Vaxart Stock Probably Isn’t Worth the Risk as It Pushes Higher

I’m privileged today to be talking about the California-based biotech Vaxart (NASDAQ:VXRT) stock. I’ve never written about the company, but I find the idea of oral recombinant vaccines to be a compelling proposition.

Of course, whether it’s enough to keep moving VXRT stock higher over the long term is another matter altogether. 

Personally, I like the idea of taking an oral vaccine over a needle, primarily because of its convenience. Of course, I’d be lying if I didn’t admit that I’m awful when it comes to having blood taken. I need to lie down for the process, or I’ll likely faint. Thankfully, the same thing doesn’t happen with allergy shots, vaccine shots, etc. 

But I digress. 

The one thing I’ve learned over the duration of Covid-19 is that vaccine contenders such as Vaxart are never out of the game because the world’s needs are always changing. 

Who’s to say Vaxart’s S-protein only oral tablet SARS-CoV-2 vaccine won’t get a chance in the future to strut its stuff on the health care dancefloor? To arbitrarily eliminate the possibility is foolish and wrongheaded.

VXRT Stock Comes To Market

Vaxart itself became a public company in February 2018 through a reverse merger with Aviragen Therapeutics. The biotech had a couple of clinical trials and hit the skids in 2017, causing its share price to fall into penny stock territory.

However, a strategic review found the reverse merger to be the best option for its bruised and battered shareholders. 

Before the reverse merger vote by Aviragen, its board sent a letter to shareholders arguing that it had a January 2018 market capitalization of approximately $24 million.

Post-merger, Vaxart shareholders owned 51% of the combined entity, and Aviragen’s shareholders owned 49% of the 7.1 million outstanding shares. Aviragen’s board valued its 49% at $106 million at the time, significantly higher than its market cap as an independent company. 

If all Aviragen shareholders held on to their 3.48 million shares they are worth $29 million today, only $5 million more than at the time of the merger. More important, their 49% ownership stake is now worth 2.8% based on 122.3 million shares outstanding.

Should they keep on holding for the potential of a big payday down the road?

It Depends on the Cost Basis

On Jan. 2, 2018, Aviragen had 38.65 million shares outstanding. Based on the $24 million market cap mentioned by the board in its letter to shareholders, the share price was approximately 62 cents at the time.

In fiscal 2016 (June 30 year-end), it had a share price high and low of $2.66 and $1.23, respectively. In fiscal 2017, it had a high and low of $2.00 and $0.43, respectively. As a result, the midpoint average of the two-year period is $1.55 [$2.66 plus $0.43 divided by 2].

So, if you bought its stock anytime in that period, you are clearly ahead of the game. It might be wise to take enough profits to repay your initial investment and let the rest ride.

However, if you bought earlier in the decade, say 2010, when Aviragen was known as Nabi Biopharmaceuticals, you might have paid as much as $6.42 a share. In which case, your profits after more than a decade of holding aren’t very rewarding. 

Should VXRT fall back to the low $5s where it traded in April, you’d be looking at a loss for the past decade, likely forcing you to hold until it was to recover.

That’s not an easy place to be. I certainly can’t tell you what to do with your hard-earned capital. 

The Bottom Line

InvestorPlace’s David Moadel discussed Vaxart’s positives at the end of July. One advantage that jumped out at me was his observation that with self-administration is possible fewer people would need to make appointments and stand in lines.   

I have a friend whose granddaughter lives in Louisiana with her family. They haven’t bothered to get vaccinated, arguing they don’t have time. The fact that she doesn’t work and still can’t find the time boggles my mind. 

However, given that Louisiana ranks 47th amongst U.S. states for vaccination rates — only 37.2% are fully vaccinated — it doesn’t surprise me that my friend’s granddaughter and her family aren’t vaccinated. The state’s not interested in doing what’s right.  

Here in Nova Scotia, where I live, 64.2% of the province is vaccinated. That includes people under the age of 12. And we’re not screaming about having to wear masks indoors. 

A more convenient health care system could also be a more efficient and less costly one. We’ve seen during the pandemic what telemedicine has meant to health care providers coping with Covid-19 at the same time they’re treating everyday issues and concerns. 

I, for one, will continue to cheer for Vaxart’s success. 

As for VXRT stock, except for the most aggressive investors, this should only be an investment you make if you can afford to lose 100% of your bet. 

 If you do buy now, I would at least save a little cash if it does fall back a buck or two in the weeks ahead.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.