Novavax helped make a lot of investors richer in the early days of the coronavirus pandemic. The company's stock surged 2,700% in 2020. That's as investors bet it would be among the first to bring a coronavirus vaccine to market. But in recent times, Novavax has lost its momentum. The worries began last year when the biotech fell behind in submitting its vaccine candidate for Emergency Use Authorization (EUA).
Today, more than 35 countries have authorized the Novavax vaccine. And the U.S. Food and Drug Administration (FDA) is considering the company's completed submission. Still, though, the shares are struggling. They've lost about 55% since the start of the year. So, right now, you may be asking yourself if it's time to give up on Novavax. Let's find out.
FDA review time
First, it's important to look at the factors that are weighing on the stock. There are two. Investors aren't happy about the time it's taking the FDA to review Novavax's EUA submission. Novavax submitted its application at the end of January. And the FDA hasn't yet made a decision. By comparison, the FDA authorized Pfizer's and Moderna's coronavirus vaccines only a couple of weeks after the companies applied.
Should we be concerned about this longer timeframe? Not necessarily. When Pfizer and Moderna applied for authorization, coronavirus vaccines weren't available. And coronavirus treatment options were limited. It's not surprising the agency made authorizing the first two vaccines a big priority.
Today, the situation isn't so urgent. And that may be why the FDA is taking its time. Novavax's data are strong. So, there's reason to be confident about the eventual decision. But until the FDA actually makes the decision, Novavax's shares could continue to suffer. Investors don't like uncertainty. That means they may be hesitant to invest in Novavax right now.
The second problem for Novavax is the idea that it is entering the vaccine market late. Some parts of the world already have vaccinated a great deal of the population. About 65% of Americans are fully vaccinated, for example. And investors worry there will be less potential down the road for big vaccine orders from governments as the pandemic switches to endemic.
Orders from around the world
It's true that Novavax's revenue possibilities would have been greater if it had entered the market earlier in the pandemic. But that doesn't mean revenue possibilities are nonexistent. Novavax already has orders for 110 million vaccine doses from the U.S. and up to 430 million doses from various other countries. The company also is set to become a big provider to low- and middle-income countries. They pay less for doses -- but Novavax could gain on volume in these locations.
For this year, Novavax has forecast revenue of $4 billion to $5 billion thanks to its vaccine orders. It's important to remember the vaccine is Novavax's first commercialized product. Revenue at that level right out of the gate is huge.
So, what does all of this mean for you as an investor? I don't expect major gains from Novavax right away. A potential FDA authorization could offer the shares a boost. But if the decision takes too long, it may not. This doesn't mean I would give up on Novavax right now. The long-term picture for this company is bright.
Even in an endemic situation, people will need protection against the coronavirus. The scenario may become a lot like that of the flu. Last year, about half of the U.S. population went for a jab. It's possible this population also will opt for an annual coronavirus shot.
An opportunity on the horizon
And one significant opportunity on Novavax's horizon is the possibility of a combined coronavirus/flu vaccine. The company is studying a candidate in a phase 1/2 trial right now. One major reason to be positive is that the two components of the vaccine individually have succeeded in late-stage clinical trials: Novavax's flu vaccine candidate and its coronavirus vaccine. Novavax has said it expects to report initial trial data for the combined candidate this month.
It's very possible Novavax stock may take a while to recover. And declines may not be over. But this doesn't change my positive long-term view. Recurring revenue from the coronavirus vaccine and the potential success of a combination vaccine could lead Novavax shares higher over time. That's why the best thing to do right now is sit back and wait.
