Where will Vaxart be in 1 year?

There are now three vaccine candidates against the coronavirus demonstrating at least 90% efficacy in late stage studies. This puts significant pressure on manufacturers of early-stage coronavirus vaccines such as Vaxart (NASDAQ: VXRT) to deliver results to their investors.

Sadly, Vaxart’s stock is down almost 67% from all-time highs as its progress has been somewhat slow. To its credit, the company’s vaccine candidate has logistical advantages over its main competitors.

First, the vaccine candidate is ingested as an oral tablet instead of receiving a conventional injection. Second, it has room temperature stability as opposed to freezing requirements.

Can the stock bounce back over the next year and reward shareholders?

Not bad for progress

In a Nov. 12 update, Vaxart revealed that after administering two doses of its vaccine candidate to Syrian hamsters, they developed significant antibody response levels against SARS-CoV-2. The study has serious limitations because it is preclinical. Normally, just because experimental therapy works in rodents doesn’t mean it will work in humans.

However, what is promising for Vaxart is that its competitor Johnson & johnson (NYSE: JNJ) was able to validate such a key hypothesis. In preclinical studies, the Johnson & Johnson coronavirus vaccine candidate Ad26.COV2.S (Ad26) protected hamsters against COVID-19 after administration. After advancing into phase 1/2 clinical studies, Ad26 replicated its success by inducing neutralizing antibodies against SARS-CoV-2 in almost all human participants in a small sample. Ad26 is currently the subject of a large-scale Phase 3 study.

With a precedent set, there is a good chance that Vaxart’s vaccine candidate could achieve immunity as well. Currently, the company’s experimental vaccine is in phase 1 studies, with data expected in the coming weeks.

Unresolved questions

The main issue Vaxart is currently facing is not so much scientific validation, but credibility. The company is currently under federal investigation and has been the subject of multiple investor prosecutions over allegations it exaggerated its role in Operation Warp Speed ​​(OWS).

In June, Vaxart said in its press release that its vaccine candidate had been “selected for the US government’s Operation Warp Speed.” In reality, the candidate was only part of the operation of preliminary studies in animals. A hedge fund that controlled the company took in more than $ 200 million in profits in its June press release through suspected insider trading.

What’s the verdict?

Despite the challenges, Vaxart is making concrete progress in advancing its coronavirus vaccine candidate. Previously, the company had licensed two oral seasonal influenza vaccines (Relenza and Inavir) to large-cap pharmaceutical companies, which brought them to market. Since its inception, Vaxart has lost a modest sum of $ 135 million. He currently has $ 133.4 million in cash and cash equivalents.

For a company with a market cap of just $ 622 million, Vaxart seems a bit undervalued given the potential multibillion dollar revenue from the coronavirus vaccine. On the other hand, the company is still in its infancy. He may only end up grabbing a small fraction of that opportunity, even if his candidate gets approval.

As a result, biotech investors with a high risk, high return mindset may consider buying a small block of stocks now. For everyone, I would recommend waiting for at least Phase 1 data before taking a position. I see a good chance that Vaxart’s candidate will at least be in Phase 3 studies by November 2021 – although the likelihood of approval is still under debate until more data is released.