A few days ago, Vaxart (VXRT -2.75%) was arguably the best-performing coronavirus vaccine stock of all time. If you had invested $5,000 in the stock last year, that principal would have grown into a stunning $205,000 by Feb. 2. 

But not even 24 hours later, Vaxart stock took a devastating 60% plunge the day it announced interim phase 1 data on its oral-tablet coronavirus vaccine candidate. Just what is behind the wild roller coaster ride? 

Woman taking a pill.

Image source: Getty Images.

Are the results really that bad?

In the interim phase 1 data release, 35 healthy adults who took one dose of Vaxart's oral COVID-19 vaccine developed little to no neutralizing antibody response. That is in stark contrast to currently approved coronavirus vaccines marketed by Pfizer (PFE -0.12%) and Moderna (MRNA -1.39%), which induced neutralizing antibodies in 100% of participants in phase 1. Additionally, only 52% of participants showed twofold or above increases in regular antibody levels.

Even though the tablet produced an immune cell response among 75% of participants, it is unclear why it failed to induce neutralizing antibodies in all individuals. Aside from that, the experimental vaccine was somewhat well tolerated with gastrointestinal issues post-ingestion, the most significant of which was loss of appetite among 2 out of 15 participants in the high-dose cohort. The vaccine candidate is also stable at room temperature and can be delivered to someone's home if it succeeds in later trials.

That probability, however, is very low. The company could theoretically try again with a two-dose or multiple-dose vaccine regimen and hope that it works. But high dosages could also make the vaccine candidate unsafe. 

VXRT Chart

VXRT data by YCharts

Is this the end? 

Vaxart was already far behind in the coronavirus vaccine race before this setback. Right now, the company does not expect its oral-tablet vaccine to finish phase 2/3 investigations until early next year. Meanwhile, mutant strains of the coronavirus are already running rampant across the globe, and experimental coronavirus vaccines are having difficulties combating them. Hence, the barrier to entry is higher now than it was for vaccines designed to combat the original strains of COVID-19.

Vaxart's lackluster results will likely mean the company would have problems finding a development partner to foot the research costs. It has only $133 million cash on hand to offset potentially billions in vaccine development expenses. Therefore, I expect the company, which has a $1 billion market cap, to initiate several sizable stock offerings if it wants to proceed with the project.

Overall, such disappointing data, especially at an early stage, is a big red flag when it comes to biotech investing. The company was already in trouble last year, when it clashed with federal authorities over allegations Vaxart inflating its role in Operation Warp Speed, as well as insider trading.

Unless the company can demonstrate that a two-dose oral tablet can generate significant neutralizing antibodies against COVID-19 or somehow find new, positive data in phase 2, I wouldn't put much faith in its science. Investing in Vaxart at this low point is about as risky as it gets.