Please ensure Javascript is enabled for purposes of website accessibility

How Novavax Is Keeping Up With the Big Players in the Coronavirus Vaccine Race

By Keith Speights – Sep 15, 2020 at 6:04AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This small biotech could be the biggest winner of all if its COVID-19 vaccine performs well in late-stage testing.

The coronavirus vaccine race is largely dominated by large drugmakers. AstraZeneca and Pfizer are evaluating COVID-19 vaccine candidates in late-stage testing. Johnson & Johnson plans to start its late-stage clinical study this month. Moderna is smaller than these big pharma companies, although it's not exactly tiny.

Then there's Novavax (NVAX -1.99%). The biotech's market cap of $6 billion is minuscule compared to the coronavirus vaccine leaders. But Novavax isn't too far behind the pack: It expects to begin a phase 3 trial of COVID-19 vaccine candidate NVX‑CoV2373 in the U.K. in September, with a U.S. late-stage study kicking off next month.

The reality is that Novavax is keeping up pretty well with the big players in the coronavirus vaccine race. Here's how.

Person holding a syringe up to a small glass globe surrounded by coronavirus cells and currency symbols.

Image source: Getty Images.

Funding

Several drugmakers have received at least $1 billion in funding from the U.S. government for their respective COVID-19 vaccine programs. Novavax ranks near the top of the list thanks to a $1.6 billion award from Operation Warp Speed, the federal program established to accelerate coronavirus vaccine development.

While the Operation Warp Speed announcement in July is Novavax's biggest injection of funding to date, it's certainly not the only major award for the biotech. In March, the Coalition for Epidemic Preparedness Innovations (CEPI) gave Novavax $4 million to help with early stage testing of NVX‑CoV2373. A couple of months later, CEPI increased its funding to $388 million to support phase 2 development of the investigational vaccine.

Novavax also won a $60 million contract with the U.S. Department of Defense. This deal obligates the biotech to supply 10 million doses of its COVID-19 vaccine to the U.S. military if it receives emergency use authorization from the U.S. Food and Drug Administration. 

Capacity

There's no way that Novavax would have been able to hang with the big players in manufacturing capacity for its COVID-19 vaccine candidate on its own. However, the company's $2 billion-plus in funding has been a game-changer.

In May, Novavax acquired Czech-based Praha Vaccines for $167 million. This deal gave Novavax the capability to produce over 1 billion doses of antigen for NVX-CoV2373 starting in 2021. 

The Operation Warp Speed funding enabled Novavax to sign up Fujifilm Diosynth Biotechnologies (FDB) in July to manufacture bulk drug substance for NVX-CoV2373. Novavax subsequently expanded its relationship with FDB to manufacture the vaccine in the U.K.

Novavax has also inked manufacturing deals with AGC Biologics and PolyPeptide Group to produce its Matrix-M adjuvant in the U.S. and Europe. The biotech is partnering with SK Bioscience to supply the antigen component of NVX-CoV2373. And it teamed up with Takeda to manufacture the COVID-19 vaccine in Japan. 

Supply deals

Production capacity has been key to securing supply deals. Novavax stacks up quite well against the larger drugmakers in lining up significant coronavirus vaccine supply agreements across the world.

The Operation Warp Speed contract requires Novavax to supply 100 million doses of NVX-CoV2373 to the U.S. government. Novavax recently reached an agreement in principle to supply 76 million doses of the vaccine to Canada. The U.K. government has agreed to purchase 60 million doses of NVX-CoV2373. 

In addition, Novavax announced a licensing agreement with Serum Institute of India Private Limited to market NVX‑CoV2373 in low- and middle-income countries and in India. Although this isn't a true supply deal at this point, the collaboration is expected to supply at least 1 billion doses of Novavax's coronavirus vaccine for India and other emerging-market nations. 

Winning ways

Novavax's success in securing funding, expanding its capacity, and winning supply deals explains how the company is keeping up with its big rivals. But the underlying reason why the small biotech ranks among the leaders in the coronavirus vaccine race is the promise that NVX-CoV2373 has demonstrated in clinical testing so far. 

Investors will probably want to pay close attention to this small company that's running with much larger coronavirus vaccine programs. If Novavax keeps up its winning ways, the biotech stock just might deliver bigger gains over the next year than AstraZeneca, Pfizer, and J&J combined.

Keith Speights owns shares of Pfizer. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Novavax, Inc. Stock Quote
Novavax, Inc.
NVAX
$18.20 (-1.99%) $0.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.