Vaxart (NASDAQ:VXRT) brought investors high hopes over the past several months. Imagine a vaccine without the jab: That's Vaxart's specialty. The clinical-stage biotech company is developing oral vaccines for a variety of viruses -- including SARS-CoV-2, the virus that causes COVID-19.

The company's shares soared more than 1,500% last year as Vaxart's investigational coronavirus vaccine made it through preclinical studies and began a human trial. Then, one specific element in the biotech company's phase 1 trial report disappointed investors, and the stock tumbled a massive 58% in one trading session on Feb. 3.

Now the question is about risk. How risky is it to invest in, or hold on to, Vaxart shares right now?

A person in a business suit reaches out and touches the word Risk, which has been cut in two.

Image source: Getty Images.

Eyes are on antibodies

As vaccine developers report trial results, all eyes are on neutralizing-antibody data. Neutralizing antibodies are known for blocking infection, so they're seen as key in the development of a strong vaccine. For example, in trials, the Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) vaccines resulted in the production of high levels of neutralizing antibodies -- even higher than those found in recovered COVID-19 patients.

Vaxart's investigational tablet vaccine didn't result in neutralizing-antibody production. That's a clear disappointment. It means people who were given this candidate are missing one significant way of fighting off the virus.

Still, Vaxart's candidate showed success on another front. It brought about strong responses from T-cells, which identify and kill infected cells. The induced T-cells targeted both the virus's spike protein (S-protien) and its nucleoprotein. The S-protein infects cells, while the nucleoprotein is involved in viral replication. The advantage here is that this vaccine candidate may have a better chance of handling new strains than a vaccine targeting the S-protein only.

But can a vaccine be highly effective without the neutralizing antibody element? We'll only know the answer to that after further trials. Vaxart said it plans to "broaden" its development program. It may launch a phase 2 trial to explore the efficacy question. It also may investigate the development of its candidate as a booster that could be given to people who'd already received another COVID-19 vaccine; the idea would be to reinforce their immunity.

Vaxart's opportunities also extend beyond fighting COVID-19. The company has five other potential products in the pipeline. The most advanced is an investigational vaccine for seasonal influenza; that program is in phase 2 studies.

Why investors are taking the risk

Now here's the reason why many investors are willing to take the risk and buy Vaxart shares: The company's technology could be a game-changer. Vaccines administered in pill form are a winning plan for patients and for healthcare systems. A pill means no need for a shot; many people will like that. And the tablet is stable at room temperature, and that means it doesn't require refrigeration when transported and stored. This lowers costs and makes administration easier. It also makes it possible to deliver doses just about everywhere -- even to areas with poor infrastructure.

Getting back to the subject of risk, short positions currently account for about 36% of Vaxart's float. Short-sellers are investors betting the stock will decline.

VXRT Short Interest Chart
Data by YCharts.

That number is high -- but it has been dropping since mid-January. Investors' views of Vaxart's prospects may be changing. We should keep an eye on short interest in the coming months to see if this decline truly takes hold.

From a pipeline perspective, Vaxart remains high-risk. I'm mainly focused on its coronavirus vaccine candidate when I say this. And that's because the stock has been highly reactive to news about the coronavirus program. We can expect this to continue until Vaxart has reached success or failure with its investigational vaccine.

Will risk recede? Possibly -- if Vaxart can demonstrate strong efficacy of its vaccine candidate without the neutralizing-antibody element, or it can show in trials that its candidate has potential as a booster. Only more positive trial results can lower risk and lift the shares. And that's why -- unless you're a high-risk investor -- it's best to wait until then before buying this biotech stock.

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.