Novavax (NVAX -9.38%) investors were just about to breathe a sigh of relief. A U.S. Food and Drug Administration (FDA) advisory committee earlier this week recommended that the agency authorize Novavax's coronavirus vaccine.

This comes after other delays. Novavax initially planned on requesting authorization in the first half of last year -- but challenges in a manufacturing ramp-up slowed things down. Then, after Novavax requested authorization in January, the FDA didn't make an immediate decision. Instead, it scheduled its advisory committee meeting for June.

After this week's panel vote, investors expected the FDA to quickly follow the recommendation and authorize the vaccine. But the agency said it needs more time. That's because Novavax submitted new manufacturing data earlier in the month, and the FDA wants to study that data. If you hold Novavax shares or are considering buying shares, should you be worried about this latest delay?

Different from an mRNA vaccine

First, let's consider the details. Novavax's product is different from today's most common type of coronavirus vaccine: an mRNA vaccine. This type -- sold by larger rivals Moderna and Pfizer -- uses messenger RNA to instruct the body to produce a copy of a protein; the protein then spurs immune response.

Novavax makes a protein subunit vaccine, which delivers purified bits of spike protein to the body to generate an immune response. Manufacturing this vaccine involves a certain amount of complexity:

  • Novavax starts with a sort of genetic recipe to make the coronavirus spike protein.
  • It inserts this into a different virus.
  • That virus then infects moth cells.
  • The moth cells produce the spike protein.
  • Novavax purifies this protein and transforms it into nanoparticles.
  • To these, Novavax adds an adjuvant derived from soapbark trees. The adjuvant draws immune cells to the injection site to further boost immunity.

When a company applies for vaccine authorization, it must provide all manufacturing details. Serum Institute of India manufactures this vaccine for Novavax; the FDA inspected the site and gave it the nod. As mentioned above, struggles with a manufacturing ramp-up early on prevented Novavax from applying for authorization last year.

Days before the advisory panel meeting, according to a CNBC report, Novavax told the FDA about changes to its manufacturing process.

More time to review

It's not surprising that the FDA is taking more time to review the new information; Novavax's process is complex. The vaccine must be transported a long way to get to U.S. vaccination centers. And the U.S. isn't in a rush to authorize new vaccines, as it was in the early days of the pandemic.

I don't see this delay as an element that will thwart Novavax's plan to enter the vaccine market. It's still very likely the FDA will give the product a nod, if a bit later than expected.

But here's the most important point: Whether the FDA authorizes the product now or in a few weeks, it probably won't make much of a difference. Novavax isn't set to play a huge role in the U.S. vaccine market in the near term -- Pfizer and Moderna already dominate that market. Novavax also isn't yet on its way to gaining a foothold in the booster market; the potential FDA authorization is only for use of its vaccine as a primary series. Novavax eventually plans on applying for booster authorization, but it's unlikely that will happen in time for the fall booster season.

Opportunity down the road

Novavax's bigger opportunity lies much farther down the road: The company is leading in the development of a combination coronavirus-influenza shot. It's generated positive phase 1 data, and plans on starting phase 2 by the end of the year. Novavax won't bring this potential product to market overnight, but if and when it does arrive, it could be big. That's because many people who get annual flu shots may opt for this two-in-one opportunity. Novavax didn't benefit from the first big wave of vaccinations, but in the future, it could benefit not just once -- but on an annual basis.

All of this means you shouldn't worry too much about Novavax's latest delay. That said, Novavax shares remain risky. Some investors have lost faith in the company. And it may take a while for Novavax to win back their confidence, which could weigh on stock performance in the coming months.

Should you buy or hold Novavax shares? If you're a long-term investor with some tolerance for risk, Novavax presents an opportunity today. But if you're more the cautious type, you may want to watch Novavax from the sidelines right now.