This Beaten-Down Biotech Is Showing Signs of Life. Is It a Buy?

Over the past five years, Novavax (NASDAQ: NVAX), a vaccine maker, lost more than 90% of its market value. Though it succeeded in its goal of launching a coronavirus vaccine, the biotech did so much later than some anticipated and struggled to keep its sales competitive with the market leaders in that niche.

However, Novavax has made several moves in recent years that could help it bounce back. The company's shares are already up by 28% in 2026 after it announced a deal with a pharmaceutical giant. With that as a backdrop, are Novavax's shares attractive right now? Let's find out.

Image source: Getty Images.

Novavax's in-demand technology

On Jan. 20, Novavax announced that it had entered into a nonexclusive licensing deal with Pfizer for its proprietary Matrix-M adjuvant technology. The pharmaceutical leader will be eligible to use the tech in up to two disease areas. Novavax will receive an up-front payment of $30 million, be eligible for milestone payments of up to $500 million, and could also get royalties on future approved products that use its adjuvant technology.

Of note, this isn't the first time another company has struck a licensing deal with Novavax for its Matrix-M platform. Sanofi, a France-based biotech leader, did the same about two years ago.

Is Novavax's stock a buy?

Novavax's revenue has been inconsistent in recent years. And with U.S. regulators changing official recommendations on who is eligible for coronavirus vaccines, things won't get much better on that front for the company.

True, Sanofi will lead commercialization efforts in the U.S. and other markets abroad for Novavax's vaccine going forward, with the smaller biotech set to receive royalties on sales. However, that hardly changes the calculus for Novavax: Much of its revenue over the next couple of years should come from its coronavirus franchise, whether through direct sales or royalties.

And this market now looks very uncertain. Novavax could also get a windfall if Pfizer or Sanofi's pipeline products that use its Matrix-M adjuvant technology make significant headway. But there is a lot of uncertainty here, too. These products may or may not prove effective in clinical trials, earn approval, or find significant commercial success.

Lastly, Novavax is developing several vaccines internally, including a flu vaccine and a combination coronavirus/flu vaccine. It's worth noting, though, that in October 2024 the phase 3 studies for both candidates were placed on clinical hold due to suspected adverse reactions. Although regulators have since lifted the clinical hold, this slowed Novavax's progress, and it has had trouble recovering from this setback since.

In the meantime, other companies are also developing promising coronavirus and influenza vaccines, including combo options. Novavax could be successful despite the competition, but its most promising candidate, the combo vaccine, would likely cannibalize sales from its other approved product.

With all that going on, it's probably best to stay away from Novavax right now, despite its strong run of form this year.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.