Why Novavax May Extend Its 2,000% Gain

Novavax (NVAX 2.06%) surged more than 2,000% last year for the best stock performance -- all industries included. Though it's unlikely to repeat such an increase, there still is plenty of room for share growth. In this Motley Fool Live video recorded on Jan. 22, 2021, healthcare and cannabis bureau chief Corinne Cardina and Fool.com contributor Adria Cimino discuss the catalysts ahead for Novavax (NVAX 2.06%), which soon will report phase 3 data for its coronavirus vaccine candidate.

Corinne Cardina: Let's turn to the next companies whose vaccines could get regulatory clearance and join Moderna (MRNA -0.58%) and Pfizer (PFE 2.40%) and BioNTech (BNTX 0.74%). Starting with the one that you've said is your favorite coronavirus stock for 2021, and that is Novavax. Can you tell us where Novavax is in clinical trials, and what the outlook for this company is?

Adria Cimino: Sure. Well, Novavax has two phase 3 trials going on right now. One is in the UK, and that's the furthest along and we're expecting to see results in the early part of this quarter, so basically anytime. And that's going to support emergency authorization in various countries. Another trial that was recently started in late December is going on in the US and Mexico that's also phase 3. And that's going to be used to support eventual approval. Now, as far as the timeline -- emergency authorization could really come, if Novavax reports results in the coming days, it could come in the first quarter, really. If they have the same timeline as Moderna and Pfizer when it comes to applying for emergency use authorization. That sort of thing. But if not, I would think the first half, maybe. This is, of course, if all goes smoothly. One challenge that it's been facing in recent days, and this doesn't concern the UK trial because we're about to get data on that -- it's fully enrolled -- but the trial that's going on in the US has some recent reports of trial dropout. Now, The Washington Post reported on this, saying it's happening in New York with a lot of elderly people who see that hey, there is the Pfizer vaccine, now there is the Moderna vaccine out. So, they are dropping out so they can go and get the vaccine. Novavax so far has said that the rate has been about 1%. They say that for them that is not a problem and they still count on having more participants than necessary to get the efficacy data that they need. So far, so good on that. But it's something to keep an eye on in the coming weeks. Now, what's ahead for Novavax this year: a lot. Really, the idea is this company was clinical stage and it is clinical stage, and so really hasn't had any product revenue of course. But this year, they could really have possibly billions of revenue if the vaccine is authorized. Now, I just did a general count using the $16 price paid by the US for the order of vaccine and the total orders that they've had so far -- and these are the orders they've actually released numbers for. That represents more than $4.5 billion. So that's pretty significant for a company like Novavax. That definitely will be something very positive ahead. And also ahead there is NanoFlu, which is their investigational flu vaccine. It met all endpoints in a clinical trial last year, and so now they're preparing to submit for regulatory approval. I think we can be rather optimistic because of performance in clinical trials. So that would be a second product. So that's another interesting point. Also, the company is exploring a combination COVID and flu vaccine. That could be really interesting because, first of all, the idea of a combo vaccine is easier for people. The idea of just going and getting one shot rather than having to go back several times to the doctor -- even if it ends up being a two-dose vaccine. That's very interesting, and the fact that Novavax is probably a really good company to do this because of their expertise with NanoFlu. They managed to get NanoFlu this far, so the idea of combining it with the investigational COVID vaccine is a really good idea. Of course, this would be for post pandemic use. So we can't count on this right away. But it's something down the road which is interesting because that gives us something to look at down the road rather than everything coming all at once. Now, last year, this share gained more than 2,000%. So, we can say, wait a minute, how is the stock going to continue gaining? I wouldn't expect another 2,000% gain this year. That would be great, but I think it would be a lot to ask. But I do think that there is definitely room for more progress with the stock, especially for a long-term investor and there are plenty of catalysts, which is also good. I think there's a difference between investing in Novavax last year and investing now. Last year, that risk was really high because we just had no idea if this was going to work out at all. If you're taking really big risks to buy the stock, and so also you've got a really big reward. This year, I think the risk is lower. I think also the reward might be a little bit lower, but eventually, there is a lot of room there for a gain. So it's definitely a stock to keep your eye on.