Another week…another sign of hope for a vaccine. Following the Moderna announcement
last week, this week’s news starts with Novavax and another jump in the markets...asking
us…where does this leave us in the race for a vaccine? And what does this mean from
an investing perspective? Let’s get into it…
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they are released. Last week we covered Moderna and their candidate
for a vaccine—we looked at the company’s history, insider trading and we made a case
for, and against, investing into the company-if you haven’t seen those videos, definitely
take a look at those in the link above…or in the description below for my thoughts and
my own personal decision on whether to invest in the company. Upfront, please know that
I’m not a financial advisor and am not providing any financial advice for you to act on, just
sharing my own thoughts on the developments on the biggest story of the year and how it
could impact investing. You always should do your own homework and consult with your
own financial advisor when making investment decisions.
So this morning, much like the first trading day of last week, we woke up to see the market
futures significantly higher based on optimism of another vaccine candidate. This week it’s
from Novavax, a biotech company based in Maryland and they are reporting that they have started
the phase 1 clinical trial of their vaccine and have enrolled the first human participants.
So more exciting news on the vaccine front…but what is the Novavax track record and what
does this mean in regards to Moderna and an investment strategy?
Well, Novavax was founded in 1987 so they’ve been around for awhile. However, their history
shows a lack of any major breakthroughs. In 2016, they made it to the phase 3 clinical
trial stage for the first time with a RSV vaccine named ResVax that looks to prevent
a virus that causes respiratory tract infections, but that trial ultimately failed as well as
did subsequent trials. The failures dropped the stock that once was trading in the $300
range to have a more recent 52 week low of $3.54.
So much like Moderna, the history of success from Novavax is lacking and the financial
fundamentals appear weak …but also like Moderna, we know that with the potential of
bringing a vaccine to market to address the pandemic, this would be a huge win for the
company that could really help them take off and we’ve seen how that momentum can really
drive the stock price. So what are the other reasons we might be
optimistic in the company? Well really the biggest reason for optimism in Novavax could
actually be an influenza vaccine candidate called NanoFlu—this product was given fast
track status by the FDA in January of this year and the vaccine is currently undergoing
a phase 3 clinical trial that will wrap up sometime in the middle of the year. Another
positive is that their pandemic vaccine candidate is being funded with 384 million dollars by
the Coalition for the Epidemic Preparedness Innovations, known as CEPI, which was co-founded
by the Bill and Melinda Gates Foundation and will significantly help support the company’s
efforts. They also have an agreement with Emergent BioSolutions to help produce the
vaccine on a large scale if the vaccine is deemed to be effective and approved by the
FDA. Unlike with Moderna, at this time Novavax
does not have any data for us to examine as their phase 1 clinical trial is just beginning.
So in regards to a race for a vaccine, Novavax is actually behind where Moderna is at this
time and being first to market is always the ideal scenario. However, as we discussed with
Moderna, there are some factors that could impact how big the financial success of developing
a pandemic vaccine could be when we are looking at it from a financial perspective. First
is the pressure from the government to keep the cost down so that it could be administered
affordably to people around the world, which obviously could put a limit on profits. The
other thing we know is that there are other, bigger entities out there working on their
own vaccines and if one of those also works, there could be a pricing war that could significantly
limit the profit potential. An example to prove this point is the much larger and successful
Merck just putting out some new announcements today in their own efforts in developing a
vaccine. So where does this leave us? I still feel
the race for a pandemic vaccine is speculative at this point. To me, this is the classic
example of investing vs. trading. An investor should be very cautious based on the news,
the environment, and track record of companies like Novavax and Moderna and the current run
up in the stock prices from the recent lows. Obviously a gamble on either company could
pay off pretty big, but you have to weigh the potential benefits with risks. Looking
at both companies and deciding which may be a safer bet is a challenge…on Moderna’s
side, they are ahead in the clinical trial phase which would put them in the enviable
position of leading in the race to a vaccine. For Novavax, the affiliations they have with
CEPI and Emergent, to me, put them in a stronger position to proceed with more resources. The
other plus for Novavax, and I think it’s a big one, is the possibility of a positive
outcome on NanoFlu likely to come this summer. Now as I mentioned, they’ve had failures
at this stage in the past, but the fast track status designation by the FDA makes me cautiously
optimistic that they may have a successful outcome this time. I feel either company is
a gamble right now—again, a gamble that could pay off big—but with Moderna, to me,
it feels like all of their eggs are in one basket whereas with Novavax, they have 2 baskets...or
2 near-term opportunities for success and need only 1 to pay off big. And the NanoFlu
vaccine could ultimately be the more profitable success. I tend to feel that if one of the
companies were to be successful in developing an approved vaccine, it would be Moderna that
might have the higher bounce in their stock price. But I also feel like, of these 2 companies
that have a lack of successful products brought to market, Novavax might be a safer bet due
to the diversification of having the influenza vaccine out there as well.
Okay, so there you have it! Which stock do you feel is the better choice at this time?
Please let me know in the comments. Also, please subscribe, hit that like button and
share with your friends. As always, I hope that we can all learn from each other on how
to take little, easy steps in making big improvements in our lives. Thank you again for watching
and until next time, have a great day!