When I last wrote about Vaxart (NASDAQ:VXRT) last month I indicated that I felt that the biotech company was not worth more than about $1 per share. As of June 16, VXRT stock was at $7.67, or $1.00 higher than when I wrote about it on May 14 at $6.61.

I am not deterred by this. I believe its Covid-19 vaccine efforts will likely fail. As such, there is going to be a good deal of volatility in VXRT stock.

Moreover, nothing has changed in terms of its potential cash burn over the next year.

VXRT Stock: Cash and Cash Burn

When I wrote about Vaxart last month the company said it had $177.3 million in cash and securities on May 3. But it was burning cash at a high rate. In Q1 alone it spent over $17.21 million in operating costs and capex spending. This is based on its Statement of Cash Flows on page 4 of its 10-Q.

I pointed out that this implies that cash burn will be $68.8 million over the next four quarters. That will eat up almost 40% of its cash of $177.3 million. Moreover, the company announced that it plans to initiate several clinical and pre-clinical Covid-19 vaccine studies. That could easily increase its cash burn for the rest of this year.

Therefore, I expect that its cash balance will be at least 50% lower by the end of the year. This would bring it down to $89 million. That is a far cry from its present market cap of $1.07 billion. Moreover, the prospect of another equity cash raise will be very high.

Let’s say that it decides to raise another $200 million. By the end of the year, the market cap won’t be at $1 billion. It will be at least 20% to 30% lower, possibly more. That is because investors (especially short-sellers) will be anticipating another dilutive raise. So, for example, another $200 million capital raise will be 20% dilutive to shareholders on a $1 billion valuation.

That will leave VXRT stock at somewhere between $5.45 to $6.23 per share, or 20% to 30% below the price of $7.79. The mid-point is $5.84.

Examining Vaxart’s Prospects

Maybe I shouldn’t be so down on this stock. After all, analysts now forecast revenue of $82.5 million for 2022, up from $3.5 million for this year.

As a result, this puts VXRT stock on a forward price-to-sales multiple of 13 times for next year. However, this is a very high valuation for a company that has no prospects of profits anytime soon. Moreover, the possibility of reaching $82.5 million in sales by the end of the next year and a half. There is virtually no indication now that any clinical drug it has will be able to reach that level of sales.

In fact, the only revenue the company makes is from a royalty agreement for sales of an influenza drug called Inavir in Japan. Last quarter the total revenue it made was $506,000. That is nothing. The company also has sales receivable of $700,000. Again, nothing.

The closest that it is to producing significant revenue is from another seasonal influenza drug, Monovalent H1, presently in a Phase 2 study.

Where This Leaves VXRT Stock

In other words, there is reason to believe right now that its revenue could spike to $82.5 million next year. That is, unless its flu drug gets fully approved and it can find a partner to produce it and provide royalties, Vaxart is still a highly speculative play.

If it is able to do this and can avoid the need for another capital raise, VXRT stock is still overvalued at 13 times sales. I suspect that most investors will want to wait.

For example, at 10 times sales, a more reasonable valuation, Vaxart would have a market cap of $825 million. That is 22.9% below today’s market cap and implies a target price of $6 per share (i.e., 77.1% x $7.79 price today). This is also close to my other estimate above of $5.84 per share.

Therefore, most defensive investors will look for VXRT stock to fall to $6 per share before investing in the company.

On the date of publication, Mark R. Hake did not own any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.