Novavax (NVAX -3.71%) has a track record of major gains and major losses within the past few years. The biotech soared more than 2,700% in 2020 as investors bet on its investigational COVID-19 vaccine. But as Novavax's candidate fell behind, the shares started to fall. Since then, the vaccine has reached commercialization -- later than rivals, though. And that put the brakes on revenue potential.

The result of all of this? Novavax shares have dropped a mind-boggling 97% from their peak. In fact, today, they're trading around their pre-pandemic level. Still, Novavax's vaccine continues to generate revenue, and the company is working on a combined flu/coronavirus vaccine candidate that could eventually stand out. Considering all of this, should you buy Novavax or avoid the stock? Let's look at the bear and bull cases.

The bear case

Novavax's vaccine won regulatory authorization in many countries about a year after rivals Pfizer and Moderna. The U.S. decision came later -- a year and a half after the competition. As a result, Novavax didn't benefit from the main wave of pandemic demand for vaccination.

Yes, some people shied away from the messenger RNA technology used by Pfizer and Moderna, and opted to wait for the Novavax shot. But in most cases, by the time Novavax's shot reached the market, most individuals who wanted a vaccine already had gotten one. Also, companies with a vaccine already on the market had the upper hand when it came to gaining and fulfilling government orders.

Revenue of Moderna and Novavax illustrates this. Both companies only have one commercialized product -- the coronavirus vaccine/booster.

NVAX Revenue (Annual) Chart

NVAX Revenue (Annual) data by YCharts.

Now, as we head toward a post-pandemic situation, vaccine demand is on the decline. To make matters worse for Novavax, costs to maintain the infrastructure needed to sell a vaccine have climbed.

And in its recent earnings report, Novavax brought up the possibility of shutting down operations. One problem the company aims to resolve relates to a U.S. funding deal. The U.S. said it wouldn't extend its contract beyond this year, and that puts part of about $400 million in funding at risk.

So, with demand for its only product falling, costs rising, and the company itself questioning the future, there are plenty of reasons to worry about Novavax today.

The bull case

Now that we have the negative out of the way, let's move on to the positive. Novavax's vaccine revenue -- and that of its rivals -- is set to decline as the coronavirus market shifts to a post-pandemic situation. But that doesn't mean revenue will disappear.

Moderna predicts the vaccine market will follow that of the flu, with part of the population going for annual shots. The global market may be worth between $12 billion and $24 billion annually, according to Moderna. Even if Novavax doesn't carve out a huge share, it still could be successful -- if it's able to manage its costs.

Meanwhile, as I mentioned above, Novavax is working on a combined coronavirus/flu vaccine candidate. The company reported positive phase 1 data and recently launched a phase 2 trial. This sort of potential product could easily attract those who go for an annual flu shot. That's about half the U.S. population. Most people would more readily go for one jab every year than a couple of different shots to protect against flu and COVID-19.

Moderna, too, is working on a combined candidate. But so far, Novavax is ahead from a timeline perspective. In any case, there's enough room in the market for both companies.

Novavax recently brought in a new chief executive officer -- John C. Jacobs -- after the company's longtime CEO retired. Jacobs already said his priorities include lowering the rate of spending and managing cash flow. These efforts, plus the potential of the combined vaccine candidate, could result in a rejuvenated Novavax down the road.

Bear or bull?

So, should you favor the bear or bull case for this embattled stock? Novavax's technology produced a quality vaccine, and so far, there's reason to be optimistic about the combined candidate, too. Jacobs and his management team are tackling the financial problems that represent a big risk for the company's future. All of this is positive.

But until we see some results, Novavax remains high risk. Novavax itself has questioned where it will be a year from now. And that makes it very difficult for investors to evaluate growth prospects down the road. So right now, though I favor the bear case, I'm closely watching Novavax's next steps.