August 17, 2022

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Fit And Go Forward

NVAX Stock Could Take Off with Impending Vaccine Success

If there exists a so-called “race” to develop a novel coronavirus vaccine, the only true competition is against time. You, me, all of humanity: We’re holding our breath. Indeed, Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) crossed the finish line first, with Moderna (NASDAQ:MRNA) and AstraZeneca (NASDAQ:AZN) not far behind. But does this eliminate other hopeful pharmas, including Novavax Inc. (NASDAQ:NVAX)? For those holding or mulling over NVAX stock, the answer means everything.

Novavax (NVAX) logo surrounded by medical supplies

Source: Ascannio/

Indeed, the next few weeks will bestow upon us a new year, new president, new pandemic plan and perhaps a few new vaccines ready to pass Phase 3 trials. The good news for those following NVAX stock is that yes, it’s reached that make-or-break stage. But so have a dozen others, according to the Regulatory Affairs Professionals Society.

Now we’d have to be cold-hearted capitalists to say of this crowded field, “and that’s the bad news.”  So let us divorce the greater good from the greener greed and observe this dispassionate point of fact: As more companies market successful vaccines, the odds drop that each will realize humongous share price spikes. That brings us back to NVAX stock, which so far has outperformed many vaccine frontrunners, including Pfizer itself.

NVAX Stock a Biopharma Rockstar

Shrewd investors will tell you that vaccine developers need not be out front medically for their stocks to soar financially. Putting Pfizer and Novavax head-to-head, you would never guess the former cracked the Covid-19 code, while the latter hasn’t. Since Nov. 1, NVAX stock is up close to 50%. And Pfizer? Up just 20%. While that’s still a healthy gain, it seems more in line for a company that just announced a new and improved adult diaper as opposed to, say, an effective curative for the worst public health crisis in more than a century.

In fact, if you bought $1,000 worth of NVAX stock a year ago, you’d be sitting on roughly $30,000 today (compared to $1,136 if you bought PFE stock).

So Novavax hasn’t been penalized one micro-itty-bitty iota for not getting there first. And those holding NVAX stock will potentially reap even more rewards so long as the company eventually gets something out there. While I can’t recall the last time I tried to inoculate an entire planet, I’m going to guess that we’ll need every single dose of every single effective vaccine we can get.

Unique Among the Phase 3 Vaccines

So is Novavax really, truly still in the hunt? You bet. Its candidate, which goes by the clunky name NVX-CoV2373, is the only nanoparticle vaccine among all Phase 3 entrants. Nanoparticles mark a huge leap forward from the first-generation vaccines that utilized weakened viruses to create immunity. In this case, we’re talking about a virus killer engineered with such miniaturized precision that it could make a computer chip jealous. Suffice to say that the technology excites immunologists for its potential to treat respiratory viruses.

As of Nov. 30, Novavax remained in full-steam testing mode. The company reported that more than 20,000 participants have been dosed so far, with enrollment complete for a pivotal Phase 3 trial in the U.K. Seeing as that nation was the world’s first to approve the Pfizer/BioNTech vaccine, it’s a huge deal.

Meanwhile, NVAX stock continues to win the approval of analyst firms that cover it. Four out of six call it a buy, placing it firmly in overweight category. While that may sound surprising for a stock that has multiplied 30 times in the last 12 months, I believe the enthusiasm is justified.

Why Novavax Will Keep Climbing

I have to confess that the market’s meh reaction to Pfizer’s breathtaking breakthrough disappoints me. It reminds me of how audiences in Paris politely applauded at Beatles concerts while Beatlemania was at full froth. Sacre bleu!

But no one ever said that the science of medicine correlates in any way to the art of investing. Besides, as with so many things in life, getting there first doesn’t always guarantee a definitive big win. Want another music metaphor? The Ramones invented punk rock just in time for Green Day to come along, imitate them, and sell 1,000 times as many records.

In more prosaic terms, consider this: The world is finally ready to ramp up to building a mass vaccination system. And that infrastructure could hit critical mass just as Novavax makes good on its efforts.

Regardless, I’ll venture that there’s no way NVAX stock will do worse than the big dogs, given how far along the company’s trials have progressed. Most likely, it will do better. Way better. Maybe it’s the underdog factor, or the simple calculus that smaller companies often ride much faster on the tailwinds of investor enthusiasm.

Johnson and Johnson (NYSE:JNJ) is just as much at the brink of Phase 3 success as Novavax. But since Nov. 1, it’s up just 7.4%. Excuse me while I YAWN (unless they’ve got some new and improved Band-Aids in Phase 3 as well).

I’m not sure the market has any steam left to give out 1,000% rocket rides to pharmas connected to Covid-19. But if it’s an explosive gain you seek, NVAX stock may offer you the very best bet. Just remember: Small outfits that live by investor fever often die by it as well.

Unless, in the case of Novavax, there’s immunity in the vaccine.

On the date of publication, Lou Carlozo held long positions in PFE, BNTX and MRNA.

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