What happened

Shares of the developmental-stage biotech Vaxart (VXRT 30.16%) sank by 11.5% last month, according to data provided by S&P Global Market Intelligence. The biotech's stock has been sliding hard over the past month and half for two related reasons:

  1. Vaxart's oral COVID-19 vaccine pill may not be on the market until the pandemic is starting to fade from the daily news cycle. The company's drug, after all, is still in mid-stage testing, meaning that it may not become a commercial-stage entity until late 2022 or perhaps early 2023 (assuming a normal review cycle).
  2. Recently, Merck and Ridgeback's oral antiviral COVID-19 pill slashed the risk of hospitalization in a late-stage trial by 50%. Similar home-based oral medications for COVID-19 might dampen the demand for vaccines in general, and perhaps undermine the rationale for an oral vaccine in particular. What's important to understand is that oral medications are easier to administer than injectables, and some individuals are hesitant to take an injected vaccine. Oral medications and vaccines might surmount these two critical hurdles.
A open pill bottle with white gel caps next to it.

Image source: Getty Images.

So what

Vaxart's shares were once up by over 300% not so long ago. The biotech's stock has since given back the vast majority of these gains, especially over the past six weeks. Not all of these issues have been Vaxart's fault, however.

First, Pfizer/BioNTech and Moderna's collective ability to roll out two extremely potent and overall safe messenger RNA vaccines in under a year's time is unprecedented. Investors, for their part, probably expected a more typical process like the one Vaxart's COVID-19 pill is undergoing (a minimum developmental timeline of at least two, if not three, years). 

Second, the advent of new oral therapeutic options, such as Merck's experimental pill, probably isn't great news for Vaxart and its shareholders for reasons that are self-evident. 

Now what

Is Vaxart's stock a bargain after this recent slide? If you're focused squarely on the COVID-19 angle, Vaxart's stock doesn't leap off the page as a screaming buy. Wall Street expects the company to book exactly zero sales from its COVID-19 vaccine candidate next year, and at-home oral COVID-19 pills for infected individuals or those living with an infected person may be a thing before the third quarter of 2022. This biotech's downward slide, therefore, may have further to go before a trend reversal starts to take shape.