What is Vaxart, Inc and why did its stock plunge like a mafia boss wearing cement boots?
“A few days ago, Vaxart (NASDAQ:VXRT) 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.”
Vaxart is a biotech company that threw its hand into the development of a Covid-19 vaccine like many other biotech companies. Vaxart “develops and markets flu vaccines that engage in the immune system of the gut to generate systemic and mucosal immune responses.”
With the race to vaccinate underway, as we know, some companies have crossed the finish line, have vaccinations developed, which are now being distributed with more in production yet there are also companies that have fallen by the wayside and/or still waiting for approval of their vaccines.
“For the biotech industry, 2020 was all about the race for a COVID-19 vaccine. By now, several have been authorized, a few additional candidates are beginning to cross the finish line … and others have fallen by the wayside.”
What happened to companies who are still waiting or have fallen by the wayside? Vaxart is one company who seems to have fallen by the wayside, or not.
Vaxart had a phase 1 trial. But somehow it did not pass the muster? And so the stock plunged because everyone’s expectations were quashed? That’s tough for the people who were in the trials, I would suspect.
“After reporting preliminary phase 1 results for its tablet vaccine candidate last week, Vaxart (NASDAQ: VXRT) was tossed into the category of misses, and its stock was crushed. Although the results were a disappointment, a possible silver lining — and other vaccine programs — could still deliver for shareholders.”
How so? That’s good for anyone who saw their stock price dip like the slopes of Troll Wall, but not to worry the stock did not reach street level, still trading at “roughly 26 times higher than they did as 2020 began”.
““Despite dropping nearly 70% from their peak earlier last week, Vaxart shares still trade roughly 26 times higher than they did as 2020 began. The stock started its wild week by doubling on the news of two board members resigning and in anticipation of the phase 1 results for its COVID vaccine candidate. Then the stock collapsed when the data showed that the treatment produced no neutralizing antibodies to fight the virus.””
“The primary purpose of phase 1 tests is to assess the safety of a new drug candidate. Vaxart’s candidate, VXA-CoV2-1, achieved this goal, having been given to 495 people with no serious side effects. The pill also spurred a type of short-term protection in the sinus and respiratory tract, but it failed to generate the immune response that provides long-term protection.”
The Motley Fool reported it this way:
“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.”
In this humble writer’s opinion, I would think short term is better than no term with an easy ingestible that, so far, shows no serious side effects. I’m not pill phobic, myself. An ingestible might, also, be more easily tolerated in individuals prone to allergies or those who are adverse to needles.
Vaxart’s founder advocates the merits of an ingestible vaccine this way:
“Vaxart’s founder and chief scientific officer believes its drug could be more resilient to variations in the virus than injectable vaccines are, and the company plans to proceed with phase 2 trials. The goal will be to determine the best dosing schedule, and to study the drug in vaccinated individuals and those who have had the coronavirus to see whether it provides an immunity booster.”
Another advantage to an ingestible vaccine is the efficiency of vaccinating large populations. Injectable vaccines take longer for distribution administration and they require cold storage – when in a race against new strains it’s a race uphill.
Vaxart makes some compelling arguments in their “Vaxart’s Oral Vaccine Candidate for Prevention of Covid-19 – Hold the Needles and the Ice”, 25 page “Forward-Looking Statement” to investors https://investors.vaxart.com/static-files/6529d1b3-f86e-480b-bd9e-98eb74b10f9c. Below are just a few pertinent parts:
“COVID-19 Vaccine Development and Distribution Efforts are Being Outpaced by Rapidly Emergent Strains”
“- New mutations are starting to accumulate in the S1/RBD domain, where neutralizing antibodies generated by current vaccines bind”
“We are currently chasing the virus with vaccines like a hamster on a wheel”
“Rate Limiting Step is the time for injected large populations: Vaxart Takes Away the Needles”
“Room temperature stable tablet, easy to produce, distribute, and administer”
The future sounds bright for this innovative company who has set their sights on an alternative method of vaccine consumption. This writer is not an anti-vaxxer, and as someone who is also a strong proponent of plant medicines and alternative methods of wellness distribution I find the ingestible method quite tolerable and efficient.
Beyond COVID, Vaxart will continue the push for a tablet vaccine for several other diseases. The first is the norovirus, which currently has no vaccines on the market. The stomach bug mostly causes severe sickness in children under age 5 and adults over 65.
Will investors see it that way?
“Given the company’s $1 billion market capitalization, current shareholders are counting on at least one of these vaccine programs to make it to approval.”
It takes a lot of money to develop a vaccine and get it approved. More than the cash Vaxart has on hand.
