Novavax Stock Might Actually Win This War of Attrition

With so much pain and destruction associated with the novel coronavirus, there’s not much to celebrate regarding this pandemic-impacted year. However, if 2020 did have a Cinderella story, one of the strongest candidates would be Novavax (NASDAQ:NVAX). Prior to this global crisis, Novavax was a biotechnology firm on the edge of collapse. However, due to unprecedented demand for a coronavirus vaccine, NVAX stock suddenly became a hot commodity.

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

To be fair though, the NVAX narrative in the first half of this year looks far better than the second half thus far. Since closing at $178.51 on Aug. 10, Novavax stock has looked incredibly vulnerable. Primarily, the harsh realities of developing a vaccine in time to meet the White House’s Operation Warp Speed initiative came rudely to the forefront. Typically, vaccines take many years to develop. Therefore, getting one out in months was mission impossible.

But even more worrying for investors is the recent volatility in Novavax stock. During a one-month period roughly between mid-September and mid-October, NVAX seemed to find solid support. But over the last several days, that support has crumbled. What gives?

Two factors come to mind. First, FXstreet.com suggested that Novavax’s coronavirus vaccine candidate – known as NVX-CoV2373 – may be experiencing delays. Although it’s just speculation at this point, the rumor has credibility. As you know, the broader Covid-19 treatment space – whether you’re talking therapeutics or vaccines – has encountered roadblocks.

So far, NVAX has been able to keep its nose clean. However, if the rumor is true, it would imply that the novel coronavirus is a tougher beast than most anticipated. And that optically puts Novavax stock back on level with the competition.

Second, new daily coronavirus infections have recently hit record highs. As we head toward flu season and the colder weather, this setup implies that we’ll suffer another tragic and disruptive surge in cases. At that point, investors may be looking at more proven therapeutics, not vaccines. Obviously, this wouldn’t be the most helpful factor for NVAX.

With NVAX Stock, Focus on the Advantages

Furthermore, the complexity of the vaccine race has many wondering which biotech or pharmaceutical firm will come out on top. From companies utilizing experimental nucleic-acid vaccines, to those featuring traditional methodologies leveraging live attenuated or inactivated vaccines, the entire industry is throwing everything and the kitchen sink at the coronavirus.

Initially, it might seem that you need to be an epidemiologist to decipher which vaccine investment is the best play for the pandemic. Fortunately, getting the answer is much simpler than you might imagine. Honestly, it just comes down to playing a game of elimination.

First, let’s remind ourselves why Novavax stock was one of the top contenders from the beginning of this crisis. As you probably know, the biotech firm specializes in developing subunit vaccines. These vaccines comprise of protein fragments (subunits) of the pathogen in question, in this case SARS-CoV-2.

Further, because these vaccines utilize fragments, they’re safer than using a weakened or inactivated form of SARS-CoV-2, which would be the case for traditional vaccines. Essentially, subunits utilize similar principles to the traditional approach while offering safety and potentially efficacy advantages. Not surprisingly, subunits have a track record of success, as the Washington Post demonstrated.

I’ll be remiss not to mention a critical advantage of subunits: they’re appropriate for use in people with weakened immune systems. Since Covid-19 is particularly deadly to those with underlying conditions, this demographic-specific efficacy helped put Novavax stock in the lead.

But with anything, NVAX had some disadvantages. Mainly, subunits tend to be more expensive and may require specific adjuvants to be fully effective. As well, NVX-CoV2373 will probably require two doses. More than likely, multiple dose-regimens will create logistical challenges which cannot be ignored.

Because of the disadvantages of subunits, other experimental vaccine platforms that may offer time, cost, distribution and/or administrative benefits received the limelight. However, it’s apparent that we’re likely not going to have a vaccine before the election. Therefore, the time element has gone out the window, leaving efficacy as the probable attribute of choice.

Given subunit vaccines’ success with forwarding viable solutions, Novavax stock has a clear shot of winning this race.

A Lingering Battle May Benefit NVAX

In a recent CNBC report, health officials warned that the novel coronavirus could turn into an endemic. Essentially, Covid-19 could live at a baseline level. Such a prospect implies that we must learn to live with the coronavirus, boosting therapeutics in the near term.

However, if this coronavirus becomes an endemic, that will likely benefit NVAX stock even more. That’s because an endemic would likely remove the advantages of vaccines that cater to time and convenience elements, such as distribution or single/multiple-dose vaccines.

Basically, the finer details won’t matter. What will matter is that a vaccine works. Again, subunits have superior track records versus experimental vaccines, making Novavax stock a likely bet on a true, substantive solution.

On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.

On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.


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