Oral Vaccine Platform And Dynavax Partnership Will Transform Long Term Prospects

Catalysts

About Vaxart

Vaxart is a clinical stage vaccine company developing oral pill vaccines that aim to induce both systemic and mucosal immunity.

What are the underlying business or industry changes driving this perspective?

• The license agreement with Dynavax for the oral COVID 19 vaccine candidate introduces up to US$700 million in potential license, regulatory and net sales milestone fees plus tiered royalties, which could support future revenue and reduce reliance on equity financing.
• The upfront US$25 million cash payment, US$5 million equity investment at a premium, and extended cash runway into the second quarter of 2027 give Vaxart more flexibility to advance its pipeline, which can influence operating expenses and future earnings power.
• The large, fully enrolled Phase IIb COVID 19 trial with around 5,400 participants and two planned data readouts in 2026 may create a series of clinical events that, if favorable, could support future royalty streams and potential net margin expansion through partner led commercialization.
• The second generation oral norovirus candidate, which produced stronger fecal IgA and serum responses than first generation constructs in Phase I, sits in an area with no approved vaccines and an estimated US$10 billion annual economic burden in the United States, which could have a meaningful impact on future revenue if partnered and developed further.
• The oral pill platform is designed to induce mucosal immunity and to simplify distribution and administration compared with injectable vaccines. This aligns with ongoing demand for more convenient vaccine delivery and could affect long term revenue opportunities and partner economics across COVID 19, norovirus, flu and HPV programs.

Assumptions

This narrative explores a more optimistic perspective on Vaxart compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Vaxart's revenue will decrease by 4.7% annually over the next 3 years.
• The bullish analysts are not forecasting that Vaxart will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Vaxart's profit margin will increase from -34.2% to the average US Biotechs industry of 16.2% in 3 years.
• If Vaxart's profit margin were to converge on the industry average, you could expect earnings to reach $20.8 million (and earnings per share of $0.07) by about January 2029, up from $-50.7 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 66.1x on those 2029 earnings, up from -2.0x today. This future PE is greater than the current PE for the US Biotechs industry at 21.5x.
• The bullish analysts expect the number of shares outstanding to grow by 5.09% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.37%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The oral COVID 19 program relies on successful outcomes from a large Phase IIb trial and future regulatory decisions over several years, so if efficacy, safety or regulatory views do not align with expectations, potential milestone payments and future royalty revenue from Dynavax could be lower than hoped. This would affect long term revenue and earnings.
• BARDA issued a stop work order that halted further enrollment in the COVID 19 Phase IIb trial, and long term dependence on external government contracts and partners to fund trials means shifts in public health priorities or funding policies could restrict future non dilutive funding. This could put pressure on cash resources and potentially increase dilution from equity financing, which would weigh on earnings per share.
• The norovirus program is explicitly dependent on securing a partner or other funding before advancing to the next clinical study, and the company has already pushed expected trial initiation into 2026. A prolonged period without partnership or financing would delay or prevent commercialization in an area with currently no approved vaccines, limiting future revenue and potential margin improvement from a broader portfolio.
• The company’s cash runway is currently expected to extend only into the second quarter of 2027 even after the Dynavax upfront payments. This indicates that additional capital or partnerships will likely be needed to support late stage development across COVID 19, norovirus, flu and HPV, and if market conditions or partner appetite are less favorable over time, Vaxart may need to constrain R&D or accept less favorable deal terms, which could reduce long term earnings power.
• The business model is concentrated around a single oral pill vaccine platform in markets where viral strains change and competing injectable vaccines are already established. If real world uptake of oral vaccines is weaker than hoped due to physician, payer or patient preferences, or if strain evolution reduces the practical benefit of the company’s cross reactive data, adoption could fall short of expectations, limiting revenue scale and the ability to expand net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Vaxart is $4.0, which represents up to two standard deviations above the consensus price target of $3.0. This valuation is based on what can be assumed as the expectations of Vaxart's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $4.0, and the most bearish reporting a price target of just $2.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $128.2 million, earnings will come to $20.8 million, and it would be trading on a PE ratio of 66.1x, assuming you use a discount rate of 7.4%.
  
• Given the current share price of $0.42, the analyst price target of $4.0 is 89.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.