Vaxart (Nasdaq: VXRT) - San Francisco, an American pharmaceutical company based in San Francisco, which develops vaccines in pill form in the early clinical stages. The issuer's shares are represented on the Nasdaq since 2015.
What he earns
The main goal of Vaxart is to create vaccines in the form of tablets, which will help some patients overcome the fear of needles and injections. The drugs themselves can be stored at home without freezing., as required by most modern injectable vaccines.
The company has several developments:
- Coronavirus Vaccine, which is undergoing the second stage of clinical trials and is now the main product of the business.
- Norovirus vaccine, or "stomach flu", with a potential market of $10 billion in the U.S., which is in the first stage of testing.
- Several variants of influenza vaccines at different stages of trials, one of which is being created in conjunction with the Johnson Medical Division & Johnson Janssen. Potential market in the US is estimated at $ 5 billion.
- Respiratory syncytic virus vaccine with a potential market of $5 billion in the U.S., which is in the preclinical stages of testing.
- Human papillomavirus vaccine with a potential market of $600 billion in the U.S., which is in the preclinical stages of testing.
Data on the assessment of potential sales markets in the UNITED STATES are taken from the company's presentation.
What's wrong
Has the train left?? The company makes the main bet on the vaccine against coronavirus in the form of a pill, which can be stored at home without freezing. But it's been two years into the pandemic., the percentage of the vaccinated population in many countries has exceeded the 50%, and dozens of major pharmaceutical companies offer their own vaccines around the world.
In short, seems, that people are already much less afraid of coronavirus in general and injectable vaccines in particular - therefore, there are doubts about the level of market demand for Vaxart tablets, which is now in the middle of clinical trials and may go on sale in a few years.
The loss has doubled. The very fact of unprofitability for biotechnology companies without registered and traded drugs is not something surprising., but over the past year, the loss of Vaxart has doubled and become a record for all time..
Obviously, this is due to the company's investment in its own growth and acceleration of research into new drugs, but at the same time the question arises, how long the company will be able to cope with such rapidly growing losses and maintain its financial health.
Dynamics of the net profit indicator
Additional issue. Over the past five years, the number of Vaxart securities has grown 31.5 times since 4 million to 126 million securities. Additional issue of shares is a typical way to raise funds in the company's business, which at the same time dilutes the share of existing shareholders: their securities lose value, earnings per share are declining.
What good
People's obsession with comfort. In addition to the obvious advantage of less demanding storage conditions, Vaxart vaccines bet on the human comfort zone. Many people do suffer from trypanophobia and are afraid of injections – according to a study, in the United States, among the adult population, such patients are approximately 10%. Therefore, vaccines in the form of less "scary" pills can be commercially successful and more loyally perceived by the target audience.. In addition, interim information about clinical trials of a vaccine against COVID-19 suggests that, that Vaxart might be more effective, than the products of competitors Pfizer and Moderna.
Strong financial health. The company has no debts, its equity exceeds liabilities almost in 6 once, and the dynamics of cash flows suggest, that in the current state of affairs, the company has enough money for 2-3 years ahead.)
The company is undervalued. According to Simply Wall Street, Vaxart shares are grossly undervalued and the discount from their fair value is now more than 70%. Such a gap in price makes the company's securities attractive both for speculative transactions., and for the gradual gain of a large position by long-term investors.
What's the bottom line?
Vaxart is engaged in useful developments - the ease of storage and convenience of the form of vaccines in the form of conventional tablets looks interesting. At the same time, the company's business is more related to the zone of human comfort., rather than with a claim to new discoveries in medicine.
Large institutional investors own more 30% company shares, and among State Street holders, BlackRock and The Vanguard Group take first place. The company cannot be called unpromising, and the purchase of its shares remains a matter of personal preferences of the investor and his approach to the formation of the portfolio..
