“The pill that moves the needle.” This is the statement highlighted on Vaxart’s (NASDAQ:VXRT) website, and it is written to make a bold impression. Recently, the company has been in the spotlight for its Covid-19 vaccine that is notably in pill form. Its inoculation isn’t ready yet, but some investors have already picked up shares of VXRT stock in anticipation.

Vaxart is a clinical-stage biotechnology company that, according to Yahoo! Finance, “engages in the discovery and development of oral recombinant protein vaccines based on its proprietary oral vaccine platform.” Can its oral vaccine pill be a game-changer in the quest to end the Covid-19 crisis? And should you consider VRXT stock now?

When Details Make a Difference

The “clinical-stage” aspect of Vaxart makes a huge difference. As a public company whose products are still undergoing trials, the company has a market capitalization of $1.04 billion and too little revenue.

It has a pipeline consisting of six vaccines in various stages of research and development. The company’s pipeline includes vaccines for Norovirus, Influenza, Respiratory Syncytial Virus (RSV), Covid-19 and Human Papillomavirus (HPV). All of its products are in clinical phases, and unfortunately for Vaxart, none of its products are in phase III trials.

VRXT stock has moved on news about the company’s oral vaccine against Covid-19, which has completed Phase I of clinical trials. To put that into context, the U.S. Food and Drug Administration (FDA) typically requires at least three phases of trials before a drug is approved. Approximately 25% to 30% of medications that make it to phase III continue on to phase IV, which comes after approval.

Recently, the FDA gave Vaxart the green light to proceed with phase II trials for its Covid-19 vaccine. Naturally, management was enthusiastic about this news. CEO Andrei Floroiu said the following:

“This is great news because it allows us to move forward with our first S-only vaccine construct … As we said at the end of the first quarter, we will explore multiple S-only constructs in clinical trials alongside the S+N construct that has already completed its Phase I trial.

Together, the S-only and S+N constructs are part of our unique oral tablet COVID-19 vaccine candidate portfolio, which we believe could make a significant contribution to the fight against COVID-19 globally.”

While this is great news for the company, it also exemplifies one of my biggest concerns about the prospects of VRXT stock. The percentage of medications that get FDA approval is rather small. Additionally, the process can often take years — not months — to get any approval. With other Covid-19 vaccines already on the market, by the time Vaxart’s pill is approved, the moment may have already passed.

So what drives the enthusiasm and irrational exuberance is hope rather than facts. The fact that this oral vaccine is now in stage II does not mean as much to me as it would if it was in stage IV.

VXRT Stock and Its Q2 Results

Second-quarter 2021 financial results showed the following highlights:

• Vaxart saw $36.2 million in net proceeds from its $250 million at-the-market facility in the most recent quarter.
• Cash, cash equivalents and marketable securities were $198.9 million.
• Vaxart saw a net loss of $16.1 million compared to $9 million in the same period last year. Net loss per share was 13 cents compared to a net loss of 12 cents last year.
• Revenue was $112,000 compared to $523,000 in Q2 2020.

To recap, the company lost money, had plenty of cash and saw crashing revenue in Q2 2021. At the same time, research and development expenses as well as general and administrative expenses increased year-over-year. This is a bad sign for its operating income, which was also negative.

An analysis of its latest 10-Q form is not supportive of VRXT stock, either. Total revenues for 2020 were $4.04 million compared to $9.8 million in 2019. A net loss of $32 million occurred in 2020 compared to a loss of $18 million in 2019.

Vaxart spent $23 million in net cash for operating activities in 2020, again worse compared to net cash used in operating activities of $13 million for 2019.

In 2020, Vaxart raised $138 million in cash from financing activities. This including $9.2 million from the sale of common stock and common stock warrants in the registered direct offering. It also raised $26 million from the issuance of common stock warrants. This is plenty of cash, but the stock dilution hurts the valuation of VXRT shares.

As of Dec. 31, 2020, there were 150 million shares authorized, with more than 110 million shares issued and outstanding.

Valuation and Volatility in VXRT Stock

According to MarketWatch, Vaxart has reported increasing free cash flow losses since 2018. In that year, the company lost $15.26 million in free cash flow compared to a loss of $24.97 million in 2020. This shows the company is burning cash.

On Vaxart’s website, there is a whole section about key ratios of its stock. I want to say kudos to the company for this valuable information. A few of these figures show how pricey this stock is. Its trailing-12-month (TTM) price to revenue ratio is 836.63x, its price to book ratio is 7.54x and its TTM net profit margin is a loss of more than 4,360%.

VXRT stock is very expensive. The company is losing money, burning cash and has recently diluted its stock. With no definite timeline for approval of its oral Covid-19 vaccine, emotions and speculation move its shares. Investors should avoid VXRT stock for now.

On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.