2021 Could Be Novavax's Year

Novavax NVAX saw its stock gain over 3,000% last year. But it could have even more room to run as the market will get only crazier for vaccines this year. Therefore, 2020's winners could get even bigger 2021. Novavax is one such company with four strengths investors could still capitalize on.

COVID-19 Vaccine Candidate

NVX-CoV2373 is what should put the company on the map as Phase 3 trial has just commenced with the U.K. trial expected deliver preliminary results in the first quarter. Both existing and potential investors will be eagerly waiting for the study's interim data. If NVX-CoV2373 is shown to be effective and safe, it may do wonders for Novavax's market's valuation and revenue once it's commercialized. Currently, Novavax's trailing revenue is just over $204 million, none of which is from recurring sales.

NanoFlu could become its first source of recurring revenue

NanoFlu's phase 3 clinical trials ended in March. They showed that this vaccine for seasonal influenza in older adults is more effective than the leading product on the market, Fluzone. However, Novavax needs to manufacture enough doses to perform a lot-to-lot consistency trial so that regulators can confirm that the product is uniform. Once that's done, it'll be able to submit the product to the FDA for final approval and NanoFlu could easily become Novavax's first source of recurring revenue.

Matrix-M could increase the competitiveness of products

It's no secret that manufacturing the active ingredients of vaccines can be expensive and that vaccines alone sometimes are not enough to ensure protection against a targeted disease. Both of these issues can be solved by using adjuvants which are additives that increase a vaccine's effectiveness by stimulating a stronger and more durable immune response.

Novavax's adjuvant is called Matrix-M, and it's a critical component in both its NVX-CoV2373 and NanoFlu. Matrix-M should increase the competitiveness of both products from an economic perspective as well. When this adjuvant is added to the mix, each dose can use a smaller quantity of the actual vaccine. Therefore, the overall manufacturing costs are reduced, which directly increases the number of doses that can be manufactured. Considering that mass-scale vaccinations will be required to end the undergoing pandemic, this feature is as appreciated as the vaccine alone.

Profitability potential

Novavax's COVID-19 candidate could also emerge popular in low and middle-income market. Both vaccines could be approved for sale in 2021. The result is never guaranteed, but if they do reach the market, its profit potential could be significant, in part due to the U.S. government funding its coronavirus project with $1.6 billion. If everything goes well, the company will prove its vaccine-making capabilities and everyone knows that proven science plus growing earnings makes any stock more attractive.

Outlook

Novavax is still seen as a key player in the COVID-19 vaccine space despite its stock price declining by about 20% over December as the Pfizer PFE and Moderna MRNA candidates received emergency approval from the U.S. FDA in December and started being administered in the U.K and the U.S. While the Novavax will not count on the first- mover advantage and its vaccine might arrive later than expected, it still holds promise. Therefore, 2021 will provide a much clearer picture of just what its earnings will look like.

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