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The winners of the race for a novel coronavirus vaccine are going to make huge cash. I imagine Novavax (NASDAQ:NVAX) shall be a kind of winners. That alone makes NVAX inventory a purchase.

Novavax (NVAX) brand surrounded by medical provides

Supply: Ascannio/Shutterstock.com

However the excellent news in the meanwhile is that traders pays a fair cheaper price to get in on the story. NVAX inventory has retreated some 42% from early August highs.

Skeptics may retort that the inventory remains to be up over 2,600% year-to-date (sure, 2,600%, and no, that’s not a typo) — and thus stays too costly. However that’s it the unsuitable approach.

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In any case, on Jan. 1, no investor may have predicted the pandemic, or the dire want for a vaccine. Novavax, due solely to that chance, is a really totally different firm than it was eight and a half months in the past.

In the meantime, Novavax is profiting from that chance — and making actual progress towards a vaccine. Importantly, it’s doing so at a fast tempo. In consequence, I imagine the vaccine shall be authorized — and that may make NVAX inventory fly.

Proper on Observe

In lower than seven months, Novavax has made spectacular progress.

In any case, at first of the yr, Novavax was trying to develop vaccines — however not but for the novel coronavirus. The corporate was targeted on its flu vaccine, which hit Part three endpoints in March. The identical month, the corporate introduced a partnership to work on a malaria vaccine.

But it surely wasn’t till late February that Novavax disclosed its first step towards a coronavirus vaccine. It started assessing candidates in animal fashions. From there, it’s been milestone after milestone.

Part 1 information in early August impressed, sending NVAX inventory greater. Knowledge revealed this month confirmed that the vaccine was each well-tolerated (with minimal unintended effects) and confirmed early efficacy. The candidate now has moved into Part 2 trials.

In the meantime, Novavax has raised loads of capital. Primarily from Operation Warp Pace, the corporate has secured some $2 billion in funding. That’s clearly greater than sufficient to get the vaccine to approval.

That’s not all. Novavax has added key executives. It has arrange partnerships in Asia. It has signed agreements with the governments of Canada and the UK.

And as soon as the drug is authorized, Novavax should not have any downside producing it. An settlement with a producer in India supplies annual manufacturing capability of over 2 billion doses.

The Threat/Reward in NVAX Inventory

To be clear, Novavax nonetheless must get the vaccine over the end line. That’s not assured. Nothing in drug improvement is.

However what’s additionally clear is that this: Novavax has finished all the things it may, and all the things it wanted to, to create the very best odds of success. In any case, within the race for a coronavirus vaccine, easy approval isn’t sufficient.

In any case, there are actually dozens of corporations focusing on a coronavirus vaccine. The checklist consists of a number of the world’s largest drugmakers.

And so being first — or second — issues. The preliminary vaccines authorized possible will grow to be the usual of care. They’ll have vital pricing energy within the early going. There shall be large income to be made.

Novavax appears to have likelihood at being one of many first corporations with an authorized vaccine. That’s huge. In fact, it might be even greater if it finally ends up being the primary.

Once more, this can be a high-risk play: a “good likelihood” will not be the identical as a assure. Sure, there’s some worth in NanoFlu, the flu vaccine. Even so, if Novavax stumbles in its coronavirus efforts, NVAX inventory has a good distance down. Buyers must preserve that in thoughts.

Low-cost Sufficient

Nonetheless, on a threat/reward foundation, I imagine NVAX inventory appears enticing, significantly with the latest pullback.

In any case, even after the huge year-to-date rally, Novavax nonetheless has a market capitalization of lower than $7 billion. Analysts anticipate the corporate to earn greater than $1 billion in revenue in 2021 alone.

It’s potential that the Novavax vaccine, if authorized, will usher in these income for one more firm. Success on the coronavirus entrance would learn throughout effectively to the remainder of the pipeline. One of many diversified main pharmaceutical gamers may see that as a purpose to accumulate Novavax. That apart, the bigger agency may bolster Novavax’s authorized coronavirus vaccine with its present worldwide gross sales and advertising infrastructure.

That’s all hypothesis. However the broad case right here is comparatively easy: if Novavax will get a vaccine authorized, NVAX inventory goes to be a winner. At this value, and given the progress to this point, I believe the rewards of betting on Novavax outweigh the dangers.

On the date of publication, neither Matt McCall nor the InvestorPlace Analysis Employees member primarily chargeable for this text held (both straight or not directly) any positions within the securities talked about within the article.

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