At one time, Novavax (NASDAQ:NVAX) was the most profitable coronavirus stock ever, with a mouthwatering return of 2,400% over a trailing 12 months. However, investors who didn't sell the stock at its all-time high price of $331.68 per share in February were soon out of luck. The stock declined 44% from its peak, and now rests around $180.

This has left many once-excited investors wondering: What could be behind such dramatic price movements for a company developing a promising coronavirus vaccine?

Woman receiving flu vaccine at drive-thru site.

Image source: Getty Images.

There's good news and there's bad news

Novavax's coronavirus vaccine candidate, NVX-CoV2373, is on the verge of receiving regulatory approval. In clinical tests, the experimental vaccine demonstrated 96.4% efficacy against the original strain of COVID-19. Against the variant U.K. and South African strains, the vaccine candidate was 89% and 49% effective, respectively.

NVX-CoV2372 was also 100% effective at preventing severe cases of COVID-19, no matter the viral strain. This year, the company expects to produce 2 billion doses of the vaccine, contingent on approval.

Having an annual production capacity of 2 billion might sound like a lot at first. On a closer look, however, the problem of actual fulfillment becomes an issue. Out of that amount, only about 300 million or so have been preordered by developed nations like the U.S., Canada, Australia, New Zealand, etc, at a price of $16 per dose. That's about $4.8 billion in revenue for a company with a market cap of $14 billion, giving the stock a price-to-sales (P/S) ratio of just 2.9. Not bad, right?

Unfortunately, Novavax is having trouble turning a profit after those initial lucrative preorders. For starters, it's donating up to 1.1 billion doses of its experimental vaccine to developing nations.

Secondly, the company is now delaying a 200 million-dose supply agreement with the EU due to a U.S. export ban on the vaccine's raw materials. Novavax has eight production facilities/contract manufacturing organizations around the world to assemble NVX-CoV2373. The largest of these is the Serum Institute of India, which promises to make over 1 billion doses of Novavax's vaccine candidate each year.

Nevertheless, it doesn't have the actual biologics to make coronavirus vaccines and must first import them from the U.S. Given the not surprising "America First" focus of the Biden administration regarding such vaccines, it's likely that Novavax's supply will be delayed until July. That brings up another problem. By now, most developed nations have secured vaccine supply agreements from competitors such as AstraZeneca, Pfizer, BioNTech, CureVac, Johnson & Johnson, and Moderna, ranging from 2 to 9 doses per capita.

In other words, the coronavirus vaccine market has mostly been maxed out by the governments that can pay. If there are any leftover doses after vaccinations are complete, they would be given to third-world countries free of charge or at no profit.

At the end of the day, Novavax is largely a one-trick pony without much to fall back on other than NVX-CoV2373. While it does have its experimental NanoFlu influenza vaccine pending regulatory approval, it's just another candidate in a hypercompetitive market. In clinical trials, NanoFlu did a 10% to 20% better job immunizing patients against the flu than those currently on the market.

The only issue? There are many flu vaccines available, all eyeing a meager $6.5 billion global market.

NVAX Chart

NVAX data by YCharts

What's the verdict? 

Overall, the golden time to make millions off Novavax stock has probably come and gone. Investors should be aware that the coronavirus vaccine market is incredibly saturated, and Novavax may not make more than a one-time cash flow of $5 billion off its venture. When the company's expected revenue falls off a cliff after the pandemic subsides, investors will be better off looking for other alternatives in the biotech sector

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.