Novavax (NVAX) Stock Declines May Be An Opportunity

Novavax NVAX Stock News

Novavax, Inc. (NASDAQ: NVAX) had a tremendous run in the market recently after announcing that it would be working on a vaccine for the Wuhan coronavirus, or COVID-19. Unfortunately however, the stock has shifted course.

Yesterday, NVAX filed an 8-K with the SEC surrounding activities that it has done to raise funds so far this quarter and opportunities to do so in the future. Of course, the news included dilution, scaring investors and sending the stock tumbling. After around 25% declines yesterday, the stock is down about 6% today. However, this may be an opportunity. Here’s how I see it:

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Digging Into The 8-K

In the 8-K, it became clear that Novavax is already raising funds as a result of gains due to the coronavirus news. In fact, the company said that during the first quarter, it has sold 10.5 million shares, bringing in net proceeds of $98.7 million.

Yesterday, the company filed a prospectus supplement with the SEC which opens the door to the sale of an additional $150 million in common stock. The stock can be issued and sold from time to time in at-the-market transactions. Of course, the Sales Agent may only sell shares at the company’s instruction.

In the filing, NVAX said that while the option to raise funds through the issuance and sale of shares is available, there can be no assurance that any actual transactions will take place.

So yes, dilution was the center of the story. The company has already raised nearly $100 million and now has the opportunity to seek an additional $150 million through the issuance of shares. So, there’s good reason for the declines that we saw yesterday and the continuance today. Nonetheless, I still see opportunity.

Where I See The Opportunity

Lately, it seems as though every biotech company we look at is announcing work to develop a vaccine. Interestingly, only a small handfull of these, which includes NVAX, are actually vaccine developers. I mean, even oncology companies are hopping on the coronavirus vaccine bandwagon.

Considering that Novavax is one of only a handful of competitors on the field that actually has experience playing the game, there’s a competitive advantage here. There’s another advantage here as well.

While many companies have announced work to develop a vaccine, few have actually already moved to testing. Recently, NVAX announced that not only does it have multiple viable candidates, it is putting those candidates into animal testing to decide which will be the most advantageous to send into clinical trials.

This is the first company outside of Moderna (NASDAQ: MRNA) to announce that it is moving candidates into testing. However, it is important to mention that Moderna is in the lead as it is already in human testing.

Nonetheless, when it comes to the vaccines space, NVAX is a company with plenty of experience and strong competitive advantages. As such, I believe that the company will be one of the first to bring a vaccine to market. So, today’s declines may hurt, but in my view, they’re an opportunity. Once the bloodshed ends, the discount to get in on potential future gains may be hard to ignore.

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