Novavax (NASDAQ: NVAX) rose more than 2,000% in 2020 as investors bet on the future of the coronavirus vaccine candidate. Thereafter, it increased profits at a reasonable rate when the new year began. But even if you are very positive about this biotechnology stock, you might not have expected what happened next. After reporting the data from its Phase 3 vaccine trial, Novavax shares doubled in just two trading sessions.
The question now is: Does Novavax have enough fuel in its engine to keep climbing? Or did this two-day rally use the last drops? Before you answer, let’s look at what Novavax has reported and what lies ahead.
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The original coronavirus
Novavax said the coronavirus vaccine for the study showed 89.3% in the UK phase 3 trial. However, investors have looked beyond exactly how well the vaccine works against the original coronavirus and emerging variants. Novavax’s candidate showed 95.6% efficacy against the original coronavirus. This is slightly higher than the efficiency of the 95% Pfizer (NYSE: PFE) vaccine and the 94.1% efficacy of the Modern (NASDAQ: MRNA) one.
New strains such as those from the United Kingdom and one developed in South Africa are of concern because they spread more easily. And it is known that the South African tribe releases antibodies that are produced after vaccination. Novavax’s candidate showed 85.6% efficiency against the British tribe in the British trial.
At the same time, Novavax reported data from a phase 2b trial in South Africa. There, the vaccine candidate showed 60% efficacy against the South African strain. Although the effectiveness against the new variants is not nearly as high as the effectiveness against the original virus, it is still excellent news. After all, the US Food and Drug Administration has set the standard for emergency consent at a minimum efficiency of 50%.
Investors applauded the Novavax report. The stock climbed from $ 134 to more than $ 268 in two trading sessions. Since then, Novavax has continued to grow, reaching more than $ 280 per share. It surpassed Wall Street’s average price estimate of about $ 205 – but remains below the highest forecast of $ 334.
Novavax to competitors
You may be wondering if the recent upswing of Novavax has been overdone. Probably. The latest news does not completely distinguish Novavax from other players. Pfizer and Moderna both said their vaccines could handle the new strains. As we have heard from the White House medical adviser, dr. Anthony Fauci, new strains reduce the effectiveness of these vaccines. And if we look at the data from Novavax, we can see that the research vaccine is in the same situation.
However, both Moderna and Novavax could take over in the coming months. Modern is studying a species-specific enhancer that can eventually adapt to any new strain that may occur. And Novavax plans to test a booster or combined vaccine to address new strains.
Looking ahead, the success of the booster study could clearly push the shares even higher than the current level. And other catalysts can do the same. Novavax is preparing to accept approval of the NanoFlu, the research flu vaccine. NanoFlu reached all the endpoints in a core test last year, so I’m optimistic. Novavax is also investigating the possibility of a combined flu / COVID-19 vaccine.
In terms of its position in the coronavirus vaccine market, Novavax may appear as a leader. The company’s capacity will reach 2 billion doses annually by the middle of this year. This is one of the highest compared to opponents. And it does not require ultra-low storage temperatures like the Pfizer vaccine.
What does this mean for investors?
From a long-term investment perspective, I’m still positive about this biotechnology venture. Over time, I expect the stock to climb further if the FDA authorizes the coronavirus vaccine candidate and eventually approves NanoFlu – and perhaps even the planned vaccine along the way. All of this represents billions in revenue annually.
Yet the recent rise of Novavax was too soon. As mentioned above, Novavax reported favorable data. But, like competitors, it still has not reached exceptionally high levels of vaccine effectiveness against new strains. The handling of new variants is currently underway.
Will the share price fall a bit in the coming days? If you are an aggressive investor, you may not want to miss the train. So you can buy now. But if you’re a cautious investor, you better wait to see if this price level persists – or if you can buy a drop.