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Novavax Is Incredibly Risky but Worth a Small Allocation

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The novel coronavirus vaccine specialist Novavax (NASDAQ:NVAX) has taken its shareholders on a wild ride for sure. With the uncertainty of the pandemic, NVAX stock has had its ups and downs — literally — and will continue to be volatile. Needless to say, this stock isn’t for everyone.

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But when U.S. President Donald Trump tweeted that he and the First Lady had tested positive for the novel coronavirus, the already-heated race to develop a vaccine got even more intense. Novavax has been a serious competitor in that race, though it’s not the biggest company in the field nor an obvious front-runner.

If you want something safer, consider competitors like Moderna (NASDAQ:MRNA) and Johnson & Johnson (NYSE:JNJ), for example. But — while risky — NVAX stock is still worth a look.

Of course, there’s a whole lot riding on the success of the company’s vaccine candidate, NVX-CoV2373. It’s an all-or-nothing proposition that could be intriguing to bold biotech traders.

Looking Closer at NVAX Stock

The numbers can be deceptive when it comes to NVAX stock. For instance, its five-year monthly beta is 1.39. That seems to suggest that Novavax only moves moderately faster than an index such as the S&P 500.

But don’t be hoodwinked by this movement — the stock’s 52-week range of $3.54 to $189.40 should also give you an indication of how wild the company’s stock can be.

NVAX stock is trading today at around $110, far below the 52-week high price printed in August. Yet, the race to develop a coronavirus vaccine has kept the company top-of-mind for biotech traders.

Therefore, the potential is definitely there for the bulls to push NVAX stock back towards $200. Just be aware that this stock is highly news-driven, so technical levels (support, resistance, etc.) might not be as important as the company’s developments towards a successful vaccine.

A Critical Phase

By far, the most significant recent news item for Novavax is the commencement of its Phase-3 clinical trials for NVX-CoV2373. This study is already under way in the United Kingdom, in partnership with the U.K. Government’s Vaccines Taskforce.

One thing that’s exciting about the study is its size. As many as 10,000 individuals are expected to participate in the study.

And while we’re using big numbers, we should also note that Novavax’s manufacturing capacity for the vaccine is already targeting “up to 2 billion annualized doses, once all capacity has been brought online by mid-2021.”

Finally, a minimum of 25% of the patients enrolled in Novavax’s Phase-3 trials will be over the age of 65. With demonstrated focus on such a high-risk population, Novavax’s study has promise to turn out well for the vaccine’s development — and for the company’s shareholders.

Reaching 2 Billion

The aforementioned goal of manufacturing 2 billion doses of NVX-CoV2373 per year might sound unrealistic. This is something that’s crucial to consider before investing — even if Novavax’s vaccine is approved, the company will need a massive distribution network to get it into the hands of those who need it.

Thankfully, though, Novavax is working diligently to turn this vision into a reality. Currently, the company is manufacturing the antigen component of the vaccine at a site in the Czech Republic.

But that’s not the only place where the antigen ingredient is being manufactured. To this end, Novavax has also partnered with sites in North Carolina and Texas, as well as in Spain, the United Kingdom, India, South Korea and Japan.

A major component of this plan is the Serum Institute of India Private Limited, which is set to manufacture around 1 billion doses of NVX-CoV2373 in 2021. By partnering with such high-capacity vaccine component manufacturers, Novavax is moving closer to its ambitious objective of mega-scale production.

Bottom Line

It has been said that risk is required if you’re going to reap the rewards of investing. And there’s certainly risk involved with NVAX stock.

Yet, it’s also clear that Novavax is working extremely hard to get a vaccine candidate approved and into large-scale production. Investment in the stock would be a calculated risk, considering all of the company’s efforts to win the race. If you’re prepared to accept that volatility, NVAX stock could be the pick for you — and provide outsized returns worth all that skin in the game.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

David Moadel has provided compelling content -and crossed the occasional line -on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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