In the race to develop COVID-19 vaccines, Novavax (NASDAQ:NVAX) seems to have gotten the most important part right. The latest clinical trial data for the NVX-CoV2373 vaccine showed 90% overall efficacy against early variants after demonstrating 96% efficacy against the original strain.

These preliminary results appear comparable to Moderna and Pfizer's vaccines, but more data is required to understand how well NVX-CoV2373 performs against the delta variant. Novavax is expected to file for Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA) in September, after which more data should be forthcoming. What comes next will determine whether Novavax enjoys a massive global business or watches this opportunity pass it by as vaccine competitors take the market.

Healthcare worker giving vaccine to young person.

Image source: Getty Images.

The next big hurdle

Now that there's evidence the vaccine seems to work, the big question is whether Novavax will be able to get it to market. The company stumbled right out of the gate in January when it was unable to produce enough of the vaccine to support clinical trials. The holdup appeared to be a combination of supply shortages and challenges in getting contract manufacturing partners up to speed. The resulting delays essentially cost Novavax a seat at the table for serving the early U.S. market. Although Novavax was paid $1.6 billion for 100 million doses as part of the Trump administration's Operation Warp Speed, those early vaccines are likely to be sent to other countries.

To support a global ramp-up in production, Novavax has secured large manufacturing contracts with the Serum Institute of India, SK Biosciences of South Korea, Fujifilm Diosynth and GlaxoSmithKline in the U.K., and Jubilant HollisterSteir in Spokane, Wash. 

The path to getting these partners up to speed is challenging. As Novavax's chief commercial officer, John Trizzino, put it, "We're not making aspirin. We're making a very complicated biological."

Playing the long game

Despite the early challenges and slow start, there are three things investors need to know that could make Novavax a buy:

1. Big remaining global opportunity

Market projections on the size of the global COVID-19 vaccine opportunity are in flux as analysts adjust their models to reflect the impact of variants, the need for boosters, the uptake in vaccines across various countries, and the pricing for vaccines at scale. The likelihood is that this market is larger and will last longer than originally anticipated when there was hope for herd immunity from a single dose.

Additionally, the Novavax vaccine has big advantages over other vaccines for use in international markets, because it can be refrigerated at less extreme temperatures and is therefore easier to transport and store.

2. There may be a second chance at the U.S. market

Novavax could be first to market with a combined flu and coronavirus vaccine. The idea of having one vaccine to prevent both diseases could be appealing to individuals getting the vaccine as well as the healthcare organizations delivering it. Novavax has already tested a new flu vaccine in clinical trials and plans to test the combination with a goal of commercialization in 2025.

The company also has some preliminary clinical data indicating its COVID-19 vaccine may be an effective choice as a standalone COVID-19 booster even in cases where the patient received a different vaccine as their original dose.

These developments could position COVID-19, flu, and combination vaccines as the cornerstones for future Novavax growth.

3. A more acceptable choice for the unvaccinated?

It's also worth noting the Novavax vaccine may ease the concerns expressed by some unvaccinated people. Novavax trial participants appear to report fewer and milder side effects. Additionally, Novavax uses a protein adjuvant rather than the mRNA technology used by Moderna and Pfizer. Perhaps having the opportunity to take a more traditional formulation will ease some concerns about vaccines using "unproven" technology.

Keep an eye on these developments

Novavax is scheduled to report Q2 earnings Aug. 5. Smart investors will look for progress on regulatory approvals in the U.S. and internationally, success in ramping up production during the remainder of 2021, and further long-term progress on flu and combination vaccines.

If Novavax can turn the corner on its COVID-19 vaccine production, there will be much brighter days ahead for both investors and the billions globally who desperately need a vaccine. For patient buy-and-hold investors, Novavax could provide a booster for your portfolio.

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.