The last time I looked Novavax (NASDAQ:NVAX) stock, I concluded that finishing third in the Covid-19 vaccine race might be enough.
This has been quite good for the shareholders of Novavax. The stock is up 120% in 2021. That’s less than half the gain of its rivals BionTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA), but they both had the Covid-19 vaccines approved and produced.
Novavax is still working on it.
Novavax is not really third either. Johnson & johnson (NYSE:JNJ) had his vaccine for months. AstraZeneca (NYSE:AZN) has a vaccine. There have been five Chinese vaccines and many more are on the way.
But Novavax has a clever plan that could still make it a big winner.
WHO seeks low cost leader
The new game starts with the World Health Organization. He absolutely wants cheap and effective Covid-19 vaccines delivered to the world yesterday.
Novavax has applied for emergency approval with the WHO for its Covid-19 vaccine. This is the end of the race for Western agencies that have not yet approved it.
The best vaccines, in terms of efficacy, appear to be those based on messenger RNA (mRNA) technology. Novavax ‘is a protein-based vaccine with an adjuvant to increase its effectiveness. But our Louis Navellier still thinks that Novavax can be a winner in this race. This is because the compound in Novavax does not require cold storage like mRNA vaccines.
Novavax works closely with groups like the Gavi Vaccine Alliance, which focus on group purchasing and fair distribution. It has an agreement to produce its vaccine in India and a manufacturing agreement in South Korea.
Manufacturing remains the big one though. Novavax says it has production agreements for 2 billion plans next year. But so far, its only production is for clinical trials.
The good news is that if you received a Novavax vaccine in its trial in the United States, you are now considered fully vaccinated. The bad news is that Novavax is still in the process of applying for an Emergency Use Authorization (EUA), which would open up the US market.
Play the long game
Novavax also has a flu vaccine in development, called NanoFlu. This failed in previous Phase 3 trials. But he seems to have managed to meet the primary endpoints in his last try.
This allowed Novavax to begin work on a combined COVID-influenza vaccine, which is said to be shelf stable and easily tolerated.
Novavax says it is now up to policy makers, not businesses, to drive vaccine use. Although it opposes patent waivers, Novavax’s work aims to make it the low-cost leader in safe and effective combination vaccines for a global market.
If Novavax can manufacture its vaccine in quantity, it expects revenue of $ 5.23 billion in 2022, with net income of $ 30.21 per share. That would make the current price of $ 232 look cheap. The stock would trade at just 3.6 times forward earnings and 8.5 times forward earnings.
The net result for NVAX shares
There are still big yews around the NVAX stock.
If it can ramp up production, and if it can get approval, and if it can combine its flu vaccine with Covid-19, Novavax could be a blow to investors in 2022.
Novavax has hired experienced pharmaceutical executives, hoping to cross the finish line and prove its case to investors.
But there are still uncertainties in the history of Novavax. The success of Pfizer (NYSE:PFE), Moderna and BionTech is certain. If you buy NVAX shares today, you are speculating. At this point in the Covid-19 race, this is the best route for big profits. But it is also the riskiest game.
As of the publication date, Dana Blankenhorn held long positions in MRNA. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
Dana blankenhorn has been a financial and technology journalist since 1978. He is the author of Living with Moore’s Law: Past, Present and Future available in the Amazon Kindle store. Write to him at email@example.com or tweet it on @danablankenhorn. He writes a Substack newsletter, Facing the future, which covers technology, markets and politics.