Novavax Inc (NASDAQ:NVAX) Could Be A Top Discount Entry Stock

Novavax, Inc. (NASDAQ:NVAX) has been a tough stock to be in over the last twelve months. The company has disappointed on a few key catalysts (one in particular, which we'll come to shortly) and currently trades for a more than 80% discount to its 2016 highs. It's a stock that many have pretty much totally written off, and there's a lot of valid reasons for them doing so. Take an objective look at the situation, however, and there's also the potential for a recovery play from current levels.Here's what we're thinking.To bring readers that aren’t familiar with the stock up to date, it's a biotechnology company that is trying to develop a vaccine for the respiratory syncytial virus (RSV). RSV is an extremely common virus, especially in children and the elderly, and infection is characterized by infections of the lungs and respiratory tract. It's highly contagious, and can be pretty serious, especially in the two just mentioned demographics.There's no vaccine on the market for it right now, but for a company that manages to bring one to market there's a billion-dollar market waiting. A couple of companies are leading the way, and Novavax is one of them – or at least it was.Last September, the company put out data from its phase III study of its vaccine, and the data failed to hit both primary and secondary endpoints. This came as a surprise, given how well the vaccine performed in early stage studies, but markets gave no real consideration to legacy data in their response – Novavax lost 85% of its market cap overnight.Subsequent to the disappointment, however, the company has regrouped, and it's in this regrouping that we see an opportunity.There are two programs that we are watching as value drivers, and turnaround catalysts, near term. The first is a phase III trial investigating immunogenicity in pregnant women, which is ongoing. The idea is to give pregnant women the vaccination in the hope it will immunize the baby before it's born. This is a billion-dollar market, and as per a recent release, we might see an interim release that offers insight into the trial, which kicked off in December 2015.If we get this interim, it could be a real upside kick – assuming it reinforces the efficacy thesis that the earlier stage data put forward.The second key driver is a phase II study looking at immunogenicity in the elderly. The idea of this phase II (although it's not spelled out as such, but we're drawing what we see as a perfectly reasonable conclusion from the available info) is to try and get the FDA to approve a phase III protocol that allows for a stronger dose to be administered in elderly patients than was administered in the phase III that failed last year.A higher dose should result in higher immunogenicity (which is just another way of saying how well does the vaccine work) and if the company can get a pivotal with a high dose approved, it could get the whole elderly program back on track.The key point here is that this vaccine seems to work, and markets had it pinned as a shoo in for approval as and when Novavax put it in front of the FDA. The phase III trial was almost nothing more than a formality.Then it failed, and the stock hit the floor.The trial failed, but the program hasn’t, and there's a good chance of recovery based on the above discussed catalysts. There's a cash risk, sure. The company has more than $200 million on hand, but it's spending that each year, so runway right now is little more than twelve months. However, current market cap is pretty much only representative of cash holding, so any push from the development program is going to add value.We will be updating our subscribers as soon as we know more. For the latest updates on NVAX, sign up below!Disclosure: We have no position in NVAX and have not been compensated for this article.