With Novavax (NVAX 2.27%) shares down by more than 70% in the past 12 months, investors are probably feeling a bit devastated right now. The shares even crashed on July 13, when its vaccine candidate for COVID-19 got an Emergency Use Authorization (EUA) from the Food and Drug Administration (FDA). It almost feels like the stock is immune to any good news, though the ongoing bear market is doubtlessly making matters more difficult.

Regardless, there is a cocktail of forces brewing that could drive the biotech to better returns for its shareholders throughout the rest of this year -- and perhaps even through 2023. It's still a long shot for it to beat the market, but let's explore two reasons why there's a chance at all.

1. The booster market is where it's at

Unlike coronavirus vaccine competitors Pfizer and Moderna, Novavax's Nuvaxovid jab isn't yet approved for use as a booster shot in the U.S. That means it's missing out on government purchasing orders intended to secure booster doses for the public -- but that probably won't be won't be the case for long.

On June 28, the company presented data to the FDA's Vaccines and Related Biological Products Advisory Committee (VRBPAC). In its presentation, Novavax revealed that its NVX-2737 vaccine, which was just approved on an emergency basis, is capable of prompting the immune system to target regions of the viral spike protein that are highly "conserved" from variant to variant.

In English, this means that the jab should be expected to provide at least some protection against the currently circulating viral variants when used as a booster, even if it hasn't been reformulated or updated to combat those variants specifically. Preliminary evidence from phase 3 clinical trials, along with trials in animal models, seems to support that conclusion. That's huge, because if true, NVX-2737 could be deployed as a booster shot as soon as it's approved for that purpose, and it would have a significant chance of being more effective than the competition's boosters too. 

In other words, the company's late entry into the U.S. primary series jab market might not matter much as Novavax could tackle a large share of the booster market on the basis of its improved efficacy against the viral threats. Novavax expects to wrap up one of its variant-specific, booster-related trials in September with the shots potentially getting shipped out the door sometime after that in Q4.

More importantly, management is in active discussions with U.S. regulators and believes that NVX-2737 could be approved as a booster dose soon. In Australia, it already has that approval in hand, so there might not be many obstacles to stumble over elsewhere.

2. Finances could be improving

The other factor that could contribute to a Novavax rally would be if its upcoming earnings report -- due sometime in the week of Aug. 3 -- wowed investors with better-than-expected revenue growth or increases to its margins. Analysts are expecting around $1 billion in sales for the quarter, on average, which meshes perfectly with management's 2022 full-year guidance for between $4 and $5 billion in revenue. So it's unlikely that there will be a big surprise in sales, given that government purchasers are the only customers. Still, margins do have a chance to improve and catalyze growth. 

The most plausible mechanism for margin improvements would be greater efficiency in Novavax's manufacturing operations, which it partially contracts out to a handful of collaborators -- and which have also been a consistent stumbling block. For investors to get an idea about how improving manufacturing efficiency is going, they'll need to keep an eye on Novavax's research and development (R&D) costs as the company recently opted to capitalize certain manufacturing-related expenses under the banner of R&D, and others under the more traditional cost of goods sold (COGS) heading.