Shares of the vaccine-maker Novavax (NVAX 0.67%) are down by a hefty 12.2% as of 12:30 p.m. ET Thursday afternoon. Earlier today, the biotech announced a two-pronged strategy to address the emerging threat from the omicron variant.
Specifically, Novavax said that it is evaluating the effectiveness of its current recombinant nanoparticle protein-based vaccine, NVX-CoV2373, against the omicron variant. In addition, the biotech announced that it has begun development on an omicron-specific construct of its SARS-CoV-2 spike protein antigen.
This omicron strategy update, however, doesn't appear to be what's weighing on Novavax's shares today. The real reason seems to be a growing concern among investors that none of these initial coronavirus vaccines will be able to provide adequate immune protection against this highly mutated variant.
What's more, Novavax, and most of its COVID-19 vaccine peers, will likely require several months to develop an omicron-specific vaccine. By that time, the variant is almost certainly going to be widespread.
Two dozen countries, after all, have already detected omicron within their borders, despite the implementation of travel bans and restrictions in several countries. Omicron, in effect, has already begun to spread across the globe.
Is Novavax a bargain or a value trap on this pullback? The idea that first-generation COVID-19 vaccines will flop against the omicron variant was birthed mainly by comments from Moderna's CEO Stéphane Bancel.
In a recent interview, Bancel said that there is going to be a "material drop" in the effectiveness of these vaccines. Investors ought to take these comments with a huge grain of salt, however.
After all, Novavax is just starting to collect the data necessary to evaluate this hypothesis. In turn, investors probably shouldn't hit the sell button on this vaccine stock just yet.