Vaxart (NASDAQ:VXRT) announced it is now proceeding to a Phase-2 clinical trial for its oral Covid-19 vaccine (a pill instead of a shot) in its Aug. 5 earnings release for the quarter ending June 30. This gives both the company and VXRT stock a new shot at life.
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Many more people would be willing to take a Covid-19 vaccine pill than take a shot. Moreover, a pill can be transported and stored much more easily around the world than a vaccine shot that has to be kept at a low temperature. Now that the Delta variant has been shown to be quite virulent around the world, Vaxart has a new chance at gaining market share in the Covid-19 vaccine space.
As a result, VXRT stock has bounced back quite well from its April 20 closing price of $5.06. As of Aug. 9, it was trading at $9.84, or nearly double that April low. Moreover, just since the end of July when it closed at $7.19, VXRT stock is now up 36.9%. In other words, the market now believes the company has can have a second bite at the vaccine apple.
Where This Leaves VXRT Stock
That is good news for Vaxart, as it was able to raise additional cash this quarter. The company has been losing money and bleeding cash flow with its various drug trials. This gives the company an extended life, so to speak.
Vaxart ended the quarter with $165.3 million in cash, and it also has $33.7 million in investments. This gives it a total liquidity balance of $199 million. It was able to raise $36.2 million from the Company’s $250 million at-the-market facility.
That is good since, during the first six months of 2021, the company has already burnt through $32.569 million. This can be seen on page 5 of the company’s 10-Q filing on Aug. 5, in its Consolidated Statement of Cash Flows. It shows that the net cash used in operating activities was $29.751 million, and the capital expenditure spend was $2.818 million, for a total of $32.6 million.
At that rate, Vaxart will use $65 million annually. However, once the company enters into Phase-3 clinical trials and beyond for its Covid-19 vaccine pill, it will likely have to raise more cash. This is because it will have to manufacture many more pills and it will have additional costs to fulfill the trial costs.
However, one analyst in Seeking Alpha now calls the possibility of an oral vaccine a “game changer for ending the pandemic globally.” His article quotes a Stocktwits entry that shows that the company is starting a Phase-2 study in Colombia. The company is moving ahead full force with its oral vaccine.
What Analysts Say
Analysts are now starting to take notice of the company. For example, Yahoo! Finance reports that 5 analysts now have an average price target of $13.40. This is 36% over the August 9 price.
Moreover, Seeking Alpha and TipRanks report that 4 analysts have an average price target of $12.50, or 27% higher. To say the least, despite not making any money and the high likelihood of another capital raise, analysts believe VXRT is worth about $13. They think this will occur before it needs more capital.
What To Do With VXRT Stock
In the past, I was not as sanguine as these sell-side Wall Street analysts. I felt that VXRT stock was not likely worth more than $6 and that investors might have a chance to buy the stock at that price.
However, now that the Delta variant has made Covid-19 a bigger problem, and given the low vaccine rates in the world, Vaxart has a new chance. Its oral vaccine, if approved, could go a long way to getting the world vaccinated.
This could be worth a good of money. I am inclined to go along with analysts at this point and at the average price target of $13, with an upside of 32%. However, investors should be aware that there could be another dilutive capital raise when it goes into Phase-3 trials.
On the date of publication, Mark R. Hake did not own any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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