Novavax Inc (NASDAQ:NVAX): Look Beyond The Share Price

Sometimes in the development biotechnology space, you've got to look past share price and market capitalization fluctuations to the science and operations of the underlying company. There is so much manipulative activity at this end of the market that a company can get beaten down, however, promising its pipeline looks, and however many catalysts are on the cards that could, or should, result in some strength.Novavax Inc (NASDAQ:NVAX) is one such example.The company is developing vaccinations for a variety of infectious diseases based on a proprietary adjuvant technology and has a raft of near-term catalysts that could inject some serious upside momentum into its share price between now and the end of 2018. It's developing a much-needed prenatal vaccine that could save countless babies' lives, and that is supported by the Bill and Melinda Gates foundation to the tune of $89 million. It's also headed up by some of the leading virology experts in the sector. Despite all this, however, it is down more than 91% on last year's highs, and close to 42% down year to date.Management just put out the company's latest earnings report and held a conference call to discuss outlook. We sat in on the conference call, and we think there are a number of key points on which markets should be focusing as indicative of upside potential going forward.Here is what we are looking at.As a bit of catch-up, readers should be aware that this company failed a phase 3 trial in RSV patients towards the end of last year; a failure that accounted for the vast majority of the decline in market capitalization seen over the last six months also. However, the failure was due to a discrepancy between expectations and reality in the control arm of the study, as opposed to a lackluster performance by the drug, and Novavax has spent the last six months going through the data to take what it has learned from the failure and apply it to forward efforts.One such effort, the next major catalyst, is a phase 2 trial in elderly RSV patients (the same population in which the drug failed previously, but with an altered dosing protocol). Data from this study is expected to hit press during the third quarter of this year. If the numbers come in as indicative of efficacy, it will reinforce management's claims that protocol led to the phase 3 failure as opposed to an ineffective compound, and the company should regain a large portion of its lost strength.A second major catalyst derives from the above-mentioned prenatal study. This one is designed to measure the impact of vaccinating pregnant women during the third trimester against RSV infections in newborn children. Said infections are the number one cause of hospitalization among this population, and the direct economic cost of these hospitalizations exceed $700 million annually in the US. If the drug is approved, it's almost certainly going to become a standard of care treatment for every pregnant woman in the US, and as such, carries a more than $1.5 billion annual sales potential – a potential that could be realized incredibly quickly post regulatory-greenlight. This one is a slow burner, and it's not going to read out from a topline perspective until 2020. However, we already know by way of data monitoring recommendation that it's safe, and management expects to be able to get some degree of (blinded) indication as to efficacy as soon as early next year. The indication will be of a yes or no type, and if it comes out as a yes, again, we are going to see some incredible upside in market capitalization for Novavax.The company's cash on hand at March 31 came in at $211 million against a quarterly burn of $39 million. This removes any near-term dilution risk, making the company a pure catalyst play for at least the next 12 months.The bottom line here is that Novavax's share price action is unrepresentative of its underlying operational activity. If the upcoming data hits press as positive, markets are going to quickly realign to accommodate this development. Sure, there's a chance that the ongoing trial/trials may fail, and therein lies the binary risk. Based on what we have seen to date, however, with the above-mentioned failed phase 3 excepted, we think there is a good chance of progression.As we've said, it's only going to take one of this company's shots on goal hitting the target to bring about a dramatic revaluation.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.