Why is everyone talking about Novavax shares?

In 2020, Novavax (NASDAQ: NVAX) jumped out of darkness and took investors on the exciting ride of the year. Shares of this small biotechnology skyrocketed from $ 4 in January to $ 117 in December. This leads to an increase of almost 3 000%.

What drives this amazing race? First, the company received positive news from its Phase 3 trial for its flu vaccine candidate, NanoFlu, in March. Then the Coalition for Epidemic Preparedness Innovations (CEPI) Novavax wrote a $ 388 million check to help pay for the company’s COVID-19 vaccine development. And then Novavax received a $ 1.6 billion grant from Operation Warp Speed ​​(OWS), which drove it into the big leagues. Now investors are talking about Novavax’s COVID-19 vaccine in the same breath as Pfizer and Moderna’s. And the company and its shareholders are emerging as big winners in the stock market.

Will Novavax’s COVID-19 vaccine get an inch from the FDA?

We do not know yet. Novavax reported incredible data from its Phase 1 trial reports and published in The New England Journal of Medicine. The vaccine produced so many antibodies (proteins that fight infection) in volunteers that at the time, many observers called it the best in class.

Whether this will really be the best can be discussed. The mRNA vaccines from Pfizer and Moderna showed very positive data from their phase 3 trials. This is far more important than any Phase 1 data. All we know from the early trial of Novavax is that the vaccine produces a large number of antibodies. Phase 3 data actually measures whether people are safely and effectively protected against the virus. And the mRNA vaccines have had incredible numbers – Pfizer and Moderna reported 95% and 94.1% efficacy levels, respectively.

Novavax now has several vaccination studies, including a Phase 2 trial in South Africa and Australia, and a Phase 3 trial that participants are beginning to enroll in the US. But the most important test for the company is the Phase 3 study in the UK; its reading is expected in the first term. The Phase 3 trial will enable the company to obtain licenses in the UK and other countries. This may be sufficient for an emergency use authorization (EUA) in the USA

When Novavax announced its Phase 1 figures on August 4, excited investors were offering the stock up to $ 189 a share the next day. In December, the stock is down more than 30% from its peak. Doubts arose as the market patiently waited for the UK Phase 3 data to enter.

The COVID-19 vaccine race is not over yet

Although many pharmaceutical companies are trying to find a vaccine for COVID-19, there are currently five key leaders in the race: Pfizer (in collaboration with BioNTech), Modern, AstraZeneca (in collaboration with the University of Oxford), Johnson & Johnson, and small Novavax.

Data Sources: Yahoo! Finances, press releases of the company. Table by author.

AstraZeneca and Johnson & Johnson have vowed not to use their COVID-19 vaccines while the pandemic is ongoing. Investors may want to scrape those two companies out of the race at least in the short term. Both companies wait until the pandemic is over and demand to make a profit decreases.

Novavax, on the other hand, wants to deliver an appropriate yield on the vaccine. This is not surprising; the scrappy underdog has long been unprofitable. It was almost removed from the Nasdaq last year, when a respiratory vaccine did not get the approval of the US Food and Drug Administration (FDA). But the big checks from CEPI and OWS brought it back from the edge.

Not only does Novavax want to make a profit, but the biotechnology has been incredibly active on the business front. Despite its small size, the company acquired more manufacturing capacity than its competitors. Novavax plans to distribute the vaccine among a billion people or more. The company has signed several distribution agreements (with the US, UK, Canada, Australia and New Zealand), as well as manufacturing and distribution agreements with employees in India, Japan and South Korea.

Data source: Novavax.

If the Novavax vaccine receives regulatory approvals, and the price tag of $ 16 per dose applies, the company will earn $ 4.5 billion in English-speaking countries alone. Novavax also strives for a major agreement with the European Union. “The proposed contract with Novavax would allow all EU countries to purchase 100 million doses, and they would be able to further purchase up to 100 million doses,” the EU said in a press release.

The big news from the UK

One problem for vaccine companies – and the world – is that the coronavirus appears to be. NBC News reports that ‘this variant apparently tore through London and the south-east of England at alarming speeds.’ Although this mutation apparently started in the UK, infectious disease experts believe it will only be a matter of time before this new virus spreads to the US and elsewhere.

One of Novavax’s Phase 3 trials is in the UK, the hub of this new strain. If the Novavax vaccine is very protective against the original strains of the virus and this mutation, the demand for the company’s vaccine will skyrocket. But it is also possible that the mutation will cause the efficacy levels of the vaccine.

If the new coronavirus changes regularly, it is unlikely that a single vaccination will eliminate the disease completely. Instead, a vaccination will provide temporary protection, and then we will have to vaccinate again – not unlike what we do for the flu. If we do have to vaccinate annually, there is a good chance that Novavax’s inventory is worth much more than it is today.