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Novavax (NASDAQ:NVAX) made a strong move to the upside earlier this week on a regulatory filing that was long overdue. The stock is now a pale shadow of its old self, having pulled back notably from its all-time high of $331.68 reached on Feb. 9, 2021.

Source: vovidzha / Shutterstock.com

Novavax held a lot of promise by virtue of it being among the earliest to venture into Covid-19 vaccine research. For that matter, the stock had picked up some momentum even ahead of its Covid-19 vaccine foray, thanks to some good tidings on its flu vaccine candidate.

But things still haven’t panned out.

NVAX Stock Had a Hard Landing

NVAX stock rallied hard till early August 2020 as the race among the handful of vaccine developers began heating up. A period of consolidation and pullback followed as the vaccine race declared two clear winners in the Pfizer (NYSE:PFE)–BioNTech (NASDAQ:BNTX) combo and Moderna (NASDAQ:MRNA). Issues with manufacturing ramp and the inordinate delay in the start of late-stage trials in the U.S. did not help matters further.

The delayed U.S. and Mexico trials finally returned results in late December 2021.

The stock broke out of this lackluster phase after Novavax reported positive results from the U.K. leg of the late-stage study of the investigational vaccine, code named NVX-CoV2373. It was this momentum and the slew of supply deals the company stitched up subsequently that led to its peaking in early February.

But with the company making no further headway, NVAX stock was once again locked in a lackluster phase for the rest of the year. The broader market weakness at the start of 2022 dragged the stock even further down.

Source: Charts by TradingView

Delayed Vaccine Launch May Hurt NVAX Stock

Novavax’ vaccine technology is different from that of the frontrunners in that it contains the spike protein of the coronavirus itself, formulated as a nanoparticle. The mRNA vaccines of Pfizer-BioNTech and Moderna, meanwhile, deliver a genetic code from the coronavirus into the body, which gives instructions to the cell for making copies of spike proteins.

Novavax’ two-dose vaccine to be administered a month apart is also fortified with a protein adjuvant, which serves to strengthen the immune response.

In June 2021, the company touted positive results from the U.S. and Mexico Phase 3 trials – with 90.4% overall efficacy, 100% protection against moderate and severe disease, 93.2% efficacy against variants of concerns and 91% efficacy in high-risk population. These numbers are competitive when compared with the then-authorized vaccines.

Pfizer and Moderna, and to some extent Johnson & Johnson (NYSE:JNJ) and AstraZeneca (NASDAQ:AZN) have all leveraged on their early mover advantage.  Pfizer expects Comirnaty sales of about $36 billion for 2021 and Moderna forecasts from $15 billion to $18 billion in Covid vaccine sales.

Even as these companies generate one full fiscal year of revenues from their respective Covid-19 vaccines, here is Novavax still knocking at the FDA’s doors for an emergency use authorization. Pfizer and Moderna have also successfully converted their authorizations into full approvals.

All doors are not closed yet on Novavax. The vaccine sales opportunity is likely to extend into 2022 amid demand for booster doses and expansion of vaccinations to new groups, including children. This is in addition to the primary vaccination opportunity. Only about 61.1% of the world population has received at least one dose of vaccine, with the percentage dipping to 10% in low-income countries, according to statistics provided by Our World In Data.

To Novavax’ advantage, it has a partnership with the Serum Institute of India for supplying 1.1 billion doses of vaccines to the COVAX facility that would primarily go to low- and middle-income countries. The company has also inked supply deals with some high-income countries, and in the U.S., it is targeting mainly the booster window opportunity, CEO Stanley Erck said in an interview with Yahoo Finance.

The Novavax-SII vaccine, going by the brand name Covavax, has already received authorizations from the regulators in India, Philippines and Indonesia as well as emergency use listing from the World Health Organization. Australia has issued provisional registration for the vaccine under the brand name Nuvaxovid. It has also received conditional marketing authorization in the European Union.

In a presentation to the JPMorgan Healthcare Conference, Novavax said it has about 2 billion doses committed and has manufacturing capacity for over 2 billion doses in 2022.

Key Upcoming Catalysts For NVAX Stock

Novavax initiated the Phase 3 booster study for its Covid-19 vaccine candidate in December 2021. Phase 2 boost study data released in December showed that NVX-CoV2373 produced broad cross-reactivity against omicron and other variants from a primary 2-dose regimen, with increased responses following a third dose at six months.

Novavax expects to release additional data from the ongoing studies in 2022.

Given its expertise in flu vaccine development, the company has also initiated a Covid-NanoFlu combo vaccine study last year. Data from the Phase 1/2 study is expected in 2022, with the Phase 2 study initiation planned for the second-half of the year.

The company is also evaluating a NanoFlu-RSV vaccine combo and NanoFlu/Covid/RSV triple combo shot in preclinical studies.

Meanwhile, the NanoFlu standalone vaccine candidate for seasonal flu is in pre-Biologic License Application stage

Moving to the Sidelines Is the Best Bet

The emergency authorization filing with the FDA announced earlier this week does not mean Novavax is out of the woods yet. An FDA authorization is likely to come through without any hiccups, although it alone may not serve as Novavax’ ticket to success.

The omicron variant that is behind the third wave of the pandemic is said to be lot less lethal, and this could act as a deterrent to broader vaccine adoption. Oral antiviral pills from Pfizer and Merck (NYSE:MRK) are seen as competition to vaccines, given the strong data reported for these curative options.

Novavax’s execution challenges with manufacturing also mar the picture. A Politico report from late last year suggested the company is not able to manufacture shots with the purity standards mandated by the FDA.

The extended sell-off in shares, undoubtedly, has made valuations attractive. Novavax now looks more of a “show-me” story. It has to navigate through scaling up without any major hiccups and show differentiation vis-à-vis competition in booster settings and in expanded user categories.

Until then, investors may be well advised to wait on the sidelines. It, therefore, comes as a no surprise that out of seven analysts rating the stock, five are calling it a hold, according to the Yahoo database.

On the date of publication, Shanthi Rexaline 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.

Shanthi Rexaline is a contributor to InvestorPlace.com as well as a staff writer with Benzinga. Equipped with a Bachelor’s degree in Agriculture and an MBA with specialization in finance and marketing, she has about two decades of experience in financial reporting and analysis, and specializes in the biopharma and EV sectors. 

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