Summary
The results of the Phase 3 ResVax trial are slated to be released in the coming weeks. Peak sales are estimated to be over $2 billion per year.
Results of the Phase 2 Nanoflu trial released last week were positive, beating the top flu vaccine. Phase 3 is likely to be completed by this time next year.
The risk-reward profile is excellent due to very high upside, and having two major candidates far along in the pipeline.
Novavax (NASDAQ:NVAX) is a clinical-stage biotech company that focuses on development of vaccines for some of the world’s deadliest illnesses. The company has four blockbuster vaccines in its pipeline that would each generate over $1 billion per year in sales individually. The company recently announced positive results for a Phase 2 trial of one of them and is on the verge of releasing results for a Phase 3 trial of another. Yet, the company is trading like it has very little in its pipeline. This is occurring for two reasons that present an opportunity for investors:
- Many investors have heavily misunderstood key parts of the science of the company, as I will explain below.
- With no major trials coming to a close during the last two years, the company was flying under the radar, receiving relatively little attention from the press and analysts. With the positive Phase 2 results and the results of the blockbuster Phase 3 trial probably coming within 30 days, coverage is starting to ramp up and the stock price has begun going up.
As an article at Investopedia notes, “an advantage in investing in small-cap stocks is the potential for discovering unknown value. The general rule of the investment world is that the majority of Wall Street research is aimed at a fraction of publicly traded companies, and most of these companies are large cap. Small-cap companies fly more under the radar, and therefore hold greater potential for finding undervalued stocks.” Long-term biotech analyst Larry Smith states that:
