VXRT (Vaxart)

Vaxart (VXRT) is a great speculative biotech to look into. I believe this offers a great unique opportunity for investors and there is one major reason why. This reason is that it is developing vaccines in oral pill forms. It is working on developing such types of vaccines for use against Covid-19 and norovirus. As far as Covid-19 goes, I think it will still do well and it could really be because of the vaccines being given in oral pill form. I believe that if it at least establishes proof of concept in humans with this delivery method, then it can apply it towards norovirus and influenza. Instead of patients needing to receive a vaccine shot, they would be able to take a pill which would be a huge game changer in this field.

Even though it is speculative, there are major catalysts expected in 2022 that could potentially change the scope of the company. There is a trial readout of the ongoing phase 2 open-label study using its oral tablet COVID-19 vaccine candidate for patients with Covid-19 in the 1st half of 2022. Not only that, but it expects to begin two studies in March of 2022 that will test this candidate against the Omicron variant as well. In addition, the biotech expects a few data readouts from its oral vaccine candidate in norovirus this year as well. The biggest thing to establish here is proof of concept in norovirus and Covid-19. That's because if the technology is proven in humans for these viruses, then the oral vaccine candidate can be applied to its other targets in the pipeline like influenza and Respiratory Syncytial Virus (RSV). They are each phase 1 and preclinical testing, respectively. Based on the potential here, I think it's a great speculative play. The stock is a good risk/reward scenario trading only at $5.13 per share.

Oral Tablet As Covid-19 Vaccine Would Be Game Changer

Before the end of 2021, Vaxart initiated a phase 2 study for its oral tablet Covid-19 vaccine. This study is a randomized open-label dose and age escalation lead-in segment in naive and previously vaccinated patients. There is a catalyst opportunity here, because the biotech expects that it will report results from this Covid-19 vaccine study in the 1st half of 2022. This is a pretty good study in that it will test both naive and prior mRNA vaccine treated patients. Not only that, but it intends to initiate two studies in March of 2022 that will test the cross-reactivity of its S-Only Covid-19 clinical vaccine candidate (oral vaccine) to the Omicron strain of Covid-19. Lastly, it intends to initiate a global study using its oral Covid-19 vaccine with India being the first. This study is expected to start in the 1st half of 2022. Okay, but why the need for another vaccine against Covid-19? The first reason is basically what I noted above which is the ability to get a vaccine in oral pill form. I believe this would be a game changer in this space. The second reason is the potential to change the scope of treatment not only for Covid-19 but any other future virus that may arise.

This belief of changing the scope comes from the release of news the other day, which may even possibly create a competitive advantage over other existing Covid-19 vaccines. The release noted that Vaxart's S-only vaccine candidate not only was able to induce similar serum antibody (IgG) responses like other vaccines against this virus, but was also able to produce elevated mucosal IgA antibody responses. How can elevated mucosal IgA antibody levels produced in non-human primates give Vaxart a competitive advantage? That's because the mucosa is where viral entry occurs. With high serum levels achieved at the mucosal IgA antibody responses compared to serum IgG levels, there is a greater shot at reducing viral shedding. Viral shedding being reduced in the sense that Vaxart's S-only vaccine candidate has the potential to stop transmission of Covid-19 from person to person. While other vaccines have been effective against causing serious illness in those who took the vaccine, this vaccine from Vaxart holds potential to stop community transmission in a greater fashion. This is a possible competitive advantage that was noted in non-human primates. Hopefully, this clinical finding is shown when the results from the phase 2 Covid-19 vaccine study are released in the 1st half of 2022. In my opinion, the main takeaway is not just about Covid-19. If the company can prove that an oral vaccine candidate works in humans, not only would it be a more convenient route of administration but it would also show the possibility of slowing down/reducing transmission of future pandemic virus outbreaks. In other words, this goes to much more than just succeeding with a Covid-19 vaccine treatment. It holds the potential to possibly produce superior responses in other Covid-19 strains. Currently available vaccines seem to do well with some variants, but then drop off in efficacy against others.

Potential To Expand Oral Vaccine Technology For Norovirus

I view the potential success of the oral Covid-19 vaccine candidate as the possibility of establishing proof of concept in humans. That will be revealed in the 1st half of 2022 when Vaxart releases results from its phase 2 Covid-19 vaccine study. However, there is another shot on goal where its technology may be effective against. It is testing out its GI.1 vaccine candidate in a several studies at the moment. Norovirus causes an inflammation of the lining of the stomach and intestines known as gastroenteritis. It is highly contagious and when a person gets this virus they experience severe diarrhea and vomiting. In healthy adults this virus is not bad at all, however, it can have a huge impact on those with weakened immune systems. As such, it designed its studies to first look at an elderly population. One such study would be a phase 1b placebo-controlled, dose-ranging study. Elderly patients who are between the ages of 55 and 80 are given Vaxart's GI.1 vaccine candidate. The goal it to test out safety and immunogenicity of this candidate in elder patients who have this virus. There are going to be two sets of results from this phase 1b placebo controlled study. The first set of initial results will be released any day now in Q1 of 2022 and then a second set of data is set for Q2 of 2022. That's not all in terms of catalysts possible, because of another study. The other GI.1 norovirus vaccine study is being done to evaluate optimal timing for boost administration of VXA-NVV-105. Again, there is potential for another two sets of catalysts. The first would be initial data from this boost study in Q1 of 2022 and then additional data in the 1st half of 2022. The company estimates that the market opportunity in just the U.S. alone stands at $10 billion.

