There are now three coronavirus vaccine candidates demonstrating at least 90% efficacy in late-stage studies. This puts significant pressure on early stage coronavirus vaccine makers such as Vaxart (NASDAQ:VXRT) to deliver results to their investors. 

Unfortunately, Vaxart stock is down nearly 67% from all-time highs as its progress has been somewhat slow. To its credit, the company's vaccine candidate does have logistical advantages over leading competitors.

First, one ingests the oral tablet vaccine candidate as opposed to receiving a conventional injection. Second, it possesses room temperature stability as opposed to freezing requirements. 

Can the stock bounce back within the next year and reward shareholders? 

Stock photo of coronavirus vaccine vial and syringe.

Image source: Getty Images.

Not bad for progress

In an update on Nov. 12, Vaxart disclosed that after administering two doses of its vaccine candidate to Syrian hamsters, they developed significant antibody response levels against the SARS-CoV-2. The study has severe limitations, as it is preclinical. Normally, just because an experimental therapeutic works on rodents does not imply that it will also work on humans.

However, what's promising for Vaxart is that its competitor Johnson & Johnson (NYSE:JNJ) was able to validate such a key hypothesis. During preclinical studies, Johnson & Johnson's coronavirus vaccine candidate Ad26.COV2.S (Ad26) protected hamsters against COVID-19 after dosage. After its advancement into phase 1/2 clinical studies, Ad26 replicated its success by inducing neutralizing antibodies against the SARS-CoV-2 in nearly all human participants in a small sample. Ad26 is currently in a large-scale phase 3 study. 

With a set precedent, there is a good chance that Vaxart's vaccine candidate can accomplish immunity as well. Right now, the company's experimental vaccine is in phase 1 studies, with data expected in the coming weeks. 

Unresolved issues 

The main problem facing Vaxart at the moment is not so much scientific validation, but credibility. The company is currently under federal investigation and subject to multiple investor lawsuits over allegations that it exaggerated its role in Operation Warp Speed (OWS). 

Back in June, Vaxart stated in its press release that its vaccine candidate was "selected for the U.S. government's Operation Warp Speed." In reality, the candidate was only part of the operation for preliminary studies in animals. A hedge fund that controlled the company cashed out over $200 million in profits on its June news release via alleged insider trades.

What's the verdict?

Despite the challenges, Vaxart is making concrete progress on advancing its coronavirus vaccine candidate. Previously, the company licensed two oral seasonal flu vaccines (Relenza and Inavir) to large-cap pharma companies, who advanced them to commercialization. Since its inception, Vaxart has only lost a modest sum of $135 million. It currently has $133.4 million in cash and equivalents. 

For a company with a market cap of only $622 million, Vaxart looks a little undervalued considering the multi-billion dollar potential for coronavirus vaccine revenues. On the other hand, the company is still in the early development stage. It may only end up capturing a small fraction of that opportunity even if its candidate makes it to approval. 

As a result, biotech investors who have a high-risk, high-reward mentality may consider buying a small block of shares now. For everyone else, I'd recommend waiting until at least phase 1 data before taking a position. I see a good chance that Vaxart's candidate will be at least in phase 3 studies by November 2021 -- although the probability of approval is still up for debate until more data comes out.

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.