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Where Will Vaxart Be in 1 Year?

By Alex Carchidi – Aug 28, 2020 at 9:08AM

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The coronavirus vaccine stock's roller-coaster ride will continue.

Vaxart (VXRT -4.07%) is one of the most dynamic coronavirus vaccine stocks of the year so far, with its share price growing from less than a dollar in January to nearly $17 in mid-July. While Vaxart has since fallen to around $7 as its speculation-induced bubble continues to deflate, the company's long-term prospects are still favorable thanks to its unique oral vaccine platform. In fact, Vaxart's platform won a critical validation earlier this year, when the company's influenza vaccine demonstrated superior efficacy to Sanofi's (SNY -1.13%) Fluzone in a direct comparison.

With this promising flu vaccine advancing to phase 3 of clinical trials, its coronavirus candidate entering phase 1, and a looming class action lawsuit from shareholders, there's a lot coming up in the next 12 months for Vaxart's. Let's take a closer look to get a better idea about whether the stock warrants a place in your biotech portfolio.

Vials of COVID-19 vaccine.

Image source: Getty Images.

Vaxart's coronavirus vaccine candidate faces its first clinical tests

After spending much of the first half of the year completing preclinical development of its coronavirus vaccine, Vaxart plans to initiate phase 1 clinical trials in the fall. Normally, phase 1 would take a minimum of many months to conclude, but due to the pandemic, an extremely compressed timetable is highly probable. Expect Vaxart to seek regulatory approval for expedited clinical trials potentially as soon as next month. 

Though Vaxart hasn't published a firm schedule for the entire trial process, we can still get a rough idea of what it might look like under current conditions. Given the breakneck pace at which competitors like Moderna (MRNA 1.59%) are moving with their coronavirus projects, it wouldn't be too surprising if Vaxart's candidate was well into its phase 3 clinical trials for efficacy by spring -- assuming it is shown to be safe and effective in earlier phases. If Vaxart moves a bit slower than Moderna, it could still be finishing up late-stage studies by the end of next year, positioning its candidate to be commercialized as part of the second generation of coronavirus vaccines.

As experienced biotech investors know, the compressed trial process has immense implications for shareholders. If Vaxart's stock is anything like that of the other biotechs working on a coronavirus vaccine, each release of positive clinical trial data or regulatory filings will send its price into the stratosphere. This means that one year from now, the company may have several of these events in the rearview mirror, leaving its price at a much higher level once again. Even if we ignore its coronavirus program, the company will still advance its phase 1 norovirus vaccine and its phase 2 flu vaccine to the next stages over the next year, inching them closer to commercialization and regular earnings and likely resulting in prompt growth.

SPY Chart

SPY data by YCharts

Will shareholder lawsuits hurt Vaxart next year?

Vaxart is currently facing a class-action lawsuit from its shareholders, and that will probably still be true a year from now. This lawsuit, initiated on Aug. 25, alleges that the company's leadership misled shareholders regarding whether the government's Operation Warp Speed had selected Vaxart's COVID-19 vaccine to receive grant funding. Unless Vaxart arranges a speedy settlement out of court, the lawsuit will likely be advancing in a year.

If Vaxart does decide to settle the suit, its cash position may be harmed, which could force the company to stall some of its preclinical projects. On the other hand, it could still issue new stock or seek a collaborating partner for vaccine development to raise new funds. Either way, while Vaxart is unlikely to have recurring revenues from product sales by this time next year, it will be much closer than it is now.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Vaxart, Inc Stock Quote
Vaxart, Inc
VXRT
$1.18 (-4.07%) $0.05
Sanofi Stock Quote
Sanofi
SNY
$45.35 (-1.13%) $0.52
Moderna Stock Quote
Moderna
MRNA
$175.91 (1.59%) $2.76

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