Investors in VBI Vaccines (VBIV 3.02%) have been on a roller-coaster ride this year as the company tries to develop a safe and effective COVID-19 vaccine. After the stock rose more than 330% from its price at the start of 2020, it lost almost half of those gains in late July. Given that the company's products only earned it $200,000 in the second quarter, compared with $600,000 a year prior, investors might be concerned that its days as a growth stock are over.

Despite its weak position in the COVID-19 race, I think that VBI will grow in the future on the basis of the programs that were in its pipeline before 2020. In particular, its hepatitis B vaccine will soon deliver revenue even if its coronavirus vaccine candidate does not.

A doctor administers a vaccine to a young boy.

Image source: Getty Images.

COVID-19 may be driving the hype, but it won't bring new revenue anytime soon

VBI's coronavirus vaccine candidate, VBI-2901, is still in preclinical development, meaning that it is significantly less advanced than those of companies such as Moderna (MRNA 1.58%). Nonetheless, VBI's candidate has a potential advantage over those other vaccines. Unlike most of the candidates in this race, which have been designed solely to function as inoculations against SARS-CoV-2 -- the virus responsible for this pandemic -- VBI-2901 also aims to protect patients from other dangerous coronaviruses as well. 

At the moment, most people won't benefit from being immune to the coronaviruses that cause Middle East respiratory syndrome (MERS) or the original severe acute respiratory syndrome (SARS), as those illnesses are not currently active. This means that even if VBI-2901 is effective at preventing them, that may never lead to a big sales boost. Nor is VBI-2901 likely to be the first coronavirus candidate approved for the market (nor even among the first few), as some have already begun their key phase 3 clinical trials, and more than two dozen more are ahead of it in earlier-stage human testing. In summary, the coronavirus vaccine candidate is far from a guaranteed source of new revenue for VBI, so the chances of its approval shouldn't be a major factor in evaluating whether to purchase the stock. 

Wiser biotech investors will be more interested in VBI's upcoming vaccine for hepatitis B, called Sci-B-Vac. Sci-B-Vac is already commercialized in Israel, and the company expects to seek regulatory approval in larger markets like the U.S., E.U., and Canada in late 2020. According to a direct comparison study, Sci-B-Vac is about 4.5% more effective than the leading hepatitis B vaccine, GlaxoSmithKline's (GSK -0.07%) Engerix-B, so it may be able to pull  some market share.

However, there are at least six different hepatitis B vaccines already on the market, some of which also confer immunity to other viruses like diphtheria and polio. Sci-B-Vac would be the seventh competing product, and its modest improvement in efficacy over GSK's vaccine probably won't be enough to capture a large market share.

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There's plenty of time to buy VBI

Let's do some basic math to see how much VBI's slice of the hepatitis B vaccine market might be worth. Acumen Research and Consulting estimates that the U.S. market for hepatitis B vaccines will be valued at close to $2.1 billion by 2026. If we assume that at the start of 2026, Sci-B-Vac will have captured slightly more than a seventh of the market for a 15% share, VBI could earn $315 million in revenue annually from the vaccine. That may not sound like much, but it should actually be an encouraging figure for investors.

If VBI is earning $315 million per year in 2026 with Sci-B-Vac, the stock should have grown appreciably in the intervening years. Based on my sales revenue calculation, the biotech industry's average price-to-sales ratio of 6.88, and the company's 231.2 million shares outstanding, I'd estimate that VBI could be trading at around $9.37 in a few years. It closed trading Monday at $3.98. 

This means that the stock could grow by around 135% even before taking future rounds of coronavirus vaccine speculation into account. Looked at from that perspective, it probably isn't too late to invest in VBI stock. However, if its hepatitis B vaccine revenues don't turn out to be significant, the company doesn't have anything in the pipeline that's on track to hit the market for at least another few years, so it could turn out to be a less attractive investment.