A pharmaceutical play, Novavax (NASDAQ:NVAX) has been on the move. In fact, NVAX stock has risen nearly three times higher since November of last year.

This leap is primarily due to the company’s Covid-19 vaccine inching closer to commercial release. However, despite the price appreciation, I believe there is still plenty of upside left for this name.

Here’s what you should know about NVAX stock moving forward.

NVAX Stock: An Important and Unique Vaccine

Recently, NVAX stock scored a major victory when the European Union (EU) inked a supply contract with the pharmaceutical firm for up to 200 million doses. Initially, I was puzzled as to why it would consider such a purchase. After all, the vast majority of EU countries already have at least 60% to 70% of their populations fully vaccinated.

Well, the answer lies in the EU’s strategy to defend itself against future variants — as well as to prepare for possible booster shots. True, it has been using vaccines produced by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). It has also approved Astrazeneca (NASDAQ:AZN) and Johnson & Johnson’s (NYSE:JNJ) doses. So, why use NVAX’s shot?

Novavax’s vaccine is unique in that it uses alternative technology to what’s currently in the market. Rather than being mRNA-based, it’s a subunit protein vaccine. As such, it’s similar to an mRNA-based shot, but a key difference is that its coronavirus spike protein is already part of the dose. Plus, Novavax’s vaccine has an adjuvant made from tree bark that helps improve a patient’s immune response.

By purchasing Novavax’s vaccine, the European Union is diversifying its vaccine portfolio. This is especially important, given the variants of Covid-19 that are circulating around the world as well as the potential future variants that may emerge. European Commission President Ursula von der Leyen noted the following about the NVAX deal:

“As new coronavirus variants are spreading in Europe and around the world, this new contract with a company that is already testing its vaccine successfully against these variants is an additional safeguard for the protection of our population.”

Given the economic damage caused by the pandemic, this type of insurance is a small price to pay.

Gaining Traction Despite Lack of Approval

It should be noted that Novavax’s vaccine has not yet been approved by the European regulators. However, I believe that approval will only be a matter of time. Right now, the only missing information the EU needs is on production-related chemistry, manufacturing and controls. This delay was due to Novavax changing its “production strategy.” Now the company has set its submission timeline between late September and early October.

Despite the current lack of approval, though, countries are more than willing to spend to secure supply. For example, Denmark announced that it would buy 280,000 doses. Novavax’s vaccine had a purchase price of roughly $20.90 per dose for a total contract size of $5.84 million.

We can use this information to do a quick, back-of-the-envelope calculation of the value of the overall supply agreement. At a price of $20.90 per dose and 200 million doses, Novavax is set to gain a potential $4.18 billion in sales from this deal. That certainly means big things for NVAX stock.

Investor Takeaway on NVAX Stock

Using the numbers from this European contract alone and the Sept. 15 price of $232.30, NVAX stock is trading at a forward price-sales (P/S) ratio of 4.14 times. I believe this is a reasonable valuation for Novavax, given the strength of the company’s vaccine. And this valuation doesn’t even include the company’s potential deals with other countries.

When it comes down to it, there are plenty of countries out there that are in need of a vaccine. What’s more, the delta variant continues to wreak havoc in those countries and elsewhere. Populations around the world are going to need additional vaccine supply.

That’s why I believe NVAX stock is a buy around these levels.

On the date of publication, Joseph Nograles held a long position in NVAX and MRNA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.