Novavax Inc (NASDAQ:NVAX) Is Now A Top Recovery Play

Back at the end of July, we published this piece on Novavax Inc (NASDAQ:NVAX). The company had just put out data from a phase 2 study of its lead development asset, an RSV vaccine, and market misinterpretation of the data had translated to existing decline in valuation practically overnight. NVAX Daily ChartThe company went from trading at $1.51 before the data hit press to $0.96 a share almost immediately subsequent to the release -- a more than 35% depreciation on the news.Our thesis at the time was relatively simple: driven by a number of misinterpretations from analysts in the space (most notably, Adam Feuerstein), Novavax was available at a discount to accurate pricing and that anything below $1 a share served up a nice opportunity to pick up an exposure cheaply and ride out the recovery.Timing these sorts of recovery place can be difficult. Catching a falling knife is often ill-advised and it is usually necessary to ride out a bit of depreciation subsequent to picking up an exposure before things start to turn around and the recovery materializes. In this instance, it's taken about a month, but across this period, price hasn't really moved substantially below the point at which we highlighted it as being a discount opportunity.Towards the end of last week, and continuing into this week, we're finally seeing our thesis validated. On August 31, Novavax went for $1.05. By mid session on September 1, the stock was trading at $1.16 per share and currently goes for $1.10. For anybody that jumped in on the $0.96 a share pricing that's a quick turnaround 20% premium.So the question now is, what's next? Are we likely to see this run continue? In a word, yes.The thing that markets have wrong about this one is that the indication it is trying to target (as a lead, RSV virus) is very difficult to treat. That's why no treatment options, or vaccines, exist today. With the latest data, however, Novavax has been able to show that its candidate, a vaccine targeting RSV-F, can induce an immune response and that further – that said immune response is both dose-dependent and can be amplified with the use of an adjuvant.This is a big deal and – right now – it's one that markets seem to be outright ignoring.Well, that's not entirely accurate. Over the last few weeks, we have seen a number of financial media outlets follow our lead and start this one forward as a stop to watch. Perhaps most notably, the Motley Fool has published six or seven glowing reviews of Novavax over the last couple of weeks alone.This tells us that the slower movers in the market of finally getting on board with Novavax's potential and that the stock is primed to run as and when this portion pulls the trigger on a buy position.As of June 30, 2017, the company had $187.3 million in cash, cash equivalents and marketable securities and, during the first six months of the year, cash burn came in at $71.7 million. Management expects this to increase slightly during the final six months of the year, given that Novavax is set to initiate a Phase 1/2 clinical trial of its new nanoparticle seasonal influenza vaccine, but even with said increase, dilution risk is minimal for the next 8 to 12 months.Bottom line here is that this is a company that is down for no other reason than bad press and that is finally starting to recover. We highlighted it at a 20% discount on current prices, but that doesn't mean it's too late to pick up an exposure and benefit from an ongoing recovery.Check out our previous coverage of NVAX here. We will be updating our subscribers as soon as we know more. For the latest updates on NVAX, sign up below!Image courtesy of Dominic Alves via FlickrDisclosure: We have no position in NVAX and have not been compensated for this article.