SHTDF - Vaxxinity: Potential Strong Upsides Ahead

Summary

• We may not be at the end credits for COVID-19 virus.
• Shares of Vaxxinity, Inc., like most biotechs, have plummeted over the past year due to unprecedented market headwinds, both macroeconomic and geopolitical.
• In the meantime, the company has been taking care of its COVID-19 virus vaccine candidate, which could act as a strong short-term catalyst for higher share prices.
• The company believes its product has prospects.

What If We're Not At The End Credits Regarding COVID-19?

We thought it was yesterday's topic and instead, COVID-19 is in the news again as the sharp resurgence of cases in China following the government's departure from a zero-tolerance policy has raised concerns about possible new waves of infection in Western countries.

The risk is real, as the Chinese make up almost 20% of the world's population and the globalization of communications favors the intercontinental moving of people. There is some form of control at the entrance of Western countries in the form of specific tests at airports, but not all countries want to introduce the controls, probably for geopolitical reasons, and this increases the likelihood of new infections, hospitalization and various restrictions.

Biotech companies still working on cures for the COVID-19 virus could make a strong comeback, and this means their US stocks could also pique investors' interest considering the aforementioned risk.

Vaxxinity, Inc. Seems To Have Strong Upside Potential If COVID-19 Returns

To that end, Vaxxinity, Inc. (VAXX) stock appears to be very well positioned to benefit from the threat to the health of Western countries. This US-based biotech company continues to work on the coronavirus vaccine and is making significant progress on its project which, combined with low market valuations for the stock, creates amazing upside potential.

Investors may want to consider adding shares of Vaxxinity to their position.

Shares of Vaxxinity, Inc. did not decline due to shortcomings at the company and most of the market value was blown away by very strong headwinds.

Meanwhile, the company has not lost its key near-term catalyst, represented by the anti-COVID-19 virus vaccine candidate, and the catalyst could flare up should the coronavirus become a concern in Western countries again.

Vaxxinity, Inc. Has Not Been Spared From Severe Market Headwinds

Aggressive monetary tightening with unpredictable consequences, coupled with recession fears and inflation still a long way from the 2% target, have combined to create unprecedented headwinds in the US stock market, with biotech stocks being hit the hardest.

Biotech stocks are down as much as 47.73% over the past year, lagging far behind the S&P 500 (^GSPC) as the benchmark index for the U.S. stock market fell 14.16%, as the screenshot of Guru Focus's histograms below illustrates.

Vaxxinity shareholders felt the blow of macroeconomic and geopolitical headwinds, but only from a stock price performance standpoint, as this biotechnology continued to work on its vaccine against the COVID-19 virus.

The share price of the U.S. biotech stock fell 70.55% over the past year, while the SPDR S&P Biotech ETF ( XBI ) industry benchmark index fell 10.42%.

The huge drop in the share price of Vaxxinity, Inc. should not be seen as a problem but as an opportunity to buy shares at a much better price than before. Exploiting the current price level implies huge growth potential because, although people in western countries have left all COVID-19 problems behind, the virus could reappear due to the significant risk of importing it from affected China.

Therefore, Vaxxinity, Inc. could make a strong comeback due to its heterologous vaccine candidate in the Phase 3 trial against the COVID-19 virus.

The Upside Potential Is In The Pipeline

On December 02, 2022, Vaxxinity informed the market of the progress it made with its protein-based COVID-19 vaccine product candidate, designated UB-612.

Vaxxinity, Inc. released some promising top-line data from a Phase 3 clinical trial in which UB-612 appears to have provided the answer researchers were hoping for.

The company said the experiments were successful because its product UB-612, tested as a heterologous booster dose, was able to meet the primary and key secondary endpoints of its pivotal global Phase 3 trial from an immunogenicity perspective.

When administered as a booster vaccine, UB-612 was able to elicit a better immune response than AstraZeneca's ( AZN ) and Sinopharm Group's (SHTDF) (SHTDY) products.

Vaxxinity's Phase 3 UB-612 clinical trial consisted of three separate sub-studies and in each of these sub-studies, populations were previously dosed with Pfizer ( PFE ) - BioNTech ( BNTX )'s BNT162b2, AstraZeneca's ChAdOx1-S, or Sinopharm's BIBP against the COVID-19 virus administered.

Therefore, these individuals had previously developed a primary immunization regimen that used the 3 most marketed products in the global COVID-19 virus vaccine markets as the products were administered to a total of over 3.5 billion people in more than 180 countries.

Because the Phase 3 clinical trial demonstrated neutralizing antibody activity titers of Vaxxinity's UB-6112 vaccine 28 days after its administration as a heterologous booster dose to subjects in the three sub-studies, the experiment met its primary endpoint.

The vaccine performed with drugs other than those used to administer the first dose is called heterologous.

In terms of neutralizing antibody activity, Vaxxinity's UB-612 response was non-inferior to that of Pfizer and BioNTech, a messenger RNA-based COVID-19 vaccine, BNT162b2.

