This month, the U.S. government awarded Novavax (NASDAQ:NVAX) more funding than any other company in the coronavirus vaccine race. In response, the shares surged by 32% in one trading session. Operation Warp Speed, the government's effort to help bring a vaccine to market by January, awarded the biotech company $1.6 billion. That's more than the $1.2 billion it offered to big-pharma rival AstraZeneca (NYSE:AZN) and the $483 million awarded to Moderna (NASDAQ:MRNA), the first company to bring a COVID-19 vaccine into human trials.

The move surprised the market, as Novavax wasn't on the government's list of five companies to potentially receive funding. (AstraZeneca and Moderna were.) Investors may wonder whether this new vote of confidence -- and other factors -- will lead to more share gains. Or is there little potential left in this biotech stock?

A doctor holds a masked piggy bank in gloved hands.

Image source: Getty Images.

If Novavax's only advanced program were the COVID-19 vaccine, I would be very hesitant about buying the stock at this level. On optimism about COVID-19 vaccine development, the shares have risen 24-fold so far this year. That's a lot for a company that isn't yet profitable and doesn't have any products on the market.

NanoFlu on the fast track

But what makes me optimistic about the shares for the long term is Novavax's flu vaccine. In a phase 3 clinical trial, NanoFlu met all primary endpoints. The U.S. Food and Drug Administration had already granted the vaccine fast-track status, and now the company plans to use the agency's accelerated pathway to seek approval. Novavax hasn't said when it plans to file, but with strong phase 3 data in, a regulatory submission is on the horizon.

We know there are other flu vaccines out there. As a matter of fact, nine vaccine options were available this past season. So why should we be excited about NanoFlu? One reason is its performance against a market leader. When compared with Sanofi's (NASDAQ:SNY) Fluzone, NanoFlu outperformed its rival in antibody response measures. Another reason: Analysts predict peak sales of NanoFlu may be between $550 million and $1.7 billion. And finally, the global flu vaccine market, at a 7.7% compound annual growth rate, is expected to reach $7.3 billion by 2026, according to Fortune Business Insights.

Still, with attention on COVID-19 these days and the global need for a vaccine, you might wonder why I'm more focused on Novavax's flu program than on its coronavirus efforts. Here's why: COVID-19 still represents an unknown. We don't know how long the pandemic will last, how much revenue a vaccine will generate, or even how many of the players will successfully bring a product to market. We still don't know whether Novavax will even make it to the finish line. The flu market represents fewer unknowns. Novavax's NanoFlu clinical trial results make me optimistic about approval prospects -- and we can count on vaccine revenue every flu season.

Another reason to own Novavax shares

This doesn't mean we should shrug off the COVID-19 vaccine progress or the importance of Operation Warp Speed's investment in Novavax. Beyond NanoFlu, I see the COVID-19 vaccine candidate as an additional reason to own Novavax shares. The funding means Novavax can bring the vaccine candidate through late-stage clinical development all the way to approval and afford a large-scale manufacturing ramp-up to produce 100 million doses as early as this year.

Novavax expects to report interim phase 1/2 immune response and safety data later this month. The phase 2 part of the trial will begin shortly thereafter, and Novavax aims to start phase 3, involving as many as 30,000 participants, in the fall.

Now let's talk share price. In spite of recent gains, Wall Street's average estimate indicates the stock could advance 17% from here within the next 12 months. NanoFlu and the COVID-19 investigational vaccine are two major catalysts for Novavax. The former in the long term, the latter in the near term.

I agree with Wall Street. Novavax shares may have further to go, even from today's level, and I like NanoFlu's long-term prospects. Still, I wouldn't recommend the stock to all investors at this point because the near term represents a good deal of risk.

The market may greatly reward -- or severely sanction -- Novavax based on COVID-19 clinical trial news in the coming months. As I always say, anything can happen during clinical trials. For that reason, only aggressive investors with risk appetite should consider buying this biotech stock right now.