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Is Novavax’s Biggest Catalyst Ever Just Ahead?


Novavax ( NVAX -2.34% ) has reported a string of good news since late last year. More than 35 countries have authorized its coronavirus vaccine

Novavax has shipped doses, and healthcare facilities around the world are administering them. The vaccine is showing efficacy against omicron and other variants. And the company predicts 2022 revenue in the range of $4 billion to $5 billion.

Yet the shares haven’t joined in on the celebrations. Novavax stock has dropped more than 40% since the start of the year. At the same time, a catalyst may be only days away.

Could it be Novavax’s biggest ever? Let’s take a closer look at what investors are waiting for — and whether it’s likely to offer Novavax a boost.

A healthcare worker vaccinates an individual.

Image source: Getty Images.

A nod from Europe

Many countries have given Novavax’s vaccine the nod, including major regions such as the European Union. But there’s one particular place where Novavax doesn’t yet have the right to sell its vaccine, and that’s the U.S.

Early Novavax investors may be frustrated by the situation for one reason. At the start of the vaccine race, the U.S. made one of its biggest investments in… guess which program? That of Novavax. The U.S. awarded Novavax $1.6 billion in funding back in July of 2020. That came along with an order for 100 million doses.

Since that time, Novavax’s clinical trials produced solid results. But one hurdle set Novavax back, and that was manufacturing. The company struggled with raw-materials shortages and general ramp-up issues last year. Companies must show they can produce quality vaccine at scale before winning marketing authorization or approval.

Novavax submitted its request for authorization to dozens of countries — and won authorization — before completing its request to the U.S. Finally, on Jan. 31, Novavax said it had officially submitted its request to the U.S. Food and Drug Administration (FDA).

Generally, the FDA decides on emergency authorization in a matter of weeks. This means news may come any minute.

The wave of vaccination

Let’s return to our question: Could this be Novavax’s biggest catalyst ever? If Novavax had submitted its files before the initial wave of worldwide vaccinations, I would reply “yes” to this question. Today, though, I’m not convinced a nod from the U.S. will result in enormous, lasting share gains for Novavax. The company already has a supply agreement with the U.S. but clearly isn’t going to become the leader in the U.S. vaccine market any time soon. Moderna and Pfizer hold that spot.

Novavax could carve out market share in the future. It may benefit as vaccination centers mix and match boosters. And farther down the road, it could win with a potential combined flu/coronavirus vaccine. That candidate is in a phase 1/2 trial today. But investors are likely to reward all of that as it happens. For example, if Novavax reports higher-than-expected revenue, the shares may climb.

That said, any negative news from the FDA could clearly hurt Novavax’s share price. Some investors probably want to see Novavax’s vaccine on the market before believing in the company’s ability to gain market share in the U.S. over the long term. So the upcoming decision is crucial — even if Novavax’s shares don’t react dramatically on the spot.

What does this mean for investors right now?

Is it time to buy Novavax? The biotech stock remains particularly risky ahead of the regulatory decision. And even if the FDA authorizes the Novavax product, investors still may worry about revenue levels until they actually see a couple of quarters of vaccine sales. So at least until the FDA decision, this stock is best left to investors who have a tolerance for some risk.

Over the long term, though, I’m optimistic about Novavax. The company’s forecast for billions of dollars in sales this year is a huge step. It’s important to remember this is Novavax’s first commercialized product, and an eventual combined flu/coronavirus vaccine could become a game-changer in the future.

Even if Novavax shares don’t surge on their next catalyst, they’re likely to put a smile on investors’ faces over time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.





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