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On Thursday night, Novavax (NASDAQ:NVAX) announced stunning results from its U.K. Phase 3 trials. At almost 90% effectiveness, the vaccine is now the most effective among those requiring only regular refrigeration.

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Markets initially yawned at the news, sending NVAX stock up just 33% in after-hours trading. But as the reality of Novavax’s success set in, prices started to climb further. As of writing, the stock is at $220. With rival vaccine-makers struggling to meet demand, even more gains could be on the way for NVAX stock.

NVAX Stock: The Tortoise and the Hare

When it comes to drug-makers, it pays to play conservatively. For every winning Phase 3 drug, hundreds more fail along the way. And with the rush to make a working novel coronavirus vaccine, those who crossed the finish line first would reap the most significant rewards.

This fall, Novavax found itself in that tortoise-and-hare position. Though its Phase 1 trial looked extremely promising, the company faced a myriad of issues. To start, its competitors were several months ahead in clinical trials. And when the Pfizer (NYSE:PFE) vaccine showed almost 95% efficacy in Phase 3 trials, that raised the bar for any competing vaccine. Any effectiveness below 60% would have been disastrous for Novavax. Given the risks, a $130 to $150 range seemed reasonable.

Old Estimates Out the Window

Thursday’s Phase 3 results changes the calculus. In a press release, Novavax announced their vaccine was 95.6% effective against the original coronavirus strain and 85.6% against the new U.K. variant. In a smaller test, the vaccine proved 60% effective against a new South Africa variant – not as high, but still good enough for general use.

No one could have predicted such a high efficacy rate. Though Phase 1 trials looked promising, Novavax’s safety-related tests only showed antibody production, not vaccine efficacy.

While U.S. and Mexico trials are still ongoing, the U.K. findings suggest that Novavax shares are now worth $350 or more. And that’s not only because of the Covid-19 vaccine – which could be worth $10 billion – but also the recombinant nanoparticle vaccine technology that sits behind Novavax’s technology.

How to Create a Vaccine in 3 Days

Most vaccine development follows a traditional approach – injecting patients with dead viral particles and hoping for an immune response. Chinese-based Sinovac’s CoronaVac is among the many that followed this. However, the problem is that traditional methods are a relatively slow and untargeted way to create vaccines.

“Conventional vaccines based on live-attenuated pathogens present a risk of reversion to pathogenic virulence while inactivated pathogen vaccines often lead to a weak immune response,” explains researchers at the University of Quebec.

Meanwhile, Novavax, along with Pfizer and others, uses a more targeted means. Rather than kill a virus and hope for the best, Novavax’s process takes only the spike DNA – the outside of the coronavirus – and multiples them in bacteria cells. Researchers then attach these spikes to nanoparticles and use them as vaccines. In other words, the outside of the nanoparticle might look like infectious virus particles to human immune response, but there’s theoretically no harmful virus particulate left to cause any damage.

Amazingly, it only took Novavax days to create the Covid-19 vaccine. By January 2020, the company had already finished developing NVX-CoV2373, which would eventually become its final vaccine candidate. The speed was only possible thanks to the firm’s nanoparticle platform – all Novavax researchers needed was to identify and replicate the right protein spike to attach to its nanoparticles. It was the clinical trials that took another 12 months to complete.

NVAX Stock Now Worth at Least $350

Novavax’s value now lies in two areas. Firstly, there’s NVX-CoV2373, the company’s flagship Covid-19 vaccine. As the most effective vaccine so far that doesn’t require freezing, the company could quickly sell the 1 billion doses it initially targeted. And while initial prices of $16 might fall as Novavax ramps up sales to developing countries, even a $5 price tag means $5 billion in revenues by 2022. With 63.6 million shares outstanding, that comes to $78 per share. A more bullish case could argue for 2 billion doses at $7 per shot or $14 billion in revenues.

Then there’s Novavax’s nanoparticle platform. Rival BioNTech (NASDAQ:BNTX), which uses an even more flexible mRNA platform, is worth $27 billion today. And while Novavax’s platform doesn’t have the same potential to create tailor-made drugs for individuals (i.e., cancer-beating vaccines), its production methods are well equipped to mass-produce vaccines for future coronavirus outbreaks.

Taken together, that means Novavax could be worth between $20 billion to $25 billion today, or about $350 per share. And future developments of its nanoparticle platform could push its value into the $40 billion to $50 billion range. It’s been a long journey for this 22-year-old company that’s never brought a vaccine to market. But with substantial proof of its platform and Covid-19 vaccine, Novavax stock looks set to shine.

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

Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.