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Novavax, Inc. (NASDAQ:NVAX) shares have exploded in 2020, rallying by more than 1000% to all-time highs. The spike has come on a huge turnover of traded shares amid strengthened investor confidence about the company's long- term prospects. The perfect business opportunity presented by the COVID-19 pandemic is the catalyst that continues to affirm the biotech's long term prospects and ability to generate shareholder value.
Novavax Outlook
While the stock has pulled lower, significantly from its record highs, the pullback might as well be a minor correction pending further upside action. The underlying fundamentals that have continued to trigger renewed investor interest in the stock continue to improve by the day.
Top on the list is the fact that the company has achieved significant milestones on the development of a COVID-19 vaccine. In addition to the vaccine chatter, Novavax is backed by solid balance sheet, which affirms its prospects of bringing the vaccine to fruition.
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The biotech company has already secured financing deals from a number of governments, including the U.S and Canada, which leaves it well-financed, heading into the year-end. Likewise, the market opportunity for COVID-19 is one that cannot be taken for granted.
With a global population of more than 7 billion, an effective and safe vaccine is poised to elicit strong demand as countries look to do anything to bounce back from the pandemic.
Why Novavax Is a Fundamentally Attractive Investment
The COVID-19 Vaccine Prospects
Novavax has achieved key milestones on the development of NVX-CoV2373, a novel coronavirus vaccine. It is believed to be one of the most advanced vaccines in the market. Novavax is currently in Phase 2 clinical trials in the U.S having also started a Phase 2b trial in South Africa. Phase 3 or final testing and regulatory approval are what stand in the way of the vaccine going to market.
In addition to the coronavirus vaccine, Novavax is also developing a next-generation flu vaccine as part of its Nanoflu program. The company has already completed phase 3 studies and is now poised to submit an application to the Foods and Drug Administration before the end of the year.
The milestones made on the development of the COVID-19 vaccine, as well as the Nanoflu program, are the fundamentals that continue to affirm Novavax hefty valuation in the market.
Surging Coronavirus Vaccine Orders
The successes in the development of the coronavirus vaccine have already elicited interest from world powers. Countries are increasingly jostling to acquire key supply lines for the COPVID-19 vaccine under development.
The U.S was the first country to take note of the Novavax COVID-19 program and the milestones achieved. Likewise, the government has already awarded the vaccine-developer $1.6 billion to develop and deliver 100 million doses of NVX-CoV2373.
Even before the dust settled, Canada has also joined the fray, inking an agreement in principle for the supply of up to 76 million doses of the coronavirus vaccine. The U.K government has also inked a deal for the supply of 60 million doses of the vaccine.
As it stands, Novavax has raised over $2 billion for the manufacturing and pivotal Phase 3 study of its novel COVID-19 vaccine.
With world powers remaining increasingly bullish about Novavax's ability to deliver a safe and effective coronavirus vaccine, given the massive investments, it does not come as a surprise that investors remain bullish about the stock.
The Revenue Opportunity
In addition to world powers securing key supply lines for the Novavax vaccine, the market opportunity for the vaccine remains huge. The demand is expected to exceed the current 7.8 billion world population presenting a perfect business opportunity for the biotech company.
The fact that it is still unclear as to how long the vaccine will last or remain effective in the body also sets up the possibility of the likes of Novavax generating recurring cash flows on revaccinations. If that was the case, then a successful coronavirus vaccine could end up being a key driver of the Novavax revenue base for many years to come.
The coronavirus vaccine has the potential to bring in more than $1 billion for the biotech company on receiving regulatory approval. The COVID-19 vaccine target market size also underscores why the stock continues to receive lots of love in the markets.
Bottom Line
Novavax is an exciting pick for investors looking to gain some exposure in the biotech space amid the COVID-19 pandemic. The company is closing in on a potential coronavirus vaccine that could be a game-changer to a pandemic that has brought the world to its knees.
The inking of deals with world powers for key supply chains underscores the amount of revenues in the pipeline, on Novavax vaccine candidate succeeding in clinical trials and receiving regulatory approval.
Likewise, the recent pullback might as well have presented an opportunity for investors who missed out on the initial rally to all-time highs as the stock looks set to continue edging higher on any positive news pertaining to the COVID-19 vaccine.
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COMTEX_370546811/2700/2020-09-02T06:31:00
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