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While Risks Remain, VBI Vaccines Stock Is a Buy at Today’s Prices

Thomas Niel

VBI Vaccines’ (NASDAQ:VBIV) stock is on the move. The shares have rallied on the heels of a successful clinical trial. But is it too late to buy the stock?

While VBIV has soared around 130% since Nov. 1, more gains could be in the cards. Everything hinges on the company being able to market its Sci-B-Vac hepatitis vaccine in North America and Europe.

VBIV stock

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VBIV stock is dependent on Sci-B-Vac. There are other drugs in the company’s pipeline. But Sci-B-Vac is the only one that’s ready for prime time. The company could win big if the vaccine is approved  by the key regulators. However, if the company hits additional headwinds, the shares could crash back to their prior lows.

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But despite its high risk,  VBIV stock may be worth buying at today’s prices. The excitement from the results of the Phase 3 trial of Sci-B-Vac has cooled off, sending the shares lower in the past few weeks. This could mean that the shares have reached a solid entry point. Let’s see why this high-risk/high-return stock may be a great investment.

With Sci-B-Vac’s Success More Certain, VBIV Stock Could Head Higher

The  success of the company’s recent Phase 3 trial bodes well for VBIV stock. But it’s important to consider the mixed outcome of the company’s prior clinical trial. As InvestorPlace contributor Chris Markoch noted in a recent column, this was Sci-B-Vac’s second Phase 3 trial. Back in June, the company completed its initial Phase 3 trial.

Based on the outcome of the latter trial,  Sci-B-Vac appeared to be more effective than GlaxoSmithKline’s (NYSE:GSK) Energix-B. Yet, as Markoch pointed out, ” the trial showed that Sci-B-Vac taken in two doses was not as effective as Engerix-B taken in three doses.” VBIV stock crashed as investors became less optimistic about Sci-B-Vac’s future prospects.

But, after this second trial, Sci-B-Vac’s viability as a two-dose vaccine is more certain. The second trial’s results showed that two doses of Sci-B-Vac were more effective than Energix-B. Thanks to these results, the company plans to seek North American and European approvals in the second half of 2020.

What’s now key for VBIV stock is how Sci-B-Vac fares against Dynavax’s (NASDAQ:DVAX) Heplisav-B. According to a Seeking Alpha contributor, Heplisav-B’s key selling point is that it’s a two-dose vaccine., while VBIV plans to market its vaccine as a three-dose treatment.  But Heplisav-B has had its own headwinds. Rejected twice due to safety concerns by the FDA, Heplisav-B was finally approved in late 2017.


Can Sci-B-Vac gain an edge against Heplisav-B? With Heplisav-B already on the market in North America, Dynavax has first-mover advantage over VBIV. But, with VBIV likely to partner with a big pharma company and Dynavax, “going it alone,” Sci-B-Vac could wind up having stronger marketing infrastructure behind it.

Yet VBIV stock is facing some key risks.

Dilution Is Likely, But That’s Par for the Course

As of VBI’s last quarterly filing, the company had $53 million of cash. But, given its $54.2 million of operating losses over the previous year, it will need more money going forward, especially since the company is trying to bring Sci-B-Vac to market.

Partnering with a big pharma company could minimize its cash burn. However, VBIV appears likely to issue more stock, diluting the value of its shares.

But, to monetize Sci-B-Vac, the company needs cash. In the end, a dilutive equity infusion will allow VBIV to fully monetize Sci-B-Vac, ultimately sending the shares higher.

As mentioned above, VBIV stock is dependent on a sole catalyst. The success or failure of Sci-B-Vac will drive the future direction of the shares. VBI Vaccines does have other opportunities in its pipeline. These include a chronic hepatitis B infection treatment, as well as a immunotherapy treatment for glioblastoma. But don’t expect these drugs to move the needle anytime soon, as both are in the early development stages.

The Bottom Line

VBIV stock is a high-risk/high-return investment. If Sci-B-Vac is approved by the FDA, the shares could move higher. But, if Sci-B-Vac is not approved, the stock could fall significantly. Yet,  with analysts’ average price target on the shares standingt at $4.50, VBIV may be worth the risk.

After the results of the Phase 3 trial were announced, VBIV stock soared as high as $1.90 per /share. But, after investors’ excitement cooled, the shares have slid back to around $1.50. Although the shares are up from their past lows, now may be a great time to buy them.

VBIV stock is not a “bet the ranch” situation. But the shares could rally tremendously  in the next year. With potential approvals of its vaccine in North America and Europe on the horizon, VBIV could be a big winner in 2020.

As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.

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