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Why Vaxart Is Soaring Today

By Prosper Junior Bakiny – Apr 27, 2020 at 12:23PM

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The biotech company is benefiting from an overall rise in the stock market.

What happened

Shares of Vaxart (VXRT -3.02%) were up by 24.8% as of 11:49 a.m. EDT on Monday. The company did not report any news, so what is going on? There are probably two major reasons behind the company's gains. First, Vaxart's stock is riding on the wave of the broader market, which started the week on a strong note. Second, the biotech company has been looking to develop a vaccine for COVID-19, and its shares are up by almost 1000% year to date as a result. Today's gains are likely a continuation of that trend. 

So what

As several states are eyeing easing restrictions on social distancing and many businesses are set to reopen, investors seem increasingly optimistic that the economic impact of the COVID-19 outbreak won't be catastrophic after all. But the public health crisis is still ongoing, and companies looking to develop vaccines or treatments for COVID-19 have been getting a lot of attention from investors. Vaxart is one such company.

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On April 21, Vaxart announced positive results from a preclinical trial for its COVID-19 vaccine candidates. According to the company, several of its vaccine candidates generated immune responses in "all tested animals after a single dose." The company is looking to start a phase 1 clinical trial during the second half of the year.

Now what

The race to develop a vaccine for COVID-19 is crowded. According to the World Health Organization (WHO), there are at least 70 vaccine candidates currently in development for the novel coronavirus. Further, there is no reason to believe Vaxart will be the first -- much less the only -- biotech company to launch a COVID-19 vaccine on the market. That's why Vaxart's gains today, or for that matter, since the beginning of the year, should mean little to long-term investors. Lastly, with no approved products currently on the market, Vaxart's overall prospects seem risky. Investors would do well to watch this one from the sidelines.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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