1 Green Flag for Novavax in 2022, and 1 Red Flag

Novavax (NASDAQ:NVAX) is arriving more than a year after market leaders Pfizer and Moderna to the coronavirus vaccine finish line. Difficulty with a manufacturing ramp up held the company back last year. And resulted in lost momentum for the shares. Novavax soared 2,700% in 2020. But last year, Novavax shares added only 28%.

As of today, Novavax's vaccine has won authorization from more than 30 countries. And Novavax has resolved all manufacturing issues. Will the road be an easy one for this late-to-market company? Let's have a look at one green flag and one red flag ahead before deciding.

1 Green Flag for Novavax in 2022, and 1 Red Flag

Image source: Getty Images.

The green flag

It's clear that first-to-market companies have a big advantage. Pfizer and Moderna have vaccinated most of the U.S. population. And they've had the chance to turn their attention to negotiating advance purchase agreements for this year and next year.

But that doesn't mean Novavax can't carve out market share. In fact, one particular element could result in major sales for Novavax. Regulators have given the nod to the practice of mixing and matching boosters. This means, if you've had a primary series of the Moderna vaccine, for example, you could opt for a Novavax booster.

And in some markets, healthcare providers may truly need a new vaccine option to meet demand. For instance, in France, health authorities recommend that people under age 30 shouldn't be given the Moderna vaccine. They cite research showing a link to rare cases of heart inflammation in that age group. So, along with the Pfizer vaccine, the Novavax vaccine could be an option for this population. The European Union recently authorized Novavax's vaccine. And the company has even started shipping doses to the region.

The red flag

Now, let's have a look at the red flag ahead. And that's the idea that the pandemic may eventually switch to endemic. Some experts say this may happen as soon as this year. In the endemic stage, the coronavirus will be around. But infection rates won't surge to and remain at extreme highs as they've done during the pandemic.

I don't think demand for coronavirus vaccines will drop off a cliff at this point. People still will need protection. In fact, the coronavirus vaccine could become a common annual shot just like the flu vaccine. And about half of the U.S. population usually goes for an annual flu shot.

Still, it's possible countries won't order as many coronavirus vaccine doses as they did in the earlier days of the pandemic -- especially from a vaccine newcomer. And some countries already have secured doses with leaders Pfizer and Moderna through next year. Canada even has options for the Moderna vaccine through 2024.

What does this mean for Novavax?

Novavax may have a bumpier path than Moderna and Pfizer when it comes to gaining market share. They arrived at a time when the entire world was unvaccinated, and the pandemic was raging. But that doesn't mean Novavax won't be successful -- even facing the red flag mentioned above.

Yes, the pandemic likely will switch to an endemic phase. And it's still unclear how many doses governments will order in the years to come -- or whether pharmacies will start ordering directly from the vaccine makers.

But I think the story of the flu can offer us some guidance. As I hinted about above, it's very possible the same population will opt for annual coronavirus vaccines even well into the future. So, our red flag may not be too ominous after all.

And the mixing and matching element could be a big opportunity for Novavax -- for a very specific reason. The Novavax vaccine uses a different technology than the Pfizer and Moderna mRNA vaccines. It includes part of a viral protein along with an adjuvant to boost immune response. This is a well-known technique already used in commercialized vaccines. So, it offers an alternative for those who can't take an mRNA vaccine.

It's important to remember that, prior to the coronavirus vaccine, Novavax was a clinical stage company. This will be the company's first commercialized product. And Novavax has predicted billions of dollars in sales. That's a pretty big deal for a first product.

All of this means, yes, Novavax may face some headwinds. But overall, Novavax still may play an important role in the coronavirus vaccine market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.