Additional Opportunities Of Oral Vaccine Candidate

Even though Vaxart is furthest along in phase 2 with its oral vaccine candidate in Covid-19, there are additional indications in the pipeline it is attempting to test this vaccine on. The first of which is the advancement of its oral vaccine candidate for influenza. This is another large market opportunity for the biotech. That's because the company estimates that the market opportunity just in the United States could reach $5 billion. Some proof of concept has already been established in which Vaxart tested its oral vaccine candidate in a vaccine challenge model study. It was noted that illness rates were 39% lower in those who took Vaxart's oral vaccine. On the other hand, illness rates were 27% lower in those who took Fluzone. These clinical results were published in the Lancet in January of 2020. In addition, it was noted that infection rates were reduced by 47% for those who took the oral vaccine from Vaxart, compared to 43% for those that took Fluzone. Having established proof of concept here, Vaxart was able to establish a research partnership with Johnson & Johnson (JNJ) subsidiary Janssen. The goal of this partnership is to establish a universal flu vaccine which is still in the preclinical stage. Vaxart itself is in preclinical testing of a quadrivalent oral vaccine candidate for the flu as well.

Other possible opportunities for Vaxart's oral vaccine candidate would be the RSV program. It is looking to find a new partner that could provide antigens for its oral vaccine technology platform. Then, there is potential to advance a product as a therapeutic as well. This is new territory but it is good to see that it is not only advancing prophylactic vaccines. A therapeutic vaccine would be another huge accomplishment for this biotech. Thus far, it has seen some pretty good preclinical data for a therapeutic vaccine targeting HPV. Its HPV-16 vaccine tested in two different types of HPV-16 solid tumor models in mice elicited T-cell responses and led to tumor cell killing. Thus far, Vaxart has received pre-IND feedback for this HPV program. Once it gets this therapeutic vaccine advanced to phase 1 clinical testing in humans this would be another huge accomplishment for it. An IND submission is planned for Q2 of 2022, which will be a catalyst for this program.

Financials

According to the 10-K SEC filing, Vaxart had cash, cash equivalents and available-for-sale debt securities of $182.7 million as of September 30, 2021. The company has a lot of cash on hand because of a few agreements it made. The first of which was in October of 2020 where it developed an At-The-Market offering agreement noted as "October 2020 ATM". It could have sold up to an aggregate amount of up to $250 million. Instead, it sold an aggregate of proceeds of $133.4 million and then terminated the agreement. That is when it decided to develop a Controlled Equity Offering Sales Agreement noted as "September 2021 ATM". With this new agreement, it could sell up to an aggregate of $100 million. Currently, it still can tap into about $95 million from this ATM if it needs to do so. Vaxart believes it has enough cash on hand to fund its operations for at least one year from issuance of the 10-K SEC filing, which was filed on February 24, 2022. That means it expects it has enough cash until at least February of 2023. I believe it can tap into the ATM it has for the time being unless it really needs to raise a substantial amount of cash for another purpose. If it does intend to do another type of cash raise, then I believe it would happen before the end of this year.

Risks To Business

There are several risks that investors should be aware of. Vaxart's oral vaccine Covid-19 is being studied in an ongoing study with expected results in the 1st half of 2022. There is no guarantee that the oral vaccine will be successful. In addition, there are already several approved vaccines for Covid-19 which means there will be a lot of competition. The efficacy data will need to be equal to or superior over existing Covid-19 vaccines. The good thing is that if it can achieve equivalent or superior data to existing vaccines, then it can have the advantage of being given as an oral pill. There are also several data readouts expected in 2022 for the norovirus oral vaccine candidate. This is another huge multi-billion dollar market potential for Vaxart if it can succeed. There is no guarantee that the norovirus data will turn out to be good. The final risk would be the financial situation. It estimates that it will only have enough cash for at least 12 months. I believe it may tap into its September 2021 ATM agreement, but it's also quite possible to enact a larger cash raise if necessary. If it does need to enact another type of cash raise, I could see this happening before the end of 2022.

Conclusion

The final conclusion is that Vaxart is a great speculative biotech to look into. Where I believe it holds the most potential is the ability to be a game changer in the vaccine space. The reason why is because developing an oral pill as a vaccine is something new. Not only this, but it goes back to what I noted above. The way its technology works is that it can target the mucosal region, where Covid-19 infection starts. It is said that nasal IgA antibodies have been shown to be more effective at blocking transmission than serum IgG. The mucosa is where viral entry and primary infections of Covid-19 occur in non-human primates and humans. Another possibility, which I noted above, is that this method of preventing viral infections in the mucosa may ultimately lead to less viral shedding. That means this oral vaccine candidate for Covid-19 might be able to do a better job at preventing transmission compared to existing vaccines. This may be proven when the results from the phase 2 Covid-19 study are released in the 1st half of 2022. A last competitive advantage for the oral vaccine tablet that Vaxart has developed would be that it can be placed in room temperature, making it easier to distribute and store the drug. With several catalysts expected in 2022, plus a great oral vaccine technology, I believe that this is a great speculative biotech to look into.