Despite seemingly good news, shares of biotechnology firm Novavax (NASDAQ:NVAX) suffered a significant decline. Earlier Friday morning, management announced the availability of its Covid-19 vaccine at major retail pharmacies across the U.S. Unfortunately for stakeholders, the news failed to spark a positive action in NVAX stock, which slipped heavily.
According to the accompanying press release, Novavax’s updated vaccine is now available at several retailers, including Costco (NASDAQ:COST) and CVS (NYSE:CVS). The underlying adjuvanted formula aims to prevent Covid-19 in individuals aged 12 and older. Perhaps most significantly, Novavax offers the only protein-based non-messenger-RNA (mRNA) Covid-19 vaccine option in the U.S.
Throughout the worst of the pandemic, the push to generate a vaccine for the SARS-CoV-2 virus sparked intense political debates. A major component of the contentious discussion centered on the novelty of the mRNA approach. However, as Johns Hopkins Bloomberg School of Public Health mentioned, mRNA’s discovery and research into delivery mechanisms occurred during the 1960s and 1970s.
Further, the first mRNA-based vaccines were developed against the Ebola virus. However, due to limited exposure, the implementation of the vaccine did not go mainstream until the Covid pandemic. Still, public perception is difficult to overcome, which seemingly gave NVAX stock an in.
Timing Likely Hurt NVAX Stock
For anyone apprehensive about mRNA technology, Novavax offered a potentially viable alternative. Leveraging a protein subunit vaccine used in other vaccines such as HPV, hepatitis B and flu, Novavax enjoyed the benefit of a lengthy track record. Nevertheless, with the crisis raging, time was of the essence. And that may have been a major contributor to the volatility in NVAX stock.
Per BioPharm International, while the subunit approach enjoys several advantages, it also incurs headwinds. Among them, time and money impose significant challenges. In particular, many subunits feature unique physiochemical properties, requiring a tailored process for vaccine development.
To be fair, other approaches also take much time, if not longer than subunits. Unfortunately, Novavax’s aim to offer a distinct alternative — which makes business sense — may have ultimately hurt NVAX stock.
With other biotechs delivering mRNA-based vaccines to the public first, the move diminished Novavax’s total addressable market. Further, the science of pandemics also may have contributed to the red ink in NVAX stock. Basically, the evolution of Covid-19 involved a pivot toward higher rates of infection but with less deadly results.
Finally, news agencies in early 2022 reported that fears of Covid-19 had begun fading. Therefore, people saw limited incentive to seek immunization via vaccines.
Why It Matters
Interestingly, analysts rate NVAX stock as a consensus moderate buy. This assessment breaks down as two buys and one sell. Moreover, the average price target clocks in at $18.33, implying nearly 164% upside potential.
On the date of publication, Josh Enomoto 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.
