Right now, everyone is talking about large-cap coronavirus vaccine players such as Pfizer (PFE -0.60%), Moderna (MRNA -4.38%), and AstraZeneca (AZN -0.55%), due to the excellent efficacy of their candidates in phase 3 clinical trials. What investors may not realize, however, is that the potential success of these companies' experimental vaccines is already reflected in their stock prices. There is arguably little money to be made in those stocks for investors new to the game.
It may be more profitable to turn your attention to emerging COVID-19 vaccine drugmakers such as CureVac (CVAC -2.35%) and Novavax (NVAX 98.66%). Contrary to popular belief, these small caps have a high probability of advancing their experimental coronavirus vaccines to market, and this potential isn't yet part of their stock price.
How can small investments in CureVac and Novavax turn into big winners? Let's find out.
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The case for CureVac
CureVac is a Dutch biotech that has returned over 56% to investors since its initial public offering (IPO) in August. The most promising candidate in its pipeline is its messenger-RNA-based (mRNA) experimental coronavirus vaccine, CVnCoV. In November, CureVac disclosed that patients who received CVnCoV in phase 1 developed strong neutralizing antibodies against the coronavirus, as well as T-cell responses that could potentially protect them from COVID-19 over the long term.
The experimental vaccine did have several serious adverse events post-dosage. These involved fatigue, headache, muscle pain, chills, and fever. All of these issues were resolved within two days. If Pfizer and Moderna's phase 1 trials serve as any indication, CureVac's mRNA candidate could be headed for success in later-stage trials. Both Pfizer's and Moderna's mRNA vaccine candidates attained at least 90% protection against circulating strains of the SARS-CoV-2 in phase 3, after inducing neutralizing antibody production and T-cell responses among volunteers in phase 1.
CureVac's vaccine candidate will likely head to phase 3 by the end of the year. Keep in mind that this potential vaccine is stable at refrigeration temperature (for ease of transport) and can last up to 24 hours in a room-temperature environment. (Pfizer's needs to be kept extremely cold, which presents challenges.) The EU has already pre-ordered 225 million doses of CVnCoV (plus an option for 180 million more) at 10 euros per dose. That's a great deal of revenue for a biotech with a market cap of $18 billion. CureVac also expects to expand its manufacturing capacity to 300 million doses in 2021 and to 600 million doses in 2022.
The company is backed by the Bill & Melinda Gates Foundation as well as by the German government. To date, CureVac has received over 552 million euros in funding and investments from the latter to advance a coronavirus vaccine. With a strong shot at approval on the table, this is definitely one coronavirus stock that biotech investors should not miss out on.
The case for Novavax
Like CureVac, Novavax is backed by the Gates Foundation and has rewarded investors handsomely this year. If you'd invested $1,000 in its stock last November, your investment would have grown to a whopping $25,000 as of Dec. 2. Even after a monstrous rally, Novavax has still only reached a $8.06 billion market cap.
The run-up was mainly due to its ability to advance its protein-based coronavirus vaccine candidate (NVX‑CoV2373) into phase 3 clinical studies. That investigation has enrolled more than 60% of the necessary volunteers, with data readout likely in early 2021.
Much like Pfizer, Moderna, and CureVac's vaccines, NVX-CoV2373 produced strong levels of neutralizing antibodies and T-cell response when given to volunteers in phase 1. However, unlike Pfizer and Moderna, Novavax's vaccine consists of directly injecting viral proteins into one's body, as opposed to injecting genetic material that encodes for these proteins.
So far, Novavax has received over $2 billion in funding from Operation Warp Speed, the Gates Foundation, and various U.S. government agencies for research and development on its experimental vaccine. The company has also secured at least 176 million preorders for NVX-CoV2373 from the U.K., Canadian, and Australian governments.
The greatest investment case for Novavax lies in its manufacturing capacity for NVX-CoV2373. Right now, the company has an agreement with the Serum Institute of India (the world's largest vaccine producer) to make 2 billion doses. Even the production capacities of large-cap biotechs developing coronavirus vaccines are dwarfed by this number. This makes Novavax a top choice for investors who are late to the game and still want to try their luck betting on the successful rollouts of coronavirus vaccines.
