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 (NASDAQ:NVAX). 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.