What To Expect From Vaxart And Its Quest To Develop COVID-19 Candidate

Summary

• Vaxart is making progress on its work to develop an oral vaccine to treat COVID-19.
• We'll look at why its oral delivery vaccine system could differentiate and potentially be superior to many other delivery systems.
• In the article we'll also consider the probable price range the share price of Vaxart will move in in the months ahead.

Source: company website

Biotech Vaxart (NASDAQ:VXRT) jumped pre-market on April 21 on the news it had achieved positive results in pre-clinical trials concerning work on its oral vaccine candidates for COVID-19.

In this article we'll examine the implications of the progress on the share price of the company going forward, why an oral delivery system could be superior to other vaccine candidates, and what to take into account if considering taking a position in the company.

Before that, we'll look at its most recent earnings report.

Latest earnings

In its last earnings report for the period ended December 31, 2019, the company reported revenue of $3.9 million, more than double the $1.8 million in revenue generated in the same quarter of 2018. Most of that was the result of non-cash sales associated with future royalties.

Royalty revenue from Inavir for the quarter was $2.2 million, up 148 percent year-over-year.

The company had a net loss in the quarter of $6.4 million, up from the $4.9 million loss in the same reporting period of 2018. The bulk of the increase in net loss came from a restructuring charge of $4.9 million in the quarter, which was offset by a drop in research and development expenditure and a boost in revenue. Full-year net loss was $18.6 million, against the loss of $18.3 million in the fourth quarter of 2018. The increase in net loss came from the "absence of a bargain purchase gain of $6.8 million, partially offset by an increase in revenue of $5.7 million."

Full-year revenue came in at $9.9 million, up from the $4.2 million in full-year revenue for 2018. The increase was from an increase in royalty revenue from Inavir in the last calendar quarter of 2019, and recorded revenue in the pre-merger period of January 1-February 13, 2018, of $3.5 million. At the end of 2019 Vaxart had cash and cash equivalents of $13.5 million, up from the $11.5 million it had at the end of 2018. The company attributed the increase to raising capital via issuing equity of $19.87 million in 2019. That was offset in part from paying down debt by $3.8 million, and the use of $13.1 million in cash for operational purposes.

Progress on oral vaccine

In January 2019, Vaxart announced it had launched a program for the purpose of developing an oral vaccine to treat COVID-19, based upon its VAASTTM platform.

On March 18 it said it had entered into an agreement with "Emergent BioSolutions Inc. for development services in preparation for the cGMP production of the Vaxart vaccine. Development services have started and, if Vaxart elects to proceed with cGMP manufacturing, Emergent is expected to produce bulk cGMP vaccine for use in a Phase 1 clinical study that Vaxart currently expects to initiate early in the second half of 2020."

HC Wainwright analyst Vernon Bernardino believes the delivery of an oral vaccine could be advantageous against other vaccines that are delivered via injection.

“We believe an oral delivery vaccine to meet this public health threat could provide distinct advantages versus candidates under evaluation by ongoing competitor CoV vaccine programs, and if commercialized, could be very differentiated due to its route of administration and mode of stimulating an immunogenic response.”

If that's how it plays out, it would be a huge differentiator for Vaxart, and an enormous revenue stream.

A Phase 1 clinical trial is expected to launch in the second half of 2020.

As mentioned earlier, the latest news is the company generated positive results related to the progress of its oral vaccine candidates. According to a press release, the company said after a single dose, all animals receiving the vaccine generated immune responses.

“These results are extremely encouraging, and we should be in a position to select a lead development candidate for cGMP manufacturing and clinical testing in the coming weeks,” said Wouter Latour, MD, chief executive officer of Vaxart Inc. “Our oral vaccines have been shown to protect against respiratory infection based on mucosal immunity, the first line of defense for such infections, as recently published in the Lancet Infectious Diseases. This could be important for an effective vaccine that protects the global population from COVID-19. In addition, the Vaxart vaccine would be administered orally using a room temperature-stable tablet, an enormous logistical advantage over injectables in large vaccination campaigns.”

What to expect going forward

As for the share price of Vaxart, other than the usual increase in price from news releases and announcements, it has been in a range of about $1.70 to $1.80 per share, and that is probably where it'll remain once the newness of the recent announcement wears off.

source: seeking alpha

That said, it's possible with the progress being made, it could jump up closer to $2.00 per share on average. As it stands, the progress isn't without merit, but we're still a long way from it being confirmed as a legitimate treatment option for COVID-19.

If the company continues to successfully move forward on a consistent basis, the floor of its share price could move up incrementally, until the stock approaches the $3.00 per share mark.

So far, after announcements from the company, the price has moved up to a little under $3.00 per share, and after the most recent announcement jumped past the $3.00 per share mark. That suggests to me the possibility of it having a higher floor and ceiling if it continues to progress. Even so, I think it'll remain subdued until there is more clarity on whether or not this is a legitimate contender to treat COVID-19.

Until that is known, it will struggle to sustainably jump above $3.00 per share in my opinion.

Conclusion

As interesting and potentially differentiated as Vaxart's candidate for COVID-19 is, it is still a highly speculative play that should be considered a short-term trade based upon news, rather than a long-term buy-and-hold.

Based upon longevity and profitability, there is no way of knowing at this time, based upon the current level of progress, whether or not Vaxart will succeed in its endeavor to treat COVID-19. It definitely has potential, but it should be understood as unrealized potential, not as a company that is guaranteed success at this stage of its vaccine development.

If it is able to successfully develop an oral vaccine with its expected treatment results, it would be a powerful entry into the market, and will sustainably change the long-term growth trajectory of the company.

If it doesn't succeed, it'll go back to being considered a small-time player in the biotech industry, that has yet to prove it can compete with the big biotech companies, or even its peers.

For that reason I consider it a stock that should be traded, not held at this time.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.