What happened

COVID-19 vaccine stocks are having a terrible week, and developers whose vaccines have yet to gain approval in the all-important U.S. market are having an especially hard time.

For example, Inovio Pharmaceuticals (INO -2.21%) stock was down by 14% so far this week as of 2:03 p.m. ET Friday, while Novavax (NVAX 15.33%) and Dynavax Technologies (DVAX -1.77%) were each down by more than 20%, according to data from S&P Global Market Intelligence. All three of these laggards in the coronavirus vaccine race are getting crushed because of concerns about the omicron variant.  

Vials of COVID-19 vaccine lined up next to a syringe.

Image source: Getty Images.

So what

Specifically, Moderna CEO Stéphane Bancel said earlier this week that vaccines designed for the original iteration of COVID-19 may not provide adequate immune protection against the omicron variant. While that hypothesis has yet to be fully vetted in clinical studies, it would spell disaster for second-tier vaccine companies like Inovio, Dynavax, and Novavax.

After all, Inovio's COVID-19 vaccine candidate, INO-4800, was only recently cleared for a phase 3 trial in the United States. As a result, it probably won't be market-ready until the second half of 2022. By that time, the omicron variant -- or perhaps another variant yet to evolve -- may have rendered first-generation COVID-19 vaccines obsolete. That being said, Inovio did recently announce that it is evaluating INO-4800 against omicron, which may turn out to be a big positive for the DNA-based vaccine-maker, once everything is said and done. 

Dynavax has licensed out its Cpg 1018 adjuvant -- a component that boosts the immune response generated by vaccines -- to several vaccine developers. But those Dynavax-associated first-generation vaccines, too, might not adequately protect against the highly mutated omicron variant. Only time will tell. 

Novavax recently updated investors about this potential risk, and said that it is hard at work developing an omicron-specific version of its recombinant nanoparticle protein-based vaccine. This effort, however, is expected to take several months to complete, which might be too slow to effectively stem the spread of this particular variant. 

Now what

Are Inovio, Dynavax, and/or Novavax worth buying on this sharp pullback? Of the three, Dynavax and Novavax come across as the most compelling buys. Both are set to generate significant revenue streams from their coronavirus vaccine products over the next 12 months, despite the emergence of the omicron variant. Moreover, we still don't know how well or poorly first-generation COVID-19 vaccines will fare against this variant. As such, bargain hunters who are comfortable with risk might want to consider buying shares of these two beaten-down biotech stocks soon.