There are a handful of companies that dominate the coronavirus vaccine market. The two leaders -- Pfizer and Moderna -- expect to generate a combined $55.5 billion in sales this year. Is there any room left in this space for newcomers? The answer is a resounding yes. First, vaccines aren't as readily available in many developing countries as in the United States.
But there's another reason too. Vaccine hesitancy prevents many people from getting inoculated. A May 2021 Gallup poll found that 24% of adults in the U.S. were not planning to get vaccinated, with most of them saying they were unlikely to reconsider. One company looking to make headway into the vaccine-hesitant crowd is Vaxart (VXRT 0.80%). Let's discuss the biotech's strategy to enter the coronavirus vaccine market and its implications for investors.
Afraid of needles? Vaxart's got your back
The great thing about Vaxart's potential coronavirus vaccine is that it need not be administered via needle injection. In fact, it is an oral pill -- and that has some advantages. Even for many of those who don't mind injections, a painless method of achieving the same result would be preferable.
Pills also present less of a logistical challenge. Vaccines typically come with stringent storage and transportation requirements. Vaxart's vaccine would help alleviate these issues. But could it incentivize those who have yet to take the vaccine to do so?
According to a survey that Vaxart announced in April, about one-third of respondents who said they were not planning on getting vaccinated would change their minds if a pill was available. In other words, Vaxart's vaccine could help meaningfully decrease vaccine hesitancy. But that's not all -- 70% of respondents said they'd prefer a pill over being injected with a needle.
If the efficacy of the current vaccines wanes and Vaxart's candidate makes it to the market, it could grab a decent share of the vaccine market, solely because it is an oral pill.
How effective is Vaxart's vaccine?
Vaxart is currently enrolling participants for a phase 2 clinical trial of its vaccine. The lack of data from a late-stage study means we don't yet know just how well it works and how it compares to already-approved vaccines. But we do have some early clues. In a phase 1 clinical trial to investigate the safety and immunogenicity (the ability to trigger an immune response), Vaxart's vaccine proved safe, well-tolerated, and immunogenic.
The biotech says that its candidate elicited higher T-cell responses than the vaccines marketed by Pfizer and Moderna. T-cells are a type of white blood cell that bind to and destroy virus-infected cells. Further, in a study conducted by scientists at Duke University, Vaxart's vaccine reduced airborne transmission of the virus in animals.
These results are encouraging, but ultimately, we will have to wait for more data to draw definitive conclusions regarding whether Vaxart's candidate is better than other vaccines.
What else does Vaxart have to offer?
Vaxart has several other programs in its pipeline, all of which are oral vaccines against various other diseases. Perhaps the most promising of the bunch is the company's vaccine for the norovirus, which causes symptoms such as stomach pain, vomiting, diarrhea, and tiredness. Vaxart's vaccine is currently undergoing a phase 1b clinical trial, and there's some potential here.
There's no vaccine for the norovirus approved by the U.S. Food and Drug Administration. The virus causes some 20 million illnesses a year, and its annual financial toll is roughly $10.6 billion. Vaxart estimates a $10 billion market opportunity for its norovirus vaccine in the U.S. alone.
A risky bet
There's no denying that Vaxart's oral vaccine platform is promising, nor does funding seem to be an issue for the company. Vaxart had $198.9 million in cash and equivalents as of June 30. Based on the $13.2 million it spent on operations during the second quarter, that should be plenty to last a couple of years -- or until it starts running late-stage studies and its expenses rise. However, given that none of its current products have even made it to a phase 3 clinical trial, a bet on Vaxart today seems very risky.
The company still has a lot of clinical and regulatory hoops to jump through -- and any misstep, particularly concerning its coronavirus vaccine candidate, would send its stock crashing. That's not to mention the fact that there are several oral therapies to treat COVID-19 currently in development, and these could reduce the need for vaccines, particularly those that aren't even approved yet.
Vaxart's shares have soundly underperformed the broader market in the past year and, in my view, there's too much uncertainty at present to make a bet on the company turning things around. That is why, at least for now, I'd stay away from this biotech stock.