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Novavax Stock Spikes as U.S. Releases Hold on Raw Materials for COVID-19 Vaccines

By Taylor Carmichael - Jun 4, 2021 at 3:53PM

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Novavax stock has jumped 30% this week in anticipation of dramatically increasing production of its COVID-19 vaccine soon.

Novavax (NVAX -2.47%) stock shot higher this week, running up from $142 on Monday to $186 on Friday. While it's not always apparent what causes short-term stock gyrations, one possible explanation is the good news from the State Department. The U.S. is finally releasing its hold on the raw materials necessary for the manufacture of COVID-19 vaccines around the world.

In February, the Biden Administration used the Defense Production Act to block the export of critical raw materials necessary for COVID-19 vaccine production. Back in March, Adar Poonawalla, the CEO of the Serum Institute of India, issued a warning that the company was seeing disruptions in its vaccine supply chain because of this. As Poonwalla said at the time, "The Novavax vaccine, which we're a major manufacturer for, needs these items from the U.S. If we're talking about building capacity all over the world, the sharing of these critical raw materials is going to become a critical limiting factor."

Indian doctor injects patient with COVID-19 vaccine

image source: Getty Images.

Novavax and the Serum Institute have contracted to manufacture over a billion doses of the company's COVID-19 vaccine to distribute in the developing world. When the U.S. government froze exports of these necessary raw materials, it hampered the production ramp-up of the Novavax vaccine and sent the stock on the skids. From a high of $331 a share in February, the stock fell all the way to $121 in May.

NVAX Chart

NVAX data by YCharts

Now that the hold has finally been released, production of the Novavax vaccine should escalate dramatically in India. In a tweet, Poonawalla thanked the U.S. government: "This policy change will hopefully increase the supply of raw materials globally."

Taylor Carmichael owns shares of Novavax. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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