Additional results on the primary endpoint indicate that Vaxxinity's UB-612 was statistically superior to AstraZeneca and Sinopharm's vaccine products against the Wuhan strain and Omicron BA.5 of the COVID-19 virus.

Regarding the secondary immunogenicity endpoints, these were also met, according to the company. The seroconversion rates of UB-612 were statistically non-inferior to those of Pfizer and BioNTech, while they were statistically superior to AstraZeneca's and Sinopharm's vaccine products versus the Wuhan strain and Omicron BA.5 variant of COVID-19 virus.

The entire Phase 3 study enrolled 944 participants in the US, Panama and the Philippines, and these individuals were 16 years of age and older.

The product was also evaluated from a safety perspective which showed no serious adverse events. It also appears that the study is on track to provide a long-term profile of the product not only in terms of safety but also in terms of T-cell immunity and durability of immune responses.

Mei Mei Hu, Chief Executive Officer of Vaxxinity, believes that UB-612 could serve as an optimal choice for administering a COVID-19 virus vaccine booster to the population, particularly in developing countries.

Vaxxinity expects the trial to be completed in the second half of 2023, while UB-612's conditional and preliminary regulatory submissions in the UK and Australia are expected to be completed in the first half of this year.

After these events, tailwinds could create strong upward pressure on the Vaxxinity stock price and it cannot be excluded that shares appreciate very quickly compared to the current levels.

Stock Valuation

Shares of Vaxxinity traded at $2.02 per unit giving it a market cap of $254.63 million as of this writing.

Shares are trading slightly above the long-term trend of the 100-day simple moving average line of $1.84, while significantly below the middle point of the 52-week range of $1.24 to $10.57.

Vaxxinity shares have recently shown signs of recovery on market optimism about the prospects of lower inflation and encouraging data from Phase 3 of the UB-612 study.

The Fed's hawkish stance to combat galloping inflation isn't usually positive for stocks, as a higher discount rate either increases the likelihood that the present value of future cash flows (the intrinsic value) will be below market value or means the gap between the two values widens.

As there could be some time between the next Fed decision and regulatory filings in the UK and Australia for UB-612, which should instead be positive for Vaxxinity, a lower stock price could follow the first event before a rally follows the second event.

Therefore, investors should consider buying shares as soon as the January 31-February 1 Fed meeting results in a decrease in the share price.

Formation of lower price levels after the Fed decision is possible as Vaxxinity's 14-day relative strength indicator of 64.58 shows plenty of room for the stock price to decline from current levels.

It can also be that positive news about the development of Vaxxinity's heterologous vaccine may not lead to a stock rally if the market feels that there isn't much room left for other products besides the vaccines that are already well-known around the world.

However, this chance of not having a positive and statistically significant impact on Vaxxinity's stock price following the development of UB-612 should be lower now than it was just a few weeks ago as Chinese vaccines failed to counteract the strong resurgence of the COVID-19 virus in the People's Republic of China.

Should aggressive variants of China's outbreaks threaten other severe waves of COVID-19 infections in the rest of the world, this could prompt the market to consider the possibility of using heterologous vaccines in a combined global strategy to pursue specific immunization targets.

Other Products Under Development

Vaxxinity is also committed to the field of neurology, developing UB-311, which targets amyloid beta, a protein responsible for the growth and repair of neuron cells in the brain. This product is being developed to help fight Alzheimer's disease [AD] and this study is in Phase 2 clinical trial.

Vaxxinity is also developing UB-312, which aims to target the aggregation of specific substances that cause neuronal death in the brains of patients with Parkinson's and other diseases such as dementia and central nervous system atrophy. This evaluation is in phase 1 of a clinical study. Based on the data collected to date, the UB-312 vaccine is non-toxic, remains within tolerability limits, and produces an effective immune response in patients with Parkinson's disease.

Vaxxinity is developing UB-313 to fight migraines and is also developing anti-PCSK9, which targets bad cholesterol and reduces the chances to develop cardiovascular health problems. In September 2022, Vaxxinity began dosing UB-313 to healthy volunteers to evaluate the product's safety and tolerability in addition to its immunogenicity. Recruitment of healthy volunteers is progressing according to the company's plan and initial data from Phase 1 of this study should be released sometime in the first half of the current year.

The Financial Condition Of The Company

In the third quarter of 2022, the company's accountants charged the income statement with research and development expenses of $12.5 million and general and administrative expenses of $7.3 million.

As of September 30, 2022, the company had $102.2 million in cash and short-term investments.

The financial situation is precarious, and this is an additional risk when investing in this stock. It is measured by the Vaxxinity Altman Z-Score of -1.66 , implying the possibility of bankruptcy within the next two years.

However, if the coronavirus vaccine, which appears to be the product with higher prospects in the pipeline, catches the interest of a larger company, Vaxxinity shareholders could potentially be offered to sell their shares at a much higher price than the current market price. This is also possible.

Conclusion

Vaxxinity is a biotech stock that investors may consider taking a bullish stance and eventually increasing their position.

This stock is selling at a much cheaper price than last year after experiencing a huge drop. The stock represents a company that continues to make strides in developing a vaccine against the COVID-19 virus.

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