small Doses
There is a lot to like about Novavax at this point. Yes, there have been delays damaging the stock. But more approvals will come sooner or later and production updates are slated in the coming months as well. All of this should pop the stock and help investors make a nice return.
Right now, NVAX stock sports a rare combination — it’s cheap, will increase in value over time and is showing high potential profit margins. Experts agree that this crisis is not going away. As such, NVAX is an ideal play on the vaccine space.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in any of 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.
