VXRT - Vaxart Inc: Asymmetric Risk-Reward Opportunity Following BARDA Funding

2024-06-27 08:00:00 ET

Summary

• Vaxart Inc is developing oral vaccines for COVID-19, norovirus, and influenza with promising early clinical results but financial struggles.
• Vaxart received $453M funding from BARDA for a 10,000-patient Phase 2b trial comparing their COVID-19 oral vaccine to an mRNA vaccine.
• Despite a stock price spike following the news, Vaxart faced investor disappointment with a $40M offering shortly after the BARDA funding announcement.
• With a cash runway into 2026 and a potential interim readout from the ph2b COVID-19 trial in Q1 2025 Vaxart may be worth a small speculative investment. A positive readout in this trial would validate the whole oral vaccine platform.

Thesis overview

Vaxart Inc ( VXRT ) is a clinical stage biotech developing oral vaccines against various viral diseases, including COVID-19, norovirus gastroenteritis and influenza. VXRT has produced promising early stage clinical efficacy-safety results in all above indication. However, VXRT has been strugling financially resulting in multiple rounds of dilutive offerings (including $15M in June 2023, $10M in January 2024 and $40M in June 2024). Up until now Norovirus appeared to be VXRT's lead program. However, VXRT just announced close to half billion $ funding by BARDA for a 10,000-patients ph2b study comparing VXRT's oral COVID-19 vaccine construct against an approved mRNA vaccine. Despite positive initial reaction , the stock price ended up negative the next day following a $40M offering .

I believe this was an overreaction considering a potential interim readout from the ph2b study in Q1 2025 and cash runway into 2026. A positive readout from the ph2b trial in COVID-19 would force the market to revaluate VXRT, since a positive readout would not only mean considerable potential penetration of the multi-billion COVID-19 vaccine market, but would also validate VXRT's oral vaccine platform with potential for additional multi-billion $ indications, particularly norovirus gastroenteritis and flu....

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