Despite Huge Run, There’s Still Some Upside for Novavax

With the dramatic progress that messenger-RNA-based vaccines have made in the battle against the novel coronavirus, solutions adopting alternative approaches seemingly appeared irrelevant. However, the recent surge in Novavax (NASDAQ:NVAX) put those concerns to rest in a shocking manner. Since the Jan. 28 session, NVAX stock has skyrocketed to a return of 116%.

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

Of course, with such an explosive rally in a short period of time, those on the sidelines may view NVAX stock as a missed opportunity. Certainly, I wouldn’t throw in everything into Novavax, especially after these wild gains. Still, from a scientific perspective, NVAX still has some room to run if you desire a modest position.

It’s important to realize that Novavax utilizes a subunit approach, which has pros and cons against the current mRNA vaccines. Subunits incorporate a purified component of the target virus for the purpose of eliciting an immune response. The advantages of subunit vaccines are that they stable, relatively safe and appropriate for people with compromised immune systems.

The Advantage

Contextually, though, the biggest advantage for NVAX stock is that subunits are proven. They represent well-established technologies and this approach is responsible for the hepatitis B vaccine.

Where mRNA vaccines are superior is their comparative ease of manufacturing. That’s why you saw the RNA approach beat Novavax and other companies utilizing viral-vector vaccines to the punch. However, the newness factor of RNA vaccines present social challenges.

Prior to the current crisis, nucleic-acid-based vaccines (RNA, DNA) have never been approved. Thus, for many people, there are lingering questions about efficacy and safety.

Of course, the medical community has established that RNA vaccines are safe – that’s not my argument. Rather, you have to convince the wider population of this fact. Unfortunately, there are still lingering fears about vaccines which gives NVAX stock a surprising catalyst.

Complexities Give Lifeline to NVAX Stock

Recently, some videos on social media went viral regarding alleged mRNA vaccine takers suffering uncontrollable shakes and other debilitating symptoms. I’m not going to comment on the veracity of such claims because that’s not my expertise.

However, such claims – whether true or not – do pose social challenges for RNA vaccines or other approaches that previously were not approved by regulatory agencies. This war against SARS-CoV-2 isn’t just a scientific or administrative one. Our leaders must win hearts and minds to achieve herd immunity.

After all, what good is a vaccine if no one wants to take it? Sadly, widely distributed cases that cast doubt on vaccine efficacy or safety may have much more leverage because of our unprecedented environment.

I’m not suggesting that NVAX stock has a clear in if mRNA vaccines fail to convince doubters. However, the underlying company has a distinct advantage in that subunits have been proven effective. In an information war, that’s worth something.

Also, we can’t just think about domestic concerns. Citizens of other nations are also worried about taking experimental vaccines – some more than others. By introducing a platform that has a successful track record, it’s much easier for converting the doubtful.

As well, we have a supply chain issue with mRNA vaccines – many need to be frozen to be effective. Even in the U.S., not all components of our healthcare infrastructure are able to accommodate ultra-cold frozen storage. Therefore, if we have problems with distribution, it’s inevitable that many other countries will have far greater challenges.

Fortunately, this is another win for NVAX stock. Subunit vaccines – specifically the kind that Novavax has developed for Covid-19 – “can be held at refrigerated temps for months,” according to experts. That’s huge for those regions that have less than ideal infrastructure.

Endemic Possibilities Add Relevance

While we’re all eager to put this virus behind us, according to Mayo Clinic doctors, “the likelihood of the virus being completely eliminated is low, especially as variants like the ones found in the UK and South Africa continue to emerge.”

Depending on how SARS-CoV-2 mutates in the months and possibly years ahead, it leaves open the room for additional treatments and vaccines. Potentially, that could put pharmaceutical companies that have pivoted to Covid-19 on a generally equal footing, which may benefit NVAX stock.

As I said earlier, though, Novavax isn’t a trade where you want to throw all your funds into one basket. However, the current battle against this disease – and the myriad health and social challenges associated with it – does leave some upside potential for NVAX stock.

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.

Matthew McCall left Wall Street to actually help investors – by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now.


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