A COVID-19 vaccine will be worth billions and billions of dollars. It will likely be the most valuable drug on the planet. There are many pharmaceutical companies pursuing a vaccine, and the market has already started rewarding some of them. Right now the big winners are small-cap biotech vaccine specialists. For instance, Novavax (NVAX 5.97%) is up a startling 2,500% in 2020.   

Novavax is not the only winner, however. Many other biotechs have a good shot at a COVID-19 vaccine, and the market is rewarding those stocks as well. One such biotech company, Inovio, has seen its stock rise 578% since January. Another tiny biotech, Altimmune (ALT -0.54%), climbed 438% in the past six months. And so far, tiny Vaxart (VXRT 2.02%) is up almost as much as Novavax, running up 2,135% since January.

Is it too late to buy one of these winners? I've been a happy owner of Novavax all year. So the question for me is whether I should take a little profit. But it also might be smart to diversify and buy another of these companies, because I think all of these small-cap stocks have plenty of room to run higher. So today I'm going to look at Novavax competitors Altimmune and Vaxart. Is either of these vaccine biotech stocks a buy?

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Image source: Getty Images

Why is the market going crazy for Vaxart?

You might be surprised to discover that Vaxart shares are now selling for $7.94. That's the stock price after a 23-bagger. This means that back on Jan. 2, you could buy shares for $0.34. Yes, it was a penny stock back then, and it's still pretty much a penny stock today, despite the huge run-up.

A lot of positive news has propelled this biotech out of obscurity. The company found its lead COVID-19 vaccine candidate back in May. "All our COVID-19 vaccine constructs were highly immunogenic in preclinical testing, and we are taking the candidate forward that is expected to generate the broadest immune response in humans," said Sean Tucker, Ph.D., chief scientific officer of Vaxart.

While Vaxart has not begun its phase 1 human trial yet, even positive animal data in a COVID-19 trial is enough to send one of these small-cap stocks soaring. Another piece of big news is that Vaxart has signed a manufacturing agreement with Atwill Medical Solutions to produce the company's vaccine if and when it clears the FDA hurdles.

Perhaps the biggest news is that Vaxart's drug has been selected by Operation Warp Speed for funding. Operation Warp Speed is the federal government program that is trying to get COVID-19 vaccines to the public as fast as possible. Specifically, the goal of Operation Warp Speed is to deliver 300 million doses of a safe and effective vaccine for the coronavirus by January 2021. 

While Vaxart's drug obviously won't be the first to market, it was certainly news that the federal government noticed this tiny biotech and decided to send it tax dollars. But why Vaxart? And why is the government paying for another animal study? Vaxart's already done an animal study.

I suspect the answer is that Vaxart's vaccine is a pill that you swallow, not a shot. The vast majority of vaccine candidates are injectable medications. And a lot of people don't like to take a shot. Pills are much more convenient. So, even if Vaxart's drug is late to the party, an oral COVID-19 vaccine that works would be huge news.

Management also believes that oral medication may help if the coronavirus is inhaled. "We are particularly interested in vaccine candidates that can generate mucosal immune responses in addition to serum antibody responses. That is a key feature of our oral vaccines and potentially significant for protection against SARS Cov-2, the virus that causes COVID-19," the company said in a press release.

Altimmune is looking good

Like Vaxart, Altimmune's vaccine candidate is not a shot. It's an intranasal vaccine that you inhale. And like Vaxart, the company believes that its drug can generate mucosal immune responses.  

Altimmune actually has two COVID-19 drugs in its pipeline. AdCOVID is the nasal vaccine, intended to keep people from catching the disease. But the company also has T-COVID, a nasal drug for people who have already contracted the coronavirus. 

Altimmune has a wonderful pipeline of drugs, including a flu vaccine in phase 2, and another drug for hepatitis B. And while Altimmune is not a part of Operation Warp Speed (yet), the company has won funding from the U.S. Department of Defense to pay for its clinical trial for its T-COVID drug. 

Perhaps one of the more interesting aspects of Altimmune is that the company has a NASH drug in its pipeline. NASH, sometimes referred to as NAFLD, is also known as non-alcoholic fatty liver disease. Risk factors for the disease include obesity and type 2 diabetes. The drug, ALT-801, is still in preclinical trials. It helps resolve NASH by helping people lose weight.    

Which stock is the stronger buy?

Overall, I think Altimmune appears to be a stronger biotech company, while Vaxart appears to have a head start in the COVID-19 race, since its vaccine has received Warp Speed funding (albeit for an animal study). Both are intriguing, but right now I would hold off on buying either of them and wait for further data.