The Window of Opportunity Has Closed for Novavax

  • The Food and Drug Administration (FDA) will meet in June to determine approval for Novavax’s (NVAX) Covid-19 vaccine.
  • The early rollout of it in the European Union has been underwhelming.
  • NVAX stock could be severely overvalued as a result.
Concept of NVAX stock vaccine against COVID-19. Glass medical vials with liquid. Ampoules with coronavirus vaccine on a medical glass table

Source: vovidzha / Shutterstock.com

In 2019, Novavax (NASDAQ:NVAX) was off to a promising start. It was one of the companies that participated in the federal government’s Operation Warp Speed program along with Moderna (NASDAQ:MRNA). Its differentiating factor is that it used different technologies than its rivals. Many investors were hoping that it would end up being the third or fourth commercially available Covid-19 vaccine.

Unfortunately, a series of missteps have left the company far behind in the vaccine race. However, I believe the company’s dire straits have not yet been reflected in the stock price. This is despite the fact that NVAX stock’s current price is much lower than its highs of $300.

NVAX Novavax $53.48

NVAX Stock Is Finally Getting an FDA Review

It was recently announced that the U.S. Food and Drug Administration (FDA) will meet in June to determine approval for Novavax’s Covid vaccine. The company has fallen behind its rivals in securing approval for its shot.

The committee review of the vaccine does not necessarily mean it will be approved in June. I doubt the FDA will be in a rush to approve any additional vaccines, especially as the pandemic subsides.

The committee will hold public hearings to discuss the data given by Novavax. It is comprised of independent physicians and scientists who will discuss the merits of the vaccine. Remember, though, that the committee will only give advisory recommendations, meaning the FDA is not bound to follow these recommendations.

Therefore, it could still be months before its vaccine secures full government approval. Furthermore, Novavax has not yet completed its submission, potentially leading to more delays. Remember the company has had submission issues in the past.

Novavax Is Off to a Slow Start in Europe

I’ve argued before that Novavax is in a race against time to get its vaccines approved. Now I believe the company is already too late to secure a market for its product. Most people in the U.S. who want a vaccine have already had the chance to obtain one.

The company’s inoculation uses different technology than the more commonly available mRNA vaccines. It uses spike proteins cultivated outside the human body and an adjuvant made from tree bark. This was designed to induce a broader immune response.

Novavax’s management is hoping this difference will make those hesitant about mRNA consider its shots. While this makes sense in theory, I doubt it will play out in practice. There doesn’t seem to be a rapid uptake in Novavax vaccines in countries where it was recently approved.

The early rollout in the European Union (EU) has shown to be underwhelming. Millions remain unvaccinated in the EU despite 85% of its population having received at least one shot and two-thirds having had a booster.

Unfortunately, data shows Novavax’s rollout has had little impact on vaccination campaigns. For example, in Germany, only a fraction of a percent of its unvaccinated population have been inoculated with the company’s vaccine.

The Takeaway on NVAX Stock

I doubt people who have held out this long will be willing to take Novavax’s vaccines. This issue and the slow approval process in the U.S. are very bad news for NVAX stock. It still has a market cap of about $3.4 billion despite having dropped close to 30% in the last month.

This means NVAX stock is severely overvalued if it can’t find a market for its Covid vaccines. Unfortunately, in my view, that window of opportunity has already closed. I would not want to get involved in Novavax stock now.

On the date of publication, Joseph Nograles 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.

Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.


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