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Better Coronavirus Stock: VBI Vaccines or Vaxart?

By Alex Carchidi – Jun 27, 2020 at 7:12AM

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A company's vaccine manufacturing capabilities can make a world of difference.

Vaxart (VXRT -3.67%) and VBI Vaccines (VBIV -0.95%) are both young vaccine companies seeking to develop a vaccine for COVID-19. Neither company is profitable, but both stocks have experienced triple-digit growth in the last three months. Future stock growth stemming from advances in vaccine development is highly likely, even if neither company manages to move its vaccine candidate all the way through clinical trials to reach commercialization.

Given that both companies have a credible chance at developing a winning COVID-19 vaccine, which company is the better stock for smart biotech investors, and why?

Several vials labeled COVID-19 Vaccine

Image source: Getty Images.

Vaxart delights investors by planning to scale up vaccine production

As a biotech start-up, Vaxart has no products on the market and trailing-12-month revenue of only $7.36 million. Nonetheless, its COVID-19 vaccine program is promising enough that the company is planning ahead for large-scale manufacturing of vaccine components, to support clinical trial operations in the near future.

On June 25, Vaxart signed a memorandum of understanding with Attwill Medical Solutions Sterilflow that laid the groundwork for future collaboration regarding vaccine-component manufacturing, causing Vaxart's stock price to skyrocket. This move, however, is only Vaxart's most recent attempt to shore up its vaccine manufacturing capabilities. In May, Vaxart announced that it had contracted with KindredBio (KIN) to manufacture vaccine components, in addition to those provided by its existing partner, Emergent BioSolutions (EBS -1.32%).

Including its vaccine for COVID-19, Vaxart's pipeline has seven vaccine programs, for infectious diseases ranging from influenza to norovirus. Notably, all of Vaxart's vaccines are formulated as oral tablets rather than injections, so they're significantly less prone to spoilage when stored at room temperature.

All but one of Vaxart's pipeline programs are early stage. This means that Vaxart will likely need to collaborate with partners that are more experienced with clinical operations, thereby reducing its share of revenue from any approved vaccine product. Given that it has only $29.86 million in cash, the company will also need to raise significantly more funds if it wants to win the COVID-19 vaccine race. If its remaining preclinical research goes according to plan, Vaxart's oral-tablet COVID-19 vaccine will move into phase 1 trials in late summer.

VBI's revenue is nascent, but its COVID-19 vaccine candidate could be a winner

Unlike Vaxart, VBI Vaccines is a commercial-stage company rather than a clinical-stage company. VBI has a hepatitis B vaccine product that is approved and on the market in Israel, and pending approval in several other countries. This means that while its $2.28 million in trailing-12-month revenue is surprisingly low, its revenue should increase precipitously once the vaccine is approved in the U.S. and Canada later this year.

VBI's pipeline has seven vaccine programs, six of which are in preclinical development or early clinical trial phases. VBI's COVID-19 vaccine candidate, VBI-2901, is noteworthy because it could potentially also confer immunity to other coronaviruses which cause diseases like MERS (Middle Eastern Respiratory Syndrome).

More importantly, VBI appears to be facing a bottleneck either in its preclinical research or its vaccine manufacturing capabilities. VBI doesn't expect to have the necessary clinical study materials assembled for its COVID-19 vaccine trial before the fourth quarter, meaning that it's roughly a quarter behind Vaxart in the development process.

With only $35.8 million in cash on hand, it's clear that VBI needs more cash before making a major push toward vaccine production. Consequently, VBI raised $57.5 million via a public offering in late April, before entering into a new debt financing agreement worth $50 million in May.

VBIV Chart

VBIV data by YCharts

Which stock is better?

Between VBI Vaccines and Vaxart, Vaxart is better positioned for stock growth stemming from its COVID-19 vaccine development program. The company's stock has already surged several times after new announcements about manufacturing scale-up, and positive news about the efficacy of its vaccine would likely raise share prices even more. In contrast, VBI appears to be struggling with its own manufacturing scale-up for clinical operations, leaving its COVID-19 vaccine candidate even further from the market than Vaxart's.

Thus, investors seeking growth should consider purchasing Vaxart in the short term to capture the largest gain from its upcoming initiation of clinical trials.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Emergent BioSolutions. The Motley Fool has a disclosure policy.

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Stocks Mentioned

VBI Vaccines Inc. Stock Quote
VBI Vaccines Inc.
$0.73 (-0.95%) $0.01
Vaxart, Inc. Stock Quote
Vaxart, Inc.
$2.10 (-3.67%) $0.08
Emergent BioSolutions Inc. Stock Quote
Emergent BioSolutions Inc.
$20.86 (-1.32%) $0.28
Kindred Biosciences, Inc. Stock Quote
Kindred Biosciences, Inc.

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