With 11 coronavirus vaccine candidates in phase 3 trials and 49 in earlier stages, it can be hard for laypeople to estimate which has the best long-term potential. So much attention has been focused on finding the company with the first approved candidate that many investors have lost sight of the ingredients that typically produce multibagger stock gains.

While large-cap companies with dozens of drugs in their portfolios -- like Pfizer (PFE 1.63%) and AstraZeneca (AZN 0.68%) -- will benefit if they produce a successful vaccine, the smaller companies are in the best position to see their shares double, triple, or do even better. By aligning with large global organizations, receiving funding that significantly increases the size of their businesses, and revolutionizing approaches to treatment, smaller vaccine makers can radically accelerate their growth. For investors seeking to ride this opportunity, Novavax (NVAX -6.04%) fits the bill.

Someone in sterile blue gloves holding a vial labeled "Coronavirus Vaccine"

Image source: Getty Images.

How did we get here? 

Entering 2019, Novavax was a $108 million company best known for the 2016 failure of its cold-vaccine candidate, which caused the stock to drop by 85%. Thanks to hopes for a coronavirus vaccine -- and several large cash infusions -- the stock currently has a $5.2 billion valuation.

In July, the company secured $1.6 billion from the U.S. government's Operation Warp Speed. This was a huge amount given the size of the company, and the stock quickly climbed by 140% over the next month. Despite the climb, the stock currently sits at the same price as it did at the time of that funding announcement.

Prior to that, Novavax became part of the COVAX initiative, a pooling of financial and scientific resources from economically developed countries designed to ensure a COVID-19 vaccine reaches those with the greatest need. There are 172 countries participating in the initiative -- sponsored by the World Health Organization (WHO) and its vaccine-related branches -- that aim to end the acute phase of the pandemic by 2021.

One of those branches, the Coalition for Epidemic Preparedness (CEPI), initially provided Novavax with $4 million, followed by another $388 million in May as the drug showed promise. It was CEPI's biggest investment in a candidate at the time.

And the days go by 

Investors experienced whiplash last week when Novavax showed both good news and bad. First, last Wednesday, the company delayed the start of phase 3 trials in the U.S and Mexico by about a month, saying they would now begin by the end of November. That was followed at the end of the week with news of favorable results for patients who received two shots of the company's vaccine candidate 21 days apart. This announcement was part of a presentation by the Centers for Disease Control and Prevention's Advisory Committee on Immunization Practices. Novavax plans to enroll a diverse population of 30,000 adults in the upcoming North American phase 3 study, while another ongoing phase 3 study in the U.K. hopes to gather 15,000 participants by the end of November.

While results of the trials aren't expected until the first quarter of 2021, the company is wasting no time preparing. Management has announced a 15-year lease for 122,000 square feet near its Maryland headquarters (as well as the purchase of 9.7 acres) to handle future growth. 

Despite a nearly catastrophic failure in 2016, Novavax leveraged its experience developing a flu vaccine when the pandemic hit. The early capital from COVAX to explore a COVID-19 vaccine candidate, and a follow-up round of funding after demonstrating progress, excited investors and pushed the stock higher.

The huge investment by the U.S. government's Operation Warp Speed has made the company one of the most prominent vaccine makers tasked with ending the pandemic. And the announcement of expanded manufacturing space and additional property indicates management is confident that growth from the vaccine won't be short-lived.

Investors ready to look past the race for approval, and toward the long-term implications of a vaccine, might find a multibagger in Novavax shares.