Novavax (NASDAQ: NVAX) inched closer to the COVID-19 vaccine finish line after receiving $1.6 billion in government funding today. The bulls are now rally in large numbers behind the COVID-19 biotech. Especially in light of today’s announcement. However, many investors wonder how long it will be until the NVAX bulls have to rest? Because if they do, there could be a potential investment window later down the track. Let us tackle this investing dilemma today.

Table of contents 
1. NVAX receives government funding for its COVID-19 vaccine.  
2. Why is vaccine funding important for Novavax? 
3. Should you invest in NVAX?

 

NVAX’s COVID-19 vaccine receives billions in government funding

Today, Novavax announced that they were selected to participate in Trump’s accelerated COVID-19 program, Operation Warp Speed (OPS). OPS aims to progress promising COVID-19 candidates through the clinical timeframe financially swiftly. . The funding of the fast-tracked program should result in a safe and efficacious COVID-19 vaccine by 2021. Investors and should note that OPS does not aim to compromise the medical integrity of any of the vaccines. Instead, provide vaccine companies with a large wallet.

Under OPS, the U.S government, granted NVAX $1.6 billion to “complete a pivotal Phase 3 trial, establish large scale manufacturing, and deliver 100 million doses of NVX-CoV2373″. NVAX’s larger wallet allows them to eliminate the clinical financial hurdles without compromising safety or efficacy. Also, the announcement represented the U.S government’s confidence in Novavax’s vaccine. Thus, the investors are gravitating towards NVAX with an insatiable appetite for growth. Ultimately, causing NVAX to jump up 35% in pre-market trading and cross over $100.

How does NVAX’s funding add to the bigger picture?

Some investors might say that the acceptance of Operation Warp speed is another layer to the NVAX cake. On the financial front, Novavax is in an excellent position. The $388 million from CEPI, coupled with the $60 million from the DOD and $1.6 billion from OPS, means NVX-Cov2373 is financially covered for clinical development. With promising pre-clinical trials indicating early success, upward growth seems likely (opinion not advice).  Thus, today’s funding is a significant milestone. However, positive phase 1, 2 and 3 data, the icing, is still needed to finish off the NVAX cake.

 

Is NVAX an excellent COVID-19 investment?

Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.

Short answer: A short or long-term investment could potentially provide a gain. However, you must put emotion asides for the investment to be viable. (opinion not advice)

Short term

Short term gains from the long-list of COVID-19 competitors is a popular play. At face value, most people would agree. Especially, as this rising COVID-19 tide brings all the vaccine boats up. Also, the government’s funding is flooding these companies with signifcant catalysts, providing investors with ample investing opportunities. You may feel the urge to hover your finger over a buy order  to profit off today’s announcement. On a surface level, this seems logical. Because we should see gigantic volume increases in buying. (opinion not advice)

However, what history, the past three months of vaccine results, tells us is that the stock is likely to rise and become inflated. Once the short-term bubble forms institutions downgrade the stock, over short sellers flood the market, driving the stock down. Thus, if you are looking to ride the stock this morning, setting a modest exit point is imperative.

 

Long term

Long-term investors would be ecstatic with today’s announcement as they will likely see their initial position grow. Because even if there is a sell-off  the announcement should create a higher low. For investors sitting on the sidelines at the moment, a long-term approach is your best bet (opinion not advice). If investors begin to cash in profits, new long-term investors have an opportunity to get in, and existing long term investors to top up. (opinion not advice). Overall, NVAX is a vaccine frontrunner with sufficient funding, government backing, a potentially promising clinical future (opinion not advice). Hence the long-term investment should come to fruition.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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Written by Patrick McLoughlin, Senior Manager of YIG

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