Dump Novavax Stock as Delays May Make Its Vaccine Practically Obsolete

It’s last call at the Covid-19 vaccine party and shareholders of Novavax (NASDAQ:NVAX) stock should be headed for the coat check.

Novavax’s share price is down 41% year-to-date, bringing its six-month decline to 65%.

The prospects of the biopharmaceutical company bringing a vaccine against Covid-19 to market in the U.S. grow dimmer by the hour. NVAX stock is now more than 70% below its 52-week high of $297 a share reached a year ago.

The number of fully vaccinated people keeps climbing and the pandemic is receding around the world. That means demand for another vaccine is waning and Novavax looks to have missed its opportunity. 

FDA Application

Earlier this month, Novavax finally announced that it had applied to the U.S. Food and Drug Administration (FDA) for emergency use authorization (EUA) of its experimental Covid-19 vaccine. The application to the FDA came after multiple delays throughout 2021.

News of the long-delayed EUA filing pushed NVAX stock up to near $95 a share. However, the gains were short-lived as investors came to the realization that A) There is no guarantee the FDA will approve Novavax’s Covid-19 shot, and B) Nearly two-thirds (65%) of Americans are now fully vaccinated against the illness that sparked a worldwide pandemic.

Further dampening sentiment has been comments from Dr. Anthony Fauci, the Chief Medical Advisor to the U.S. President. He said that the pandemic phase of Covid-19 is nearly over throughout the world.

Indeed, several countries in Europe, including Germany and France, have announced plans to remove all restrictions related to the pandemic. The World Health Organization (WHO) has said that Europe is entering a “plausible endgame” to the pandemic.

Ontario, the most populous province in neighboring Canada, has outlined plans to do away with vaccine passports and proof of vaccination requirements as case counts and hospitalizations drop sharply.

Even pharmaceutical rival Moderna’s (NASDAQ:MRNA) chief executive officer (CEO) Stéphane Bancel said it is likely the Covid-19 pandemic is now in its “final stages” and will become endemic moving forward.

All this comes amid a background of global protests against vaccine mandates. While Novavax has said that it has the capacity to manufacture two billion doses of its vaccine per year, the need for another vaccine alternative looks to be muted at best.

Approvals Abroad

Novavax’s vaccine has received approval in some markets abroad, including Indonesia and Singapore. The company continues to file applications for its use in jurisdictions all over the world, most recently in Switzerland.

Novavax did score a victory on Feb. 17 when its Covid-19 vaccine was approved for use in Canada. However, the approval came after the company signed a deal with the Canadian government. It pledged to produce some of the Novavax vaccine within Canada at a new, $126 million CAD manufacturing plant in Montreal.

Canada, which had no domestic vaccine production capacity prior to the pandemic, is now trying to rectify the issue by convincing pharmaceutical companies to manufacture at least some of their medications north of the border.

Novavax’s grand plans involve focusing sales of its vaccine to foreign countries that have struggled to secure reliable vaccine supplies, and where inoculations are lagging. The company has said it plans to target several countries in Africa, for example.

If its plans work out, Novavax has said that it could generate $30 billion in sales from its Covid-19 vaccine. That revenue can’t come soon enough. Novavax announced a net loss of $322.4 million for the third quarter ended Sept. 30 of last year.

In addition to the other headaches, there are growing concerns that the Omicron variant of Covid-19 might make Novavax’s vaccine obsolete. While the company’s vaccine has proven to be about 80% effective against the original strain of Covid-19, Omicron success evidence is largely inconclusive.

Novavax says it is working on an Omicron-specific vaccine, but here too it is late to the party as rival Pfizer (NYSE:PFE) has said that its own vaccine targeting the Omicron variant could be approved by the FDA as soon as March.

Do Not Buy NVAX Stock

Novavax isn’t just late to the Covid-19 vaccine party, the company has missed the festivities entirely. With none of its products aimed at treating Covid-19 approved in the U.S., there’s really no point in investors holding onto the company’s stock at this point.

The continued decline in the share price reflects the increasingly negative sentiment towards the company and its prospects for ever getting its Covid-19 vaccine to market in America.

With health officials declaring that the pandemic is on its last legs and governments around the world removing vaccine requirements, Novavax’s once-promising vaccine against Cobid-19 looks to now be unnecessary. NVAX stock is not a buy.

Disclosure: On the date of publication, Joel Baglole held a long position in MRNA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.