1 green flag for Novavax in 2022 and 1 red flag

Novavax (NASDAQ: NVAX) comes more than a year after the market leaders Pfizer and Modern at the coronavirus vaccine finish line. Difficulty with a manufacturing ramp-up held back the company last year. And led to a loss of momentum for equities. Novavax soared 2,700% in 2020. But last year, Novavax shares only added 28%.

To date, Novavax’s vaccine has been licensed in more than 30 countries. And Novavax solved all the manufacturing issues. Will the road be easy for this belated company? Let’s take a look at a green flag and a red flag before deciding.

Image source: Getty Images.

The green flag

It is clear that the first companies in the market have a big advantage. Pfizer and Moderna vaccinated most of the American population. And they’ve had the chance to turn their attention to negotiating advance purchase contracts for this year and next.

But that doesn’t mean Novavax can’t carve out a market share. In fact, one particular item could lead to significant sales for Novavax. Regulators have given the green light to the practice of mixing and matching boosters. This means that if you had a primary series of the Moderna vaccine, for example, you can opt for a Novavax booster.

And in some markets, healthcare providers may really need a new vaccine option to keep up with demand. For example, in France, health authorities recommend against administering the Moderna vaccine to people under 30 years of age. They cite research showing a link to rare cases of heart inflammation in this age group. So, along with the Pfizer vaccine, the Novavax vaccine could be an option for this population. The European Union recently authorized Novavax’s vaccine. And the company has even started shipping doses to the region.

The red flag

Now let’s look at the red flag in front of us. And that’s the idea that the pandemic could eventually become endemic. Some experts say it could happen as early as this year. In the endemic stage, the coronavirus will be present. But infection rates will not rise and remain at extreme levels as they have during the pandemic.

I don’t think the demand for coronavirus vaccines will drop at this point. People will still need protection. In fact, the coronavirus vaccine could become a routine annual vaccine, just like the flu vaccine. And about half of the US population typically gets the flu shot each year.

Still, countries may not order as many doses of the coronavirus vaccine as they did at the start of the pandemic, especially from a vaccine newcomer. And some countries have already secured doses with leaders Pfizer and Moderna until next year. Canada even has options for the Moderna vaccine through 2024.

What does this mean for Novavax?

Novavax may have a bumpier road than Moderna and Pfizer when it comes to gaining market share. They came at a time when the whole world was unvaccinated and the pandemic was raging. But that doesn’t mean Novavax won’t succeed, even in the face of the red flag mentioned above.

Yes, the pandemic will likely transition to an endemic phase. And it’s still unclear how many doses governments will order in the coming years – or whether pharmacies will start ordering directly from vaccine makers.

But I think the flu story can guide us. As I hinted above, it is very possible that the same population will opt for annual coronavirus vaccines even far into the future. So our red flag might not be too much of a concern after all.

And the mix and match element could be a big opportunity for Novavax – for a very specific reason. The Novavax vaccine uses different technology than the Pfizer and Moderna mRNA vaccines. It includes part of a viral protein as well as an adjuvant to stimulate the immune response. This is a well-known technique already used in marketed vaccines. Thus, it offers an alternative for those who cannot take an mRNA vaccine.

It’s important to remember that before the coronavirus vaccine, Novavax was a clinical-stage company. This will be the first product marketed by the company. And Novavax predicted billions of dollars in sales. This is a big deal for a first product.

All of this means that, yes, Novavax can handle headwinds. But overall, Novavax can still play an important role in the coronavirus vaccine market.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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