Novavax (NASDAQ:NVAX) has been making meaningful progress on several fronts around the world and looks poised to fill an important void in the U.S. As a result, I believe that the weakness of NVAX stock in the last two months has been overdone, creating a good buying opportunity for some medium-term and long-term investors.
Although Novavax’s revenue is likely to be somewhat limited by the change in the coronavirus’ status from pandemic to endemic, the company is still well positioned to obtain enough revenue from its shot to meaningfully lift its shares going forward.
Making Progress and Filling an Important Void in America
Last month, opening the door for dozens of countries to authorize Novavax’s shot, the World Health Organization authorized the jab. Already, France, the Phillipines, India, Indonesia and South Korea are among the large nations that have authorized the vaccine.
In Japan, a major drug maker, Takeda (NYSE:TAK), is seeking approval for Novavax’s vaccine, leaving the shot very likely to get that country’s nod. And, since the EU’s drug regulator has approved Novavax’s jab and paved the way for its nations to buy up to 200 million of the shots, many other countries in the bloc are likely to approve and purchase the company’s vaccine.
The U.S., the U.K., Canada and Australia have also agreed to buy the jab. And speaking of the U.S., on Dec. 31, Novavax announced that it had submitted all necessary data to the FDA needed to obtain an emergency use authorization (EUA) from the agency. The company added that it anticipates officially filing for an EUA with the FDA by the end of this month.
In the U.S., I believe that one reason why only 64% of the country has been fully vaccinated is that many people are nervous about the mRNA vaccines made by Pfizer and Moderna is because of the relative new usage of mRNA technology, which was invented only about 34 years ago and used for the first time on a wide scale in 2020. This nervousness has likely risen due to the recent criticisms of the technology by one of its inventors, Robert Malone.
Only one shot that does not use the mRNA technology is currently available in the U.S.; that’s Johnson & Johnson’s (NYSE:JNJ) vaccine, which has had more than its share of problems and negative publicity. So Novavax’s shot, which uses older, more tested vaccine methods, could appeal to Americans who want a coronavirus vaccine but have misgivings about mRNA shots.
The Transition From Pandemic to Endemic
In-line with my predictions from several months ago, many experts and commentators believe that the coronavirus has or is about to transition from a pandemic to endemic. CNBC explains the latter term as “a disease of relatively low severity that constantly circulates throughout certain parts of the world.” The Flu is an example of an endemic illness, the financial news outlet noted, adding that “People get vaccinated regularly against” the flu.
There’s certainly a significant amount of evidence that the current, dominant omicron strain is “a disease of relatively low severity.” For example, in England, the death rate was recently coming in at about 1 in 500 cases.
But, as the BBC points out, “There will be people – mostly the old and vulnerable – who will die from endemic Covid.” As a result, those groups and those who associate closely with them will likely still look to get vaccines for the foreseeable future. And many if not most governments around the world will encourage and incentivize their citizens to get shots. Consequently, Novavax should be able to sell a significant amount of its vaccines for the next few years.
The Bottom Line on NVAX Stock
Novavax is making progress on finally getting its vaccine to the market. And even though the coronavirus is becoming endemic, I believe that the company could easily generate $3 billion to $4 billion of revenue from its vaccine per year, making its $8.3 billion market capitalization relatively low.
But since Novavax is a new, small company, and its vaccine has not yet been widely used, NVAX stock still carries a meaningful amount of risk. Still, for longer-term, risk-tolerant investors, Ithink that taking a small, bullish position in the name is worthwhile.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.