Have you ever watched a stock skyrocket and thought to yourself, "If I only I could have gotten in on that IPO"? I suspect that many investors have had that thought about Novavax (NVAX -9.65%) recently. Shares of the biotech skyrocketed by 2,700% last year, making Novavax one of the biggest winners in 2020.

But how big of a winner has Novavax been since the stock first began trading? You might be surprised. Let's look at how much money you'd have now if you had invested $1,000 in Novavax's IPO.

Hands holding $100 bills fanned out over a pile of $100 bills

Image source: Getty Images.

Crunching the numbers

First, some clarification is needed. There never was an initial public offering for Novavax. The biotech went public through a reverse triangular merger in 1995 with Lipovax and MPS Acquisition Subsidiary, a subsidiary that Novavax created solely for the acquisition of Lipovax.

But while you couldn't have gotten in on Novavax's IPO, you could have invested in the biotech stock on the first day that it traded publicly -- Dec. 5, 1995. Novavax's share price at the market open that day was $67.50. An initial investment of $1,000 would have bought 14 shares. You would have also had $55 left over, since buying fractional shares wasn't an alternative back then.

So how much would those 14 shares be worth today? As of Jan. 29, 2021, Novavax stock was trading at close to $221. Your 14 shares purchased 25 years ago for $945 would now be worth nearly $3,100. 

That total is actually underwhelming. Novavax stock's compound annual growth rate is less than 5%. You would have been much better off avoiding Novavax until early last year. And if you had invested $1,000 back in December 1995, putting it in an S&P 500 index fund would have provided a much higher return.

The story of a clinical-stage biotech

You might be interested to know, though, that Novavax's market cap is significantly higher now than it was in 1995. The company started out back then with a market cap of around $40 million. Novavax's market cap today stands close to $14 billion. 

Why did the biotech's market cap skyrocket around 225 times higher while its shares generated much lower gains? Novavax conducted multiple stock offerings through the years to raise cash. Those transactions kept the company afloat to continue advancing its clinical programs. However, they also diluted the value of the previously existing shares.

Novavax's story is similar to many other clinical-stage biotechs. It has spent years in research and development, during which a lot more money was flowing out than was coming in. 

Also like many other small biotechs, Novavax has changed its direction multiple times along the way. Although the company has focused on vaccine development throughout its history, its first product approved by the Food and Drug Administration was Estrasorb, an estrogen replacement product that it licensed to King Pharmaceuticals.

The big twist in Novavax's saga came last year with the onset of the coronavirus pandemic. Novavax was one of several drugmakers to quickly announce plans to develop vaccine candidates targeting SARS-CoV-2. The company's clinical updates throughout 2020 were encouraging to investors. So were Novavax's external funding deals, which included $1.6 billion from the U.S. government's Operation Warp Speed.

Looking ahead

What's next for Novavax? While it has been beaten to the vaccine race finish line by others, it's possible that the company could yet become a leader in the COVID-19 vaccine market.

Novavax just announced positive results from a late-stage study conducted in the U.K. for its COVID-19 vaccine candidate, NVX-CoV2373. This should set the stage for the vaccine to receive authorization in the U.K. and other countries. A potential U.S. emergency use authorization is still at least several months away though. Novavax didn't begin its phase 3 clinical trial of NVX-CoV2373 in the U.S. until December. 

The company already has supply deals in place for its COVID-19 vaccine with multiple countries. Regulatory approvals would likely lead to billions of dollars in revenue flowing into Novavax's coffers over the next year.

NVX-CoV2373 isn't Novavax's only promising candidate, though. The biotech is also moving toward filing for regulatory approvals of its flu vaccine candidate, NanoFlu. Novavax is even exploring the possibility of combining NVX-CoV2373 with NanoFlu into a single-shot inoculation against both COVID-19 and the flu for post-pandemic use.

Buying Novavax in 1995 wouldn't have been a spectacular investment. However, buying the stock now just might pay off handsomely over the next few years.