Here’s Why This Laggard in the Coronavirus Vaccine Race Could Still Win

Novavax (NASDAQ:NVAX) isn’t the closest company to the finish line of the coronavirus vaccine race. While some rivals expect initial phase 3 data this month — competitors Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) expect to generate data by the end of November and to be ready to file for Emergency Use Authorizations (EUAs) soon afterward — we’ll have to wait until the first quarter of 2021 for Novavax’s interim readout.

But being a few steps behind right now doesn’t mean that Novavax won’t eventually win the race. In fact, this company has something that no other coronavirus vaccine developer has: plans to explore a combined flu/COVID-19 vaccine. And that’s why it may be worth waiting for what Novavax has to offer. Let’s take a closer look.

A researcher vaccinates a clinical trial participant.

Image source: Getty Images.

A clear advantage

Any vaccine race player may eventually consider developing a combination flu/COVID-19 vaccine. Moderna recently said it would enter the flu vaccine business, though the company hasn’t publicly mentioned exploring a combined vaccine. In any case, Novavax’s expertise gives it an advantage over rivals. The biotech has been working on new a flu vaccine candidate for patients aged 65 and older — NanoFlu — and is preparing to submit it to the U.S. Food and Drug Administration (FDA) for approval. The company plants to examine the combination of NanoFlu with its current investigational coronavirus vaccine.

Earlier this year, NanoFlu met primary endpoints in a pivotal trial. These endpoints were non-inferior immune response and safety compared with Sanofi‘s (NASDAQ:SNY) Fluzone Quadrivalent. The trials measured the time it took participants to develop virus-fighting antibodies and the levels of these antibodies. NanoFlu produced antibody responses 24% to 66% higher than Fluzone Quadrivalent to all four flu strains included in the vaccine.

Recently, Novavax appointed a team to focus on bringing NanoFlu to market and pursuing the possibility of a combined flu/COVID-19 vaccine. Now you might say, “If Novavax is only at the exploration stage, this kind of vaccine will be too late to combat the pandemic.” And you would be right. Novavax has said any eventual combined product would be for the post-pandemic world. The market opportunity will probably still be present after the worst of the global pandemic is over, because countries will want to protect their populations from the virus and prevent new waves.

New and better candidates

Here’s another point to consider: We need a vaccine as soon as possible, but that very first vaccine may not be the market leader further down the road. Companies will probably bring safer and more effective vaccine candidates into testing as we learn more about COVID-19. Follow-up studies on current vaccines in development also will offer researchers clues to fine-tune their earlier work.

So, if Novavax creates a combined flu/COVID-19 vaccine, it can indeed take market share in the coming years — and even become the market leader. Why am I optimistic about this type of vaccine? For two practical reasons. No one likes getting shots or going to the doctor’s office. So, the idea of minimizing the jabs — and visits to a medical setting — by including two viruses in one vaccination makes sense. The second reason has to do with transport, storage, and costs. All could be streamlined by adopting a combined vaccine.

What does this mean for investors? Novavax’s potential combined vaccine sounds promising. The company has the expertise to take on the task. And the resulting product would fit the needs of countries, doctors, and patients. But even if Novavax has what it takes to be the long-term winner of the coronavirus vaccine race, is it too early to invest in this biotech stock today? Not necessarily.

At least 1.6 billion dollars worth of support

As mentioned above, Novavax also has a coronavirus vaccine candidate in phase 3 studies. Even if Novavax isn’t first to market with this possible product, it still may carve out a share. There is room for more than one player, considering the global need for a vaccine. And Novavax has already signed supply agreements with several countries, including Australia, Canada, and the U.K. The U.S. has also ordered 100 million doses and pledged $1.6 billion in support.

And we shouldn’t forget that NanoFlu represents another possible revenue driver in the near term if approved by the FDA.

Novavax’s shares soared more than 3,840% this year to a peak in July. Since then, they’ve slid about 44% and are trading lower than even Wall Street’s lowest estimate. But before you buy, consider your risk comfort level. Coronavirus vaccine news has determined Novavax’s share performance so far this year. That reality means that any future gains or losses will likely be extreme. 

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