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Can Novavax Stock Overcome Growing Vaccine Distrust?

Josh Enomoto
·4 min read

After the initial onset of the novel coronavirus, the narrative shifted from finding a treatment to a vaccine. While it is important to treat those with Covid-19 symptoms, there’s a possibility that this new virus could keep coming back unless we build a defense against it. Therefore, Novavax (NASDAQ:NVAX) became one of 2020’s top winners. But with this year soon coming to a close, NVAX stock, like other vaccine plays, has lost much charm.

Novavax (NVAX) logo surrounded by medical supplies
Novavax (NVAX) logo surrounded by medical supplies

Source: Ascannio/Shutterstock.com

Unfortunately, the realities of the vaccine race began weighing on the biotechnology and pharmaceutical sector. Ordinarily, it would take years for a vaccine to be developed and distributed. With the launching of Operation Warp Speed, the White House wanted this job done in months. That’s probably not going to happen. Why? Covid-19 vaccine candidates have suffered many setbacks and disappointments.

But recently, NVAX stock ticked higher, and not for reasons directly associated with the underlying company. Rather, a competitor really flubbed up, at least from a PR perspective. AstraZeneca (NASDAQ:AZN) generated exactly the headline that it did not need, with media reports indicating that one of its vaccine trial participants in Brazil died. Naturally, this sent ripples throughout the international community.

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Nevertheless, NVAX stock may stand to benefit.

Different Vaccines, Different Potential Outcomes

One big reason Novavax could benefit is its innovative vaccine approach.

AstraZeneca uses a platform called viral-vector vaccines. Essentially, bioengineers take a “neutered” virus and use it as a carrier to distribute the target virus’ (in this case, SARS-CoV-2) gene into the patient. The ultimate aim is sparking an immune response.

In contrast, Novavax is using a more proven platform called subunit vaccines. As the Washington Post states, the vaccine for hepatitis B is a subunit solution. Here, fragments of the target virus’ proteins are injected into the patient, eventually leading to antibody production.

Scientifically, the differences are significant enough that they would catapult NVAX stock at the expense of AstraZeneca. However, the vaccine is no longer just about the science, and that’s why Novavax stakeholders can’t ignore what just happened.

NVAX Stock and the Dangers of a Perception Pit

For starters, available evidence indicates that the deceased participant did not receive AstraZeneca’s experimental vaccine, but was part of a control group. Therefore, it would be grossly inaccurate to state that the company’s viral-vector vaccine has a fatal flaw.

That said, it is fair to have some skepticism toward viral vectors in general. Although scientific research demonstrates that this approach induces “robust immune responses,” and “increased cellular immunity,” viral vectors have been at the center of controversy. Along with AstraZeneca, Johnson & Johnson (NYSE:JNJ), which uses viral vectors for its Covid-19 vaccine candidate, had to pause its late-stage clinical trial because a participant came down with an unknown illness.

Still, I don’t think people are not going to take vaccines because they use viral vectors as opposed to subunits. Instead, people are not going to take vaccines because they don’t trust the government anymore. And that’s a new challenge for NVAX stock that wasn’t present before this latest industry setback.

Here’s the deal. Back at the start of this pandemic, federal health officials warned us not to wear masks because they’re ineffective. Suddenly, that narrative gradually shifted to mask-wearing being more effective than a vaccine. As you can guess, the American people are tired of getting the run-around.

Hence, I think it’s more than possible that people are now skeptical about any news on the vaccine front.

Novavax Looks Good Longer Term

That’s not to say that NVAX stock is a bearish candidate. Importantly, the subunit vaccine platform has a track record of success. Some of the other competing platforms lack this historical credibility.

But even here, track record alone doesn’t make NVAX stock a buy. The sticking point with Novavax’s Covid-19 candidate is that it most likely will require two doses. As things stand, distributing any vaccine will be a logistical nightmare. Add in multiple doses and possible storage challenges, and none of the proposed solutions looks terribly enticing.

Ultimately, though, the science and the logistics may be the easy part. What may be excruciatingly challenging now is convincing the public that Covid-19 vaccines are safe.

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

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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