Markets

Why Vaxart Stock Is Under Pressure Today

What happened

Vaxart (NASDAQ: VXRT), a clinical-stage vaccine developer, is poised for a tough day today. Ahead of the opening bell, the biotech's shares dropped by as much as 9.9%.

The culprit? Vaxart's stock is sinking this morning in response to an 8-K filed with the Securities and Exchange Commission (SEC) last Wednesday. In the filing, Vaxart revealed that it is currently under investigation by the federal government and the SEC for its prior claims about being selected by Operation Warp Speed (OWS). What's more, the company also released details regarding the ongoing class action lawsuits filed by some of its shareholders over the same matter.

A schematic outlining the threat posed by the novel coronavirus

Image source: Getty Images.

Vaxart's shares have rebounded to some degree since the opening bell, but they are still down by 5.2% as of 9:46 a.m. EDT Monday.

So what

Last June, Vaxart announced that its oral COVID-19 vaccine was selected to participate in OWS, the federal government's program to accelerate the development of vaccines and therapeutics to fight the virus. As a result, the biotech's shares shot up by a whopping 500% over just a three-week period in the summer.

Investors apparently took the press release in question to mean that Vaxart was in line to receive a large grant for its COVID-19 vaccine program. The truth, however, was that the company's vaccine was simply selected to participate in a nonhuman primate challenge study. Vaxart, in short, did not land a sizable award from OWS at the time of that particular press release.

Now what

Is this dip a buying opportunity? Vaxart's press release over the OWS matter didn't explicitly state that the company had received a large award -- only that the primate challenge study would be sponsored by OWS. So it's hard to imagine that investigators will be able to definitively prove that the company purposely deceived shareholders in order to inflate its share price. That's the silver lining.

Having said that, investors also need to understand that Vaxart's COVID-19 oral vaccine program is far from a sure thing. This developmental biotech stock, therefore, probably belongs only in the portfolios of the most aggressive of investors.

10 stocks we like better than Vaxart, Inc
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Vaxart, Inc wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 24, 2020

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

VXRT

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More