This is my first time writing about Novavax (NASDAQ:NVAX) and the more I learn about the company, I can’t help but think about Inception, the Leonardo DiCaprio movie about dreams within dreams. A lot of the discussion around Novavax’s Covid-19 vaccine feels like living in that film’s impossible dream worlds. People buying NVAX stock are believing in the dream that its coronavirus vaccine will reach production soon, but it’s important to face reality: Novavax’s fundamentals are far from exciting.

It’s certainly possible that Novavax’s Covid-19 vaccine could reach production. But approval from the U.S. Food and Drug Administration may still be a long way off. The FDA has understandably stringent requirements, though.

Vaccine Progress

Novavax says it has used its “recombinant nanoparticle technology to generate antigen derived from the coronavirus spike protein,” and the vaccine candidate “binds efficiently with human receptors targeted by the virus, a critical aspect for effective vaccine protection.” It had phase-3 trials begin in the U.K. and U.S. in November and December last year respectively, with phase-2 and earlier trials elsewhere.

That’s progress toward FDA approval, but it is still uncertain when and if this will occur. Novavax is trying to achieve this by the end of 2021, but that doesn’t mean they’ll success.

As of today, Novavax nine vaccines in its pipeline, and none of them are officially marketed or being approved for commercialization.

That being said, there is some good news. Novavax has applied for emergency use authorization for their Covid-19 vaccine in India, Indonesia and the Philippines, and it has finalized terms for an advance purchase agreement with the European Commission for up to 200 million doses. The company also has a promising flu vaccine in their pipeline.

An EUA approval India would be great news and could lead to a lot of potential revenue. The APA is good news too.

But the European Medicines Agency brings a caveat: those 200 million doses will need to be “reviewed and approved by EMA as safe and effective.” We do not know if the EMA will approve Novavax’s coronavirus vaccine.

The NVAX Stock Fundamentals

Novavax’s Q2 2021 earnings report highlighted the company’s biggest weak point: it is burning cash. Novavax had a net loss of $352 million compared to $18 million in the year prior quarter, or a loss of $4.75 per share compared to 30 cents. Their revenue did improve, though. They had $298 million in revenue for the quarter compared to $36 million a year prior.

So revenue improved, but net loss worsened. Both research and development expenses and general and administrative expenses increased. All in all, it’s not good. Novavax did manage to turn its stockholders’ equity from a deficit in 2019 to a positive number, but along the way it issued a lot of shares, diluting stock.

NVAX stock has a price/sales ratio of 37.3 compared to 9.99 for its industry, and a Price/Book Value ratio of 26.94 compared to 6.29 for its industry. That’s awfully expensive by comparison.

Novavax has remained unprofitable and has had negative free cash flow for years. There might be potential in the company’s Covid-19 vaccine, but until commercialization begins and the company makes any profit, focus on the fundamentals, not the dream.

On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.