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Why Novavax Stock Is Skyrocketing Tuesday

By George Budwell - Updated May 27, 2020 at 8:50AM

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Novavax's experimental COVID-19 vaccine has officially entered an early-stage trial.

What happened

Shares of Novavax (NVAX 0.78%), a clinical-stage vaccine company, are poised to continue their amazing run today. The biotech's stock is already up by a noteworthy 20% in pre-market action Tuesday morning.

Novavax's shares are heating up yet again this morning in response to the official start of the combined phase 1/2 trial for the company's COVID-19 vaccine candidate, NVX‑CoV2373. Data from the phase 1 portion of the trial is expected to be released as soon as this July. 

A researcher preparing to inject a minature Earth with a vaccine.

Image source: Getty Images.

So what

Novavax's shares have now gained well over 1,000% since the start of 2020, thanks mainly to the excitement surrounding NVX‑CoV2373. This small-cap biotech, in fact, has been the second-best performing healthcare stock so far this year due to its experimental COVID-19 vaccine.

While all this enthusiasm has certainly been a boon for Novavax and its shareholders, there's still no guarantee that NVX‑CoV2373 will end up in the winner's circle. A number of COVID-19 vaccines are under development at the moment -- several of which are being shepherded by far more experienced and better funded companies. 

Now what

The good news is that this early-stage trial is being funded by the Coalition for Epidemic Preparedness Innovations, so Novavax won't have to divert precious resources away from its late-stage flu vaccine platform in order to pursue this high-value endeavor. That being said, investors may still want to take a cautious approach with this red-hot biotech stock. Novavax's historic run hasn't exactly been fueled by a radical change in its underlying fundamentals, after all.

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