Vaxart (NASDAQ:VXRT), the San Francisco-area clinical-stage biotech company, has made and lost millions for investors this year.

On Feb. 3, at the beginning of the recession, Vaxart's shares opened at $1.32 a share, buoyed by a Jan. 31 announcement that it had started a program to develop an oral vaccine to fight the coronavirus.

By July, the stock was up to $17.49. Those who had spent $5,000 on the stock when it was at $1.32 would have received 3,787 shares at the time, assuming they didn't buy any split shares. If they sold the stock at its 52-week peak, their investment would have left them with $66,235, including a net profit of $61,236.

A man's hand drawing a rising graph line.

Image source: Getty Images. 

However, the question here is how much money anyone who bought the stock during the recession -- and held on -- would have now. That's a lot less, but still a nice deal. Those who bought 3,787 shares at $1.32 and held on would find the stock worth $19,314 at Wednesday's closing price of $5.08 a share, for a net profit of $14,315.

What is Vaxart doing differently?

Vaxart concentrates on making recombinant (DNA-based) protein vaccines in tablet form. In many cases, vaccine pills have not been as effective as injectable vaccines because they must survive the gastrointestinal tract without being broken down by the body's digestive enzymes. However, Vaxart said its COVID-19 vaccine pill, VXA-CoV2-1, would likely work well in the intestine.

A tablet vaccine has several advantages over an injectable vaccine. Many people dislike using needles, yet have little fear of taking a pill. A tablet vaccine can also be distributed more easily. In the company's first-quarter report, CEO Wouter Latour said that because VXA-CoV2-1 is more temperature-stable than injectable vaccines, it would travel with fewer difficulties. He also said that as a tablet, the vaccine could be manufactured with a higher throughput.

VXRT Chart

VXRT data by YCharts

What's behind that crazy ride -- and is it time to get off?

Much of Vaxart's success this year is based on hope. As a clinical-stage biotech, it had only $523,000 in revenue in the second quarter and lost $9 million in net income. What the company does have is a unique pipeline, specifically devoted to developing oral vaccines in tablet form.

It started the year at only $0.36 a share, but quickly jumped up when the recession began in February. On April 21, the stock climbed 33% in one day to close at $3.16 after a company announcement of positive pre-clinical results in its COVID-19 candidates on animals.

In late June, the stock got another boost when Vaxart announced VXA-CoV2-1 had been selected for the government's Operation Warp Speed program. On June 24, two days before the announcement, the stock closed at $3.19. On the day of the announcement, it opened at $11.49, hit a high of $14.30, and closed at $8.04 a share.

Partly cloudy on the horizon

Last month the company disclosed that in July, the U.S. Security and Exchange Commission and the Justice Department had begun an investigation into the company's involvement in Operation Warp Speed.On top of that, Vaxart has been hit with investor lawsuits over whether it overstated its connection to Operation Warp Speed to inflate the company's stock.

The same day the company filed the disclosure of the investigation, it announced that VXA-CoV2-1 had fared well in a hamster challenge study. The company said hamsters that received two doses of its vaccine showed no systemic weight loss, one sign of the vaccine's effectiveness against COVID-19.

Looking past the speculation

It's clear to me that investing in Vaxart for its coronavirus vaccine candidate is purely speculative. On Oct. 13, the company said it had just given its first human subject a dose of VXA-CoV2-1 as part of a phase 1 study, so there's a long way to go to see whether it will be safe and effective in fighting the coronavirus. And the potential legal problems are another red flag.

However, I do see some long-term benefits to investing in this company. It does have other oral preventative vaccines in its pipeline, including vaccines for norovirus, seasonal flu, and respiratory syncytial virus (a common respiratory virus that can be deadly to older adults and infants). The company also has a therapeutic oral tablet vaccine in trials for human papillomavirus (HPV), a common sexually transmitted infection.

Vaxart has time to develop a moneymaker vaccine. It has $140 million in cash, enough to last it almost four years at its current burn rate. However, anyone who invests in Vaxart should do so with both eyes open, understanding the risk.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.