Probably few people would have predicted a year ago that Novavax (NASDAQ:NVAX) would emerge as one of the most resilient stocks in the next bear market. After all, Novavax stock plunged nearly 90% in 2019.

It's a totally different picture for the biotech so far this year, though. While most stocks have stumbled due to worries about the coronavirus pandemic, Novavax's shares have soared. Nearly everything that could go right for Novavax has gone right in recent months. But should you buy Novavax stock right now?

A blue question mark sits at the center of a spiral of fifty and hundred dollar U.S. bills.

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Multiple opportunities

Novavax has multiple growth opportunities. The most promising one right now is its nanoparticle-based influenza vaccine NanoFlu.

The company announced results on March 24 from a late-stage study of NanoFlu in a head-to-head comparison against Sanofi's flu vaccine Fluzone Quadrivalent. I won't get into all of the details from that study, but suffice it to say that NanoFlu appeared to be more effective than Fluzone on several efficacy fronts with a similar safety profile.

Novavax will now move forward with preparations for a regulatory filing in the U.S. for NanoFlu. Analysts' peak sales estimates for the vaccine range from the ballpark of $550 million to around $1.7 billion if it gains FDA approval. Even on the low end of the projections, Novavax could have a big winner on its hands. 

NanoFlu isn't the only candidate with significant potential in Novavax's pipeline. Even though respiratory syncytial virus (RSV) vaccine ResVax failed twice in late-stage clinical studies, it hasn't completely struck out. Novavax still thinks the experimental vaccine could improve the concentration of oxygen in the blood of infants and reduce hospitalizations linked to RSV lower respiratory tract infection in infants via maternal immunization. The biotech is in talks with regulatory agencies and potential partners on ways to bring ResVax to market. 

Novavax is also in the race to develop a novel coronavirus vaccine. The company won funding from the Coalition for Epidemic Preparedness Innovations (CEPI) to develop and conduct an early stage clinical study for a nanoparticle-based COVID-19 vaccine. Novavax is currently evaluating several vaccine candidates and plans to advance the most promising one to testing in humans by May or June.

Multiple risks, too

Like any clinical-stage biotech, Novavax has plenty of risks to go along with its opportunities. Probably the biggest risk right now in terms of the potential impact on the company is that NanoFlu could fail to win FDA approval. Around 11% of regulatory filings for infectious disease candidates wind up received a thumbs down from the FDA based on historical data compiled by the Biotechnology Innovation Organization.

Novavax would love to figure out a way to move ResVax forward without having to conduct another phase 3 clinical trial. However, the odds of that happening seem to be very low. Assuming the company initiates another late-stage study of the vaccine, there's a significant risk of flopping on the third try.

On the coronavirus vaccine front, Novavax could win and still lose. There's no guarantee that the biotech's experimental COVID-19 vaccine will prove to be both safe and effective. Even if it is, though, several other drugmakers are developing their own COVID-19 vaccines. Any of these other candidates could turn out to be better than Novavax's experimental vaccine.

Another risk for Novavax relates to its financial position. The company reported cash, cash equivalents, marketable securities, and restricted cash totaling $82.2 million as of Dec. 31, 2019. Novavax subsequently raised another $156 million. It's expensive to launch a new product. Should the company win FDA approval for NanoFlu, it could very well need to issue more shares to fund commercialization, which would result in the dilution in the value of existing shares.

To buy or not to buy?

I like Novavax's chances of success with NanoFlu. With Novavax's market cap currently around $700 million, my view is that the overall potential for NanoFlu hasn't been fully priced into the biotech's share price. And while I'm not as optimistic about Novavax's ResVax and COVID-19 programs, they still represent the potential for additional future growth for the company.

Risk-averse investors will probably be better off staying away from biotech stocks like Novavax that don't have any approved products. My view, though, is that aggressive investors should consider buying a small stake in Novavax. I think Novavax still has plenty of room to run if NanoFlu wins FDA approval.