Despite a rough start to the year due to COVID-19, the S&P 500 has bounced back nicely since hitting a low point in March. In fact, this closely watched stock index is currently up by a respectable 8.6% for the year. 

The S&P 500's fairly strong performance in 2020, however, is nothing compared to that of the clinical-stage biotechs Novavax (NVAX -9.65%) and Vaxart (VXRT -6.00%). At one point this year, Novavax's shares were up by an astonishing 4,500%, and Vaxart's stock jumped by a rip-roaring 4,680% at its high-water mark in 2020.

Image of a bandage on a person's upper arm.

Image source: Getty Images.

Although these two coronavirus vaccine stocks have pulled back significantly from their 52-week highs, Novavax and Vaxart are still crushing the S&P 500 from a share price performance standpoint. Should bargain hunters take advantage of this recent downward trend in these top growth stocks, or is it best to keep a safe distance? Let's dig deeper to find out. 

Can Novavax rebound after a disappointing August?

Novavax's meteoric rise this year has been powered mainly by its recombinant nanoparticle COVID-19 vaccine candidate, NVX-CoV2373. This experimental vaccine grabbed Wall Street's attention this year for two reasons:

  1. Novavax secured roughly $2 billion in funding from the Coalition for Epidemic Preparedness Innovations, the Department of Defense, and Operation Warp Speed (OWS) to accelerate the vaccine's development. That's a huge chunk of change for a company that started the year off with a market cap of $145 million.
  2. NVX-CoV2373's phase 1 trial results were impressive enough that some analysts argued this vaccine might turn out to be the best of the bunch. So, despite Novavax's late-comer status to the COVID-19 vaccine game, the company may still end up earning a sizable portion of the market when everything is said and done. 

What's the verdict? Investors may want to hold their horses when it comes to buying this biotech stock. The COVID-19 vaccine landscape remains extremely fluid at this stage. What's more, Novavax's candidate won't post interim phase 2 results until later this year.

That's a lot of uncertainty -- and Wall Street hates uncertainty. In other words, Novavax's stock probably won't reverse course until more data points -- for both its vaccine as well as the other leaders in the space -- are public knowledge.  

Has Vaxart lost its mojo? 

Vaxart's main selling point to investors is its novel oral vaccine platform. The biotech's shares rocketed higher back in June in response to the news that its oral COVID-19 vaccine had been selected to participate in a non-human primate challenge study by the government's OWS program.

Some investors, though, apparently took this news to mean that Vaxart had also received significant financial support from OWS to accelerate the development of its oral COVID-19 vaccine. That was never the case. As a result, the biotech's shares have since dropped by a whopping 63% from their former highs in less than two months' time. Vaxart is also facing a class action lawsuit over this funding-related mixup.

Is it time to buy this falling knife? Vaxart's oral vaccine approach could have major logistical and clinical advantages over injectable vaccines. Moreover, the company is poised to initiate the first human trial for this unique COVID-19 vaccine contender within the next few months. So there are some solid reasons for investors to at least consider buying this small-cap biotech stock right now.     

Having said that, Vaxart clearly isn't a stock for conservative investors. It could take years to gain a regulatory approval for an oral COVID-19 vaccine. By then, the opportunity may have evaporated due to the approval of more traditional vaccines. 

Bottom line: There are simply too many unknowns when it comes to Vaxart and its oral vaccine for COVID-19. Therefore, investors might be wise to wait until this story matures a bit more before buying shares.