Novavax COVID-19 vaccine’s long-delayed global rollout will start in Indonesia, fueling hope for more equitable distribution

The announcement sparked a 16% rise in Novavax’s share price on the Nasdaq, as investors hope the news will help reverse the fortunes of a vaccine maker that has yet to take any product to market but has long been considered a major player in the race to inoculate the globe against COVID-19.

“The first authorization of Novavax’s COVID-19 vaccine exemplifies our commitment to equitable global access and will fill a vital need for Indonesia,” Stanley Erck, president and CEO of Novavax, said in a statement. He explained that doses would be sent to Indonesia “imminently,” and Indonesia’s government expects to receive 20 million doses by the end of this year.

In trials, Novavax’s protein-based vaccine has proved as effective as mRNA counterparts from makers like Moderna and Pfizer. It’s also easier to distribute since it can be stored at refrigerated temperatures (2° to 8° Celsius) instead of in subzero freezers.

Novavax’s approval will likely be welcome news in Indonesia, a country of 273 million people that has lagged Asian peers in rolling out vaccines. Indonesia has fully vaccinated 27.6% of its citizens, compared with 75.1% in Malaysia, 64.8% in Australia, and 76.5% in China. Similarly vaccine-starved countries may follow Indonesia’s lead in coming weeks in approving Novavax’s vaccine, but distributing the vaccine globally may be delayed until 2022, pending decisions from World Health Organization, the U.S. Food and Drug Administration, and other global health regulators. Endorsements from those agencies could allow Novavax to finally unleash its highly effective vaccine to billions of people next year.

Protein boost

Novavax’s two-dose regimen will be Indonesia’s first protein subunit COVID-19 vaccine, a technology that has been successfully used to protect against diseases like hepatitis B.

It works by injecting the body’s immune system with a purified form of COVID-19 to stimulate an immune response. Since protein subunit vaccines only deliver a part of the virus that cannot cause disease, the jab is often considered one of the safest vaccines on the market.

The vaccine has also proved highly effective.

In initial Phase III trial results in January, Novavax reported that its vaccine was 89.3% effective in preventing COVID-19 infections in a U.K. trial. Additional results published in June confirmed the findings, showing that Novavax’s jab was more than 90% effective in a large trial in the U.S. and Mexico. In a separate trial, the vaccine also induced a strong immune response among trial participants who had received a full regimen of other vaccines, prompting Erck to say this week that Novavax is an “ideal” candidate for booster shots.

But Novavax still faces stiff hurdles in scaling up manufacturing and winning over U.S. regulators.

Protein subunit vaccines are relatively difficult to manufacture compared with mRNA jabs, especially at scale, given the complicated process of needing to infect cells to produce spike proteins. The mRNA jabs, on the other hand, are more easily made at scale because they rely on a relatively less complex chemically synthesized process.

In the U.S., Novavax initially aimed to get its vaccine approved by May, but has yet to submit an application to the Food and Drug Administration for approval.

U.S. regulators said in August that poor quality control issues in Novavax’s manufacturing facility were the root cause of Novavax’s delayed approval. Novavax later countered that its partnership with the U.S. government’s Operation Warp Speed—which provided $1.75 billion in funding to Novavax to develop a COVID-19 vaccine—slowed down Novavax by pushing it to work with specific manufacturers.

A Politico investigation in October found that Novavax’s vaccines produced in a U.S. manufacturing facility were 70% pure, below the 90% threshold needed for FDA approval. Lower purity levels increase the chance that the vaccine would contain unnecessary substances or contaminants that could make the vaccine less effective. Novavax, meanwhile, did not comment on the purity issues but said it was “confident” that its vaccine would play a “significant role in the global COVID-19 vaccine arsenal” in the wake of Politico’s report.

In October, Novavax cited “analytical” delays in production methods for why it hasn’t applied for FDA approval yet. But on Monday Novavax announced that it expects to submit its “complete package” for FDA approval by the end of this year.

Global distribution

But amid U.S. holdups, Novavax hopes that Indonesia’s approval will kick-start more widespread acceptance of its vaccine.

“It is the first of many authorizations that Novavax expects in the coming weeks and months for our vaccine globally,” Erck noted. Erck had previously said in an August investor call that Novavax would target low-income countries with low vaccination rates for the jab’s initial rollout.

Novavax’s key supplier outside the U.S. is the Serum Institute of India, the largest vaccine manufacturer by volume in the world, which will be making the Novavax doses used in Indonesia. Novavax and the Serum Institute said in September that they plan to make 2 billion COVID-19 doses in 2022. Still, it is unclear whether the Serum Institute’s manufacturing facilities are plagued by the same issues as Novavax’s U.S. plants. Novavax and the Serum Institute did not immediately respond to Fortune’s request for comment.

But some countries at least may follow Indonesia’s lead in approving the vaccine. Countries like the Philippines and India may be more likely to look past the U.S. regulatory delays and approve Novavax than countries with more bountiful vaccine supplies. Erck told Reuters on Monday that India and the Philippines are two of the markets that could approve Novavax jabs in the coming weeks.

Novavax applied for regulatory approval in the Philippines in August. And like Indonesia, the Philippines has similarly struggled to access COVID-19 vaccines and has fully vaccinated just 25.5% of its population.  

But Novavax may face an uphill battle in India.

In India, the Serum Institute has applied to regulators to get the jab approved, but the Indian outlet India Today reported this week that a decision may be delayed until next year given the reported problems in U.S. manufacturing facilities. Serum Institute CEO Adar Poonawalla said in August that India’s approval of the vaccine would likely be contingent on Novavax’s ability to get clearance from U.S. regulators.

Novavax has also applied for approval in the European Union, the U.K., Australia, New Zealand, and Canada.

Novavax’s biggest test will come at the WHO. Novavax applied to the WHO for emergency use approval for its vaccine in September, and winning authorization could open dozens of new markets to distribution.

Earlier this year, Novavax and the Serum Institute pledged to deliver 1.1 billion doses of the vaccines they produced together to WHO-backed COVAX, an initiative aimed at supplying low- and middle-income countries with vaccines.

Novavax, at least, is confident that a WHO approval will come by the end of the year.

“I think [Novavax is] going to really start being able to ship [a] large quantity to COVAX in the first quarter” of 2022, Erck told Reuters on Monday.

More must-read business news and analysis from Fortune:

• The Impact 20
• Hong Kong’s COVID policies are forcing big banks to consider shifting resources away from the city
• Hyperinflation: Why Jack Dorsey is worried
• Lucid Motor’s Air EV finally hits the roads with a range that blows Tesla away
• Chewy CEO Sumit Singh on the pet boom, the pandemic, and moving from puppyhood to profitability