VBI Vaccines Inc. (NASDAQ:VBIV) recently announced a pan-coronavirus vaccine candidate, VBI-2901, which comprises of SARS-CoV-2, SARS-CoV, and MERS-CoV spike proteins. VBI-2901 is a multivalent vaccine that could produce a broad array of reactive antibodies, which may provide protection from mutated strains of the coronavirus. Now, the company is working with the National Research Council of Canada, “NRC,” to bring a candidate to the clinic in Q4 2020. Additionally, the company successfully completed Sci-B-Vac’s pivotal Phase III for hepatitis B and is preparing for submissions with the FDA, EMA, and Health Canada. It looks as if VBI has several major catalysts scheduled in the coming quarters that could be transformative events for the company and the stock. However, the stock has already experienced a strong move to the upside following its announcement of its pan-coronavirus vaccine candidate and appears to have found a new trading range around $2.00 per share. I would like to find a spot to add to my speculative position, but I don’t want to pay the COVID-19 premium price.
I intend to review the company’s recent progress and discuss my opinions about VBI’s pan-coronavirus vaccine candidate. Finally, I attempt to find a target price for my next buy and how I plan to manage my position in the second half of 2020.
VBI Vaccines is one of several vaccine companies in my speculative portfolio that has committed to discovering and developing a COVID-19 vaccine. Admittedly, I didn’t expect VBI to become a market leader from its efforts, but I was happy to see the market identify VBI’s efforts and potential to produce a cutting-edge vaccine to thwart the pandemic. Not only does VBI’s vaccine target COVID-19, but it also includes the spike proteins for severe acute respiratory syndrome, “SARS”, and Middle East respiratory syndrome, “MERS”. Together, these different strains of coronavirus could create a pan-coronavirus vaccine that will offer broad protection against existing strains and possibly future or mutated strains of coronavirus.
Figure 1: Pan-Coronavirus Structure. Source: VBIV
VBI’s collaboration with NRC will combine VBI’s eVLP technology platform and NRC’s antigens and assay development capabilities to develop this pan-coronavirus vaccine.
Figure 2: eVLP Technology Overview. Source: VBIV
My Take On The Vaccine Program
There are a variety of coronavirus vaccines in development right now, but VBI’s multivalent vaccine is definitely one of the most intriguing. Most of the vaccines in development are focusing on the current strain of coronavirus, but COVID-19 might become endemic and find ways to mutate as the seasons past…similar to the flu. VBI’s vaccine is similar to the modern flu vaccines that contain multiple strains (trivalent, quadrivalent), which can help immunize against the current strain and future strains caused by genetic shift or drift. The other vaccines in production could get to the end of their development and testing, only to find out that COVID-19 is now COVID-20. It is possible that the majority of the vaccines in development might not protect the population to the mutated or new strain of coronavirus, which would bring us back to square one. VBI’s vaccines might be the only vaccine that could be effective against the new strain, which would be a huge commercial opportunity and bring some attention from the market. Even if the current COVID-19 vaccines are effective this year, health organizations might fear the potential of the coronavirus becoming endemic and will look for an annual multivalent vaccine, which again will favor VBI-2901. The company is already partnered with the NRC, so it should have access to a novel strain and should be able to reformulate rather quickly.
Overall, I rank the VBI-2901 pan-coronavirus vaccine near the top of my COVID-19 candidate list due to its ability to address the past, current, and potentially future strains of the virus.
My Plan For VBIV
Admittedly, I sold half of my VBIV position during the spike back in May due to stock hitting some technical checkmarks, including a bearish divergence on the RSI after hitting the overbought area. In addition, I was up over 300% and I was looking to bank some profits and the stock is now trading at a premium valuation for its expected revenue (Figure 3).
Figure 3: VBIV Revenue Estimates (Source: Seeking Alpha)
Now, I am waiting to see what the overall market is going to do as it approaches the pre-coronavirus highs before making my next move. The company recently secured approximately $54M in net proceeds from a recent offering and $50M in debt financing, so I am not worried about any further dilution in the near-term. In addition, we should expect an update on the pan-coronavirus vaccine development before year-end, so it is possible to see another leg higher on good news or data. Still, I suggest investors to remain cautiously optimistic and wait for an update from the company in regards to its pan-coronavirus vaccine or Sci-B-Vac candidate before going “all-in” on VBIV.
Personally, I still have a long-term bullish outlook for VBIV, so I am going to be on the lookout for a pullback either before or after an update on Sci-B-Vac’s BLA for approval in the United States.
Figure 4: VBIV Daily (Source: Trendspider)
I am going to wait for a retest of the 200-day EMA (Figure 4) or wait for a bullish divergence in the RSI before clicking the buy button. My strategy is to reapply a third of my recent profits and let it run for the rest of 2020. This way, I am able to stay in the game while still banking a net profit for 2020. Long-term, I still expect to stay in VBIV for at least five years in anticipation of a large return on an undersized investment.
Disclosure: I am/we are long VBIV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.