Vaccine startup Vaxart (VXRT -2.02%) announced Thursday morning that it was initiating a memorandum of understanding with Attwill Medical Solutions Sterilflow. The latter company will produce components for Vaxart's COVID-19 vaccine candidate currently in preclinical development, and Vaxart's stock exploded upward by more than 96% on the news.
The agreement between the two companies isn't finalized yet, and Vaxart's COVID-19 vaccine isn't even ready to enter early clinical trials despite the company moving to secure manufacturing resources. Nonetheless, biotech investors seeking gains from COVID-19 vaccine development might consider buying Vaxart now to position themselves for another round of wild growth.
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What makes Vaxart special?
At present, Vaxart doesn't have any vaccines that are approved for sale. Nor does it have any late-stage vaccine candidates in its pipeline. And, with a market cap of $443 million and only $7.4 million in trailing-12-month revenue, the company's financial position is nascent rather than burgeoning. Instead, Vaxart is remarkable for its oral-vaccine technology platform, which will likely give it a strong competitive advantage in the COVID-19 vaccine market of the future.
Vaxart's platform is designed to produce vaccines in the form of tablets, unlike traditional liquid vaccines for injection. By producing vaccines that patients can take orally, Vaxart accomplishes several important things at once.
First, Vaxart's vaccine pills are shelf-stable. This means that unlike most vaccines, they don't need a refrigerated supply chain during distribution or storage, thereby delivering cost savings as well as easier access to wider markets. Second, Vaxart's vaccines may be safer than injectable vaccines, and there is some evidence that they will cause fewer side effects. There's also some preliminary clinical trial evidence that Vaxart's oral vaccines can prevent illness more effectively than injection-based vaccines for common illnesses like influenza.
All of these factors are extremely favorable for a COVID-19 vaccine. In fact, if another company develops an effective COVID-19 vaccine before Vaxart, its vaccine might still be able to find a niche in the market. And, if the early COVID-19 vaccines require consistent redosing to maintain immunity, Vaxart's oral vaccine tablets would look even better.
By expanding vaccine manufacturing, Vaxart's leadership is planning for success
Independent from the merits of its oral-vaccine platform, Vaxart's leadership has shown that they fully believe in the company's COVID-19 vaccine candidate. Vaxart's exhilarating growth on Thursday resulted from an announcement regarding scaling up its vaccine production capabilities with the help of an outside collaborator, a decision that almost certainly would not have been made if the company's leadership had a low opinion of the vaccine's efficacy. And Thursday's announcement was only the latest of Vaxart's public bets that its COVID-19 vaccine will be a runaway success.
Well before Thursday's excitement, the company had completed technology transfers to its two major manufacturing partners, Emergent BioSolutions (EBS -2.11%) and KindredBio (KIN). These technology transfers mean that each of the partners is now prepared to manufacture significant quantities of Vaxart's vaccines.
The company's COVID-19 vaccine candidate is still in preclinical development, and there's no guarantee that it will pass through the clinical trial process. While it might seem like Vaxart is putting the cart before the horse by scaling up manufacturing capabilities before having a proven vaccine candidate in hand, in reality Vaxart has little to lose, because it needs a certain volume of vaccine produced to service its upcoming clinical trials anyway.
Don't wait for the next round of growth to invest
Phase 1 trials for Vaxart's COVID-19 vaccine will begin later in the summer, so consider purchasing shares now to get the most growth.
Moving forward, expect Vaxart's stock to get a bump whenever it releases preliminary clinical trial data in any of its vaccine trials. Each positive piece of clinical trial evidence validates the merit of Vaxart's oral-vaccine platform, and investors should assume that the market will react accordingly.
