Novavax (NVAX -0.95%) can't market its COVID-19 vaccine in the United States. There's a simple reason why: The vaccine hasn't received U.S. Emergency Use Authorization (EUA) yet. However, that isn't stopping Novavax from launching a broader marketing campaign to increase awareness about its vaccine program.
These efforts indicate that Novavax is betting that its COVID-19 vaccine will win U.S. authorization. But should you?
Image source: Getty Images.
Cart before the horse?
Novavax isn't breaking any rules with its marketing campaign. The company launched two websites this month that don't refer at all to the brand name of its COVID-19 vaccine (Nuvaxovid). These sites also don't imply in any way that Novavax's vaccine has already won EUA in the U.S.
But is Novavax getting the cart before the horse by attempting to build awareness about its vaccine program before it wins EUA? Not really. Actually, it appears to be a smart strategy.
Novavax isn't a household name like Pfizer and Moderna are. Building awareness about the company and its vaccine program sooner rather than later could pay off if Nuvaxovid secures U.S. authorization.
The company didn't reveal how much it's spending on the marketing campaign. However, it's unlikely that Novavax is investing a boatload of money at this point.
Perhaps most importantly, Novavax almost certainly fully expects to win U.S. authorization for its COVID-19 vaccine. After all, the vaccine has already picked up approvals or authorizations in Australia, Bangladesh, Canada, the European Union, Great Britain, India, Indonesia, New Zealand, the Philippines, Singapore, South Korea, and the United Arab Emirates.
What's at stake
The U.S. government has already ordered 100 million doses of Novavax's COVID-19 vaccine. This order was included with Operation Warp Speed (OWS) funding of up to $1.8 billion for the development and production of the vaccine. Novavax has already received nearly $1 billion of that total as of Dec. 31, 2021.
However, the U.S. government has also suspended funding any manufacturing of the vaccine in the U.S. until Novavax aligned with U.S. Food and Drug Administration (FDA) standards. Novavax has until April 2022 to achieve this goal unless it's extended. If the company fails to win EUA for its vaccine, the remaining portion of the OWS funds could be in jeopardy.
Novavax also has its sights set on obtaining additional supply deals with the U.S. That won't be possible without first securing EUA. The company would also need to win authorization for its vaccine as a booster to the other COVID-19 vaccines already on the market in the U.S.
In addition, Novavax hopes to eventually launch a combination COVID-19/flu vaccine. It's already conducting a phase 1/2 clinical study evaluating a combo vaccine and expects to report results from the study next month -- making April a critical month for the company.
A pretty good bet
Novavax's track record of gaining approvals and authorizations in other countries should bode well for its prospects of winning U.S. EUA. Would success on this front make the vaccine stock a good bet for investors? I think so.
The company's market cap currently stands at around $6.2 billion. Wall Street analysts expect Novavax to generate revenue of close to $4.5 billion this year. Sure, analysts also project the COVID-19 vaccine market will decline in 2023. However, the consensus revenue estimate for Novavax next year is still $3.65 billion.
Novavax's longer-term prospects could continue to be bright if two conditions are met. First, there must be a continued need for annual COVID-19 vaccines. Second, the company's efforts to develop a combo COVID-19/flu vaccine are successful. Both conditions seem quite possible.
Granted, Noavax faces significant risks. However, I think aggressive investors should seriously consider the stock at its current valuation.
