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Vaxart shares fall 57% on considerations weak antibody response will have an effect on the effectiveness of the oral Covid vaccine

An experimental coronavirus oral vaccine showed promising results in an early clinical trial of 35 healthy adults, Vaxart of South San Francisco said on Wednesday. Despite the results, Vaxart's stock fell about 57%.

Vaxart scientists divided volunteers between the ages of 18 and 54 into three groups. The first group received two low doses of the vaccine – called VXA-CoV2-1 – 29 days apart, while the remaining groups received a single low or high dose.

The vaccine, contained in a small tablet, produced a type of T cell responsible for killing virus-infected cells in about 75% of the volunteers who received a single low or high dose. The reported reactions are higher than with the vaccines from Moderna and Pfizer.

However, neutralizing antibodies were not detected in volunteers after a single dose, Vaxart said. Researchers believe that the antibodies play an important role in the defense of cells against the virus. The company said it is currently testing second-dose antibody responses after antibodies were detected in two-dose volunteers' nasal swab samples.

Isaac Bogoch, an infectious disease specialist and professor at the University of Toronto, said the company's shares could fall after the first dose due to the lack of neutralizing antibodies.

"The immune response is diverse," he said, adding that one aspect of the immune response is to make antibodies, especially neutralizing antibodies. "While it is great to see that there seems to be a decent T-cell response, the lack of antibodies detected is problematic and can reduce the effectiveness of this vaccine."

The company said no serious adverse events were reported in the Phase 1 study, with side effects generally being mild. Volunteers reported common side effects such as headache and fatigue, and there was a "slight increase" in the high-dose group of loose stool cases, the company said.

The data will be presented on Wednesday afternoon at the New York Academy of Sciences symposium.

"The most exciting thing about the [Phase 1 data] is that even after one dose, we can get a very, very strong T-cell response," Sean Tucker, Vaxart's chief scientific officer, told CNBC in a telephone interview and added that T cells are likely to be "underestimated" compared to antibodies in fighting the virus.

The biotech company said the vaccine has the potential to provide better protection against current and emerging strains of the virus than existing vaccines. Moderna, Johnson & Johnson and Novavax have announced in the past few days that their vaccines may be less effective against B.1.351, a highly contagious strain found in South Africa. US officials have raised concerns that Covid may continue to mutate and defy the protection of existing vaccines.

Vaxart's vaccine contains DNA instructions for making the spike protein that allows the virus to enter human cells, as well as instructions for making the N protein, which is involved in other processes. Tucker said the inclusion of the N protein could cause the vaccine to retain its ability to work against emergent strains.

Many other vaccines under development chose spike protein as a "primary target," he said. "But the problem with the [spike] protein is that it definitely mutates more over time. We also added the N-protein, which is highly conserved in the virus."

According to Vaxart, the vaccine is the only oral tablet in the US that has been tested in humans. Similar technology is being used to develop vaccines against influenza and norovirus.

The company was investigated and investigated by the federal government late last year for allegedly exaggerating its involvement in Operation Warp Speed, former President Donald Trump's vaccines and treatments program. A June press release said that "Vaxart's Covid-19 vaccine has been selected for US government Operation Warp Speed," which rocketed its stocks.

However, it found the company had received no federal government funding for vaccine doses and was only participating in preliminary U.S. studies to identify potential areas for possible Warp Speed ​​partnership and support, according to the New York Times.

Tucker told CNBC the company is in talks with the US and other governments to find possible ways to collaborate on its vaccine.

If Vaxart's vaccine goes through other clinical trials and US approval, it could offer advantages over needle-based vaccines.

Dr. Paul Offit, a member of the FDA's Advisory Committee on Vaccines and Allied Biological Products, said that an orally taken vaccine may be better accepted by the public who may be afraid of needles. Two US-approved Covid-19 vaccines – from Pfizer and Moderna – are injected into the arm and require two injections three to four weeks apart.

Vaxart said his vaccine is stable even at room temperature and does not require a freezer, which means it "can be stored and delivered to mass populations around the world". In comparison, Pfizer's vaccine must be stored in ultra-cold freezers that keep it between minus 112 and minus 76 degrees Fahrenheit. Moderna vaccine must be delivered between 13 and 5 degrees Fahrenheit.

Vaxart said the vaccine also doesn't require any special medical training and can be taken at home. This will help comply with social distancing guidelines while relieving the burden on the health system.

The company said it was still critical whether it was single- or two-dose therapy.

A phase 2 study is expected "in the next few months," Tucker said. In its "Fastest Accelerated Timeline," the company expects Phase two and three studies to be completed by early 2022.

–CNBC's Hugh Son contributed to this report.

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