For investors seeking to turn a modest initial investment into millions, explosive growth is desirable. And unexpectedly explosive growth is exactly why many healthcare investors are now looking at the vaccine start-up Vaxart (VXRT -3.16%) with newfound appreciation.
Vaxart's stock soared more than 90% last week when it announced that its COVID-19 vaccine candidate had been chosen to participate in the U.S. government's accelerated vaccine development program, and that it planned to scale up its vaccine manufacturing capabilities to supply its anticipated clinical-trial needs. Before these two announcements, the company was barely on the market's radar, in part because it only joined the Russell 3000 index this week.
Given the company's new-kid-on-the-block status and highly risky industry, investors will need to carefully consider whether buying Vaxart is a sound path to earning millions.
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Vaxart's oral tablet technology could disrupt the entire vaccine market
Vaxart is a young company that's currently massively unprofitable, with deeply negative year-over-year quarterly revenue growth, less than $30 million in cash, and only $7.4 million in trailing-12-month revenues. None of these metrics are expected to improve anytime soon, but all are explained by the fact that Vaxart hasn't yet moved any single vaccine product through the clinical-trial process. Nonetheless, its disruptive vaccine technology platform is a major reason why the market should be excited about the company.
Most common vaccines are administered via injections, which require a skilled healthcare worker like a nurse to conduct, and they also require clinics to have products like sterile wipes and syringes on hand. Many injectable vaccines also need refrigeration to avoid spoiling. These requirements are not daunting under normal conditions. But at the scale of vaccination necessary to combat the COVID-19 pandemic at a time when healthcare resources are already stretched to the limit, each of these prerequisites could be an obstacle, especially for healthcare systems in developing countries.
That's where Vaxart comes in. Vaxart's vaccine technology platform doesn't produce injectable vaccines, but rather, oral vaccine tablets. In head-to-head comparisons with a market-leading injectable flu vaccine, these tablets vaccinate the patient more effectively and may also cause fewer side effects. This means that on the basis of clinical performance alone, Vaxart's vaccine technology could be enormously disruptive to the entire vaccine industry.
Furthermore, the vaccine tablets are also shelf-stable and don't require any supporting products to administer. While Vaxart's COVID-19 vaccine candidate is still in preclinical development and won't enter phase 1 trials until later this summer, these highly favorable logistical and clinical performance factors are major points in the company's favor.
All of Vaxart's products use its oral vaccine platform. By the end of this year, the company aims to start phase 2 clinical trials for its influenza vaccine and for its norovirus vaccine. It also plans to move its preclinical COVID-19 and human papillomavirus (HPV) programs forward into phase 1 trials.
If any single program advances or reports positive preliminary results, the company's stock will gain in value as evidence supporting the efficacy of its vaccine technology platform grows. Vaxart has already moved forward with scaling up the production of its COVID-19 vaccine candidate, suggesting that it's willing to bet heavily on its own success in the near future -- an aggressive and favorable sign for a company engaged in something as risky and uncertain as vaccine development.
The window of opportunity to invest in Vaxart is wide open
Right now, Vaxart is a speculative investment. With a new CEO at the helm as of mid-June and one major price spike slowly cooling off, Vaxart's growth story is only getting started.
It will likely be several years before any single Vaxart project is approved for purchase, though with the current demand for a COVID-19 vaccine, anything is possible.
In the meantime, investors should keep an eye out for the company's release of favorable preliminary clinical data, especially in its COVID-19 program. Each report is likely to send the company's stock price spiraling upwards once more, especially as its mature pipeline programs inch closer to regulatory approval.