“Unfortunately, it takes a lot of money to shepherd a drug from the lab through approval — anywhere from $500 million to $5 billion. Either number is far more than the $127 million in cash the company has on its balance sheet.”
“Whether Vaxart shareholders take advantage of the recent huge price drop is really about whether they think the company’s tablet-based vaccine platform can work. As the rough estimates show, a vaccine for COVID isn’t the only way for shareholders to realize solid returns over the next several years. However, any return will require success in at least one major program, and the recent results from the company’s phase 1 trials of VXA-CoV2-1 raise doubts about that likelihood.”
Perhaps the shareholders need to think out of the box.
“The company has – surprisingly – few rivals in this space and the logic of developing an oral COVID-19 vaccine is sound. Easier distribution, cost effective and patient friendly.”
So why if a company has such an easy method of vaccine distribution is it really struggling so?
They did have some legal troubles back in July.
According to https://seekingalpha.com/article/4397483-vaxarts-oral-covidminus-19-vaccine-be-2021-biotech-highlight this is what happened:
“Vaxart’s shares skyrocketed in July when the market learned – or thought it had learned – that its as-yet-unnamed COVID vaccine had been selected to join Operation Warp Speed’s (“OWS”) development program.”
“In fact, Vaxart had simply entered its vaccine into a non-human primate study that was being conducted by OWS, but had not been selected for the development programme and was not eligible to receive funding from OWS.”
“Vaxart’s biggest shareholder at the time – a New York Hedge Fund named Armistice Capital – sold almost its entire two-thirds holding in Vaxart as the company’s shares climbed towards their peak, realizing a ~$200m gain.”
“Two Armistice executives were Vaxart Board members and Vaxart’s CEO Andrei Floroiu was a close associate of the company, according to a New York Times article, and as a result, Armistice was able to trigger an option to buy warrants at just $1.10 per share, selling them immediately at a market price of ~$7 – $13 per share.”
“In October, Vaxart announced that it had been subpoenaed by the Justice Department in relation to the stock sales, and the company also faces the prospect of numerous lawsuits being brought by disgruntled shareholders.”
“Ultimately, the verdict may come down to a question of whether the company knew full well the scale of the impact that its OWS announcement would have, and were deliberately misleading the market, or whether the news was seized upon by a hysterical media and stock market, allowing Vaxart’s majority owners to fortuitously exit their position for a substantial gain, which, from a hedge fund’s perspective, would be the right course of action to take.”
I wish Vaxart well. With the innovation of oral administration I certainly hope they recover and give those of us who do prefer ingestibles to needles options in the entire vaccine marketplace.
“The advantages of an oral COVID vaccine over a injectable vaccine are quite self evident, but to summarize, an oral vaccine is more patient friendly (people are more afraid of needles than they are of taking a pill), easier to distribute (could be mailed to patients), can be stored at room temperature (no cold storage chain), would be suitable for distribution in any climate, and is simpler and potentially more cost effective to manufacture.”
As a writer who likes to question things, I wonder why Vaxart has not found a partner? Could it be that an ingestible form of a vaccine would negate almost all need for any injectable form of vaccine? Why would anyone choose a needle when they can swallow a pill? That was Vaxart’s founder, Sean Tucker’s reason for founding the company.
“Indeed, in a recent virtual presentation, Vaxart’s founder Sean Tucker revealed that his reason for starting the company in the first place was to develop a:
…vaccine that would come to the person, rather than you having to go get it. I found it was just impossible to go get a flu vaccine, but if someone could send me a tablet through the mail, that would be, like, the ultimate solution.
The logic is not hard to follow, and when we throw in mucosal immunity, an interesting picture begins to emerge.”
Makes sense to me.
“And yet for whatever reason, Vaxart still appears to be very much under the radar. The company has not won any government funding for its COVID vaccine, and has had to raise its own funds via share issuances which have been very damaging to its stock price.
Vaxart hasn’t found a partner, either, which again seems surprising – is there no big pharma concern out there that’s willing to take a chance on a company with a COVID vaccine solution that evidence suggests could be just as effective as an injectable, and far easier to distribute?”
As for me. I’m 67 and in no hurry to get a shot in the arm because I have anaphylaxis allergies but would be very happy to swallow a vaccine pill. So sign me up. Oh. There isn’t one. Vaxart has a fanclub in me.
Author: Sherri Margolin (Dark Matters)
Disclaimer: Absolutely nothing you read in here should be taken as investment advice. The discussion of securities and ideas is never to be considered a recommendation to buy or sell any. Always do your own due diligence.