Few companies have done as well for investors in 2020 as Novavax (NASDAQ:NVAX).
The stock began the year below $5 per share. Then COVID-19 came to America. A vaccine specialist, Novavax quickly issued a press release saying it had a vaccine candidate for the coronavirus called
That was just one of over 50 press releases Novavax has issued this year. Early clinical trials of the vaccine and the shot began late-stage trials
Novavax is one of several companies under the Trump administration’s program. Among the other companies that received contracts under the program were Pfizer (NYSE:PFE), AstraZeneca (NYSE:AZN), Johnson & Johnson (NYSE:JNJ), Glaxo SmithKline (NYSE:GSK), and Moderna (NASDAQ:MRNA).
It’s exalted company.
A History of Failure
It is especially exalted company given Novavax’ history of failure.
Before COVID-19 arrived, Novavax had developed two vaccines which failed in two separate Phase 3 trials. These vaccines were called The first failure, in 2016, resulted in the company laying off 30% of its employees. The second resulted in a 1:20 reverse stock split, which let NVAX stock keep trading on the Nasdaq Exchange.
Whenever the company gets some good news, CEO Stanley Erck does raises money by issuing more shares of its stock. He announced he was selling more shares of newly issued stock for $500 million. He has become . And Erck recently sold 29,112 shares of his own personal Novavax shares for about $110 each, netting
InvestorPlace contributor Will Healy profiled Novavax as a penny stock in June 2018. Despite its relatively recent penny-stock status, it received more than of funding to develop
a vaccine for the coronavirus.
What Novavax Has
Besides a flair for publicity, Novavax mainly has an adjuvant. It’s called Matrix-M, and it was acquired by Novavax, along with the Swedish company that had developed it, in 2013. An adjuvant increases the potency of a medicine, allowing more people to be treated with it.
The adjuvant enabled Novavax to quickly win a production contract for
In contrast to the Pfizer vaccine, Novavax has said its product can be The Pfizer vaccine must be stored at –70 C. Moderna’s vaccine must be stored at –4 C.
All of this assumes that Novavax’s vaccine works. The company has previously developed shots that failed Phase 3 trials.
Taking Profits
Given how dependent Novavax is on a single vaccine and the government’s largesse, you may think it’s remarkable that the stock has done so well.
The truth is that the shares haven’t done that well. They peaked in mid-August at over $170 and have generally headed lower since. Novavax has gone to some lengths to keep the stock afloat. For instance, it released the details of its federal contract The contract gave its vaccine candidate .
The Bottom Line on NVAX Stock
Novavax has a market cap of nearly $6 billion because it has taken advantage of a desperate government.
Unlike other COVID-19 plays, such as Moderna, which has a unique technology involving Messenger RNA, NVAX stock is entirely dependent on the company’s COVID-19 vaccine. Without it, this would be the penny stock of a wily promoter whose hype machine has failed to deliver in the past.
COVID plays are all about momentum, not revenue. Novavax’s management gave itself after its vaccine candidate had advanced to a Phase Two trial, But at the height of the panic, that achievement was not too difficult.
If I had a profitable position in Novavax, I would sell it.
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
has been a financial and technology journalist since 1978. He is the author of the environmental thriller , available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at .
