Should you buy Vaxart shares in March?

Vaxart (NASDAQ: VXRT) started last month on a bitter note. Data from the Phase 1 trial for its investigational coronavirus vaccine has been disappointing, and its stock has fallen 58% in a single trading session. The reason: The Vaxart candidate lacked a quality considered key to a successful vaccine.

But there was a silver lining in the data from the trial. And the company is building on this bright spot to move the experimental vaccine forward into Phase 2 trials in the second quarter. Now the question for investors is whether they should believe in Vaxart again – and buy clinical-stage biotech stocks.

Image source: Getty Images.

So, first of all, what happened?

Here’s the bad news: Vaxart’s COVID-19 vaccine candidate did not produce neutralizing antibodies in participants in its Phase 1 trial. These particular types of antibodies are considered important because they block infections. In their own preliminary studies, vaccines developed by Pfizer (NYSE: PFE) and Modern (NASDAQ: mRNA) Both have been shown to induce recipients to produce higher levels of neutralizing antibodies than those found in patients who have recovered from COVID-19. These companies subsequently reported vaccine efficacy by over 94% in Phase 3 clinical trials, on their way to becoming the first to gain regulatory approval for their coronavirus vaccines.

Other companies that have advanced COVID-19 vaccine candidates into late stage trials have also reported high levels of neutralizing antibody activity. So investors viewed Vaxart’s lack of this item as a big negative.

But as mentioned above, one bright spot emerged from the report. Vaxart’s experimental vaccine produced strong killer T cell responses. In fact, Vaxart said these responses were the highest the company has ever seen in its clinical trials.

Killer T cells don’t block infections, but they play a major role in fighting them – and therefore in preventing the infection from spreading throughout the body, explains an article in Nature on the development of a vaccine against COVID-19. It is good for the patient as it usually results in mild illness instead of severe case. It’s also good for those around the patient: if the killer T cells restrict viral circulation, then an infected person can shed fewer viral particles. And that means a reduced likelihood of them passing the virus on to others.

Management of new variants

Another advantage of killer T cells is their potential to deal with new variants of concern, that is, strains with genetic changes that make them more transmissible or dangerous, or better able to evade other induced lines of defense. by current vaccines. Nowadays we can refer to Brazilian, British and South African varieties. A report published in Cellular Reports Medicine have shown that recovered coronavirus patients produce T cells that recognize 30 to 40 parts of the antigen. This opens the door for a large immune system attack against the coronavirus – even though parts of it have mutated.

This could be great news for Vaxart and its candidate. But the big question is: is the robust generation of T cells enough to make them an effective vaccine against the coronavirus? Or do we need a combination of neutralizing antibody production and T cell response? For that answer, we’ll have to wait for Vaxart’s subsequent trials to offer us evidence.

Some investors may wonder why the Vaxart candidate has generated so much interest in the investment community. After all, many companies are closer to the finish line in the vaccine race.

The answer is that Vaxart’s candidate has the potential to be a game-changer – if he’s effective enough. This is because its candidate is an oral vaccine, taken in tablet form. People will love to avoid a painful jab. But more importantly, a tablet that is stable at room temperature makes storage and distribution much easier and cheaper. It is easy to imagine governments sourcing such a product.

And the risk?

The biotech company has six other candidates in its pipeline, so in the medium term it won’t depend solely on bringing a COVID-19 vaccine to market. But for now, the performance of Vaxart’s share price is largely due to developments in the coronavirus vaccine program.

As mentioned, we have yet to see a coronavirus vaccine candidate reporting efficacy based on T cell production. And that is why Vaxart’s stock remains at high risk – at least until it does. produce initial efficacy data. Vaxart also offers strain-specific candidates that could be used with its original vaccine candidate. Positive data for these experimental vaccines could reduce investor risk.

Yet considering all these points I wouldn’t buy this biotechnology stocks in March – unless I’m a very aggressive investor. For the rest of us, the best place for Vaxart stocks is on our watchlists.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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