VXRT stock: why investing in VXRT stock is so easy

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When Merck (NYSE:MRK) announced last week that it had an inexpensive oral antiviral drug to treat Covid-19, Vaxart (NASDAQ:VXRT) plunged almost 10%. For much of the year, VXRT shares haven’t moved anywhere. Bears have a short float of 13% and have big profits if the company goes bankrupt.

Source: Photo courtesy of Vaxart, Inc.

What does Vaxart have for him and what are his problems?

Purchase interest decreases on VXRT shares

In the second quarter, Vaxart touted the development of its oral tablet vaccine. A lot has changed since the August 5 trade update. Merck beat Vaxart by announcing that its Covid-19 pill reduces the risk of death and hospitalization. In the study, Merck tested people who were not vaccinated. It found that 7.3% of subjects taking molnupiravir were at risk of hospitalization or death, compared to 14.1% of those receiving a dummy pill.

Although Merck has only studied unvaccinated people, the Food and Drug Administration may clear the drug for wider use. Vaccinated patients who show peak symptoms of Covid-19 would be eligible for the drug.

The headline of the news from Merck mine Vaxart. The company is working on an oral vaccine in tablets. Subjects could use the Vaxart tablet as a booster.

Investors may consider ImmunityBio (NASDAQ:IBRX), which is also studying an oral vaccine. The latter has a larger market capitalization and does not hold any debt. Likewise, Vaxart has no debt. In the second quarter, he raised $ 36.2 million. It has also signed licensing agreements to develop a broad spectrum antiviral.

T2 results

The company spent $ 10.7 million on research and development, compared to $ 5.1 million spent last year. He lost 13 cents per share on a GAAP basis.

To support the infrastructure necessary to continue its research, Vaxart has added staff. It strengthened its management team, strengthened its research, clinical and manufacturing groups and invested in R&D. Its number of R&D employees increased by 36% to 49 full-time employees.

In its work on the norovirus vaccine, Vaxart recruited its first subjects. The vaccine candidate will study subjects in the age range 55-80 years. The study is a phase 1b, placebo-controlled, repeat-dose trial.

Short-term headwinds for VXRT stock

On September 16, Vaxart filed for a $ 100 million share sale. This will be in addition to the approximately $ 200 million in available cash. The company needs funds to work on its Covid platform. If he can get regulatory approval and go into high volume production, shareholders will be rewarded.

Merck’s clinical results offer hope for Vaxart. The oral medication works better than a placebo. This suggests that oral vaccines against respiratory viruses are a possibility. Vaxart is to report positive clinical results as the next step to bring a product to market.

Another short-term headwind for Vaxart is the saturation of the vaccine market. Already, countries are administering the vaccine from vaccines manufactured by Moderna (NASDAQ:MRNA), Johnson & johnson (NYSE:JNJ), and BioNTech (NASDAQ:BNTX).

On Wall Street, analysts have not updated their ratings on Vaxart. Piper Sandler is the latest company to issue a price target of $ 18.00 more than two months ago, according to Tipranks.

Opportunity

Investors might speculate that Vaxart’s oral drug would appeal to hesitant people who don’t want to receive a jab. However, this group may not take the drug by mouth for other reasons. The anti-vax group will refuse to take any vaccine. This implies that Vaxart’s market share for the Covid vaccine is declining over time.

Moderna and BioNTech will also lead the recall plans. Unless Vaxart demonstrates better clinical results, investors have a binary result with VXRT stocks. It’s like flipping a coin. The company either has a well-received vaccine or it is too late to capture market share. In the latter case, Vaxart should end its study on the Covid vaccine to save money. It would have the excess infrastructure and personnel costs to study vaccines outside of Covid. The company should cut costs to reduce its cash flow depletion rate.

In this scenario, the markets will treat the stock as speculation with low growth potential.

Your takeaway meals

Vaxart is not an attractive speculation for cautious investors. Biotech investors who missed the rally of Merck, Moderna or BioNTech shouldn’t expect Vaxart to rally anytime soon. The company has yet to prove itself to the scientific and financial community. This will come if the company publishes positive clinical results supporting the effectiveness of its oral vaccines.

As of the publication date, Chris Lau does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.

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