Vaxart(US:VXRT)2025-08-13 20:16Part I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited financial statements for Q2 2025 show increased revenue from government contracts, higher R&D expenses, a net loss of $30.6 million, and a 'going concern' warning due to insufficient cash Condensed Consolidated Balance Sheets As of June 30, 2025, total assets slightly decreased to $164.1 million, while total liabilities significantly increased to $131.2 million, leading to a sharp decline in stockholders' equity to $32.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $20,111 | $25,229 | | Total current assets | $70,379 | $68,260 | | Total assets | $164,085 | $166,389 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $117,878 | $90,878 | | Total liabilities | $131,207 | $107,464 | | Total stockholders' equity | $32,878 | $58,925 | - A significant increase in 'Unbilled receivable from government contracts' was observed, rising to $36.8 million from $6.2 million at the end of 202413 - 'Other accrued current liabilities' more than tripled, increasing from $11.4 million to $35.7 million, contributing to the rise in total liabilities13 Condensed Consolidated Statements of Operations and Comprehensive Loss For the six months ended June 30, 2025, total revenue surged to $60.6 million, driven by government contracts, while operating expenses increased to $90.1 million, resulting in a net loss of $30.6 million Six Months Ended June 30, (in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue | $60,606 | $8,582 | | Research and development | $80,479 | $36,493 | | Total operating expenses | $90,144 | $48,908 | | Operating loss | ($29,538) | ($40,326) | | Net loss | ($30,577) | ($40,883) | | Net loss per share | ($0.13) | ($0.23) | - Revenue from government contracts was the primary driver of growth, increasing to $59.0 million for the first six months of 2025 from $8.0 million in the comparable 2024 period16 Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities improved to $25.5 million, while investing activities provided $20.5 million, leading to a $5.1 million decrease in cash and equivalents Cash Flow Summary for Six Months Ended June 30, (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($25,544) | ($33,218) | | Net cash provided by (used in) investing activities | $20,465 | ($14,688) | | Net cash (used in) provided by financing activities | ($39) | $56,436 | | Net (decrease) increase in cash | ($5,118) | $8,530 | - The significant cash provided by financing activities in 2024 ($56.4 million) was primarily from the issuance of common stock, which did not recur in 202524 Notes to the Condensed Consolidated Financial Statements The notes disclose a 'going concern' warning due to insufficient cash, heavy reliance on HHS BARDA government contracts, and subsequent events including Nasdaq delisting and a stop work order on the COVID-19 trial - The company has substantial doubt about its ability to continue as a going concern for one year, as its cash, cash equivalents, and investments of $26.3 million are insufficient to fund planned operations3236 - Revenue from government contracts with HHS BARDA totaled $59.0 million for the six months ended June 30, 2025, primarily from the 2024 ATI-RRPV Contract for the COVID-19 vaccine candidate7880 - Subsequent to the quarter end, on August 5, 2025, the company received a stop work order for screening and enrollment in its COVID-19 Phase 2b trial under the 2024 ATI-RRPV Contract125 - Effective July 8, 2025, the company's common stock was suspended from trading on Nasdaq and began trading on the OTCQX® Best Market122124 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses oral vaccine development, highlighting a 606% revenue increase driven by HHS BARDA contracts, a 121% rise in R&D expenses, and significant liquidity challenges with a 'going concern' warning due to a recent stop work order Company Overview and Product Pipeline Vaxart, a clinical-stage biotech, develops oral tablet vaccines, with its norovirus candidate showing positive Phase 1 results, while its COVID-19 program faces a stop work order on its BARDA-funded Phase 2b trial - Norovirus Program: Reported positive topline results from a Phase 1 trial in June 2025 for its second-generation bivalent vaccine, showing statistically significant increases in functional antibody titers. The next step is a potential Phase 2b study135136 - COVID-19 Program: A Phase 2b trial funded by HHS BARDA (up to $460.7 million) was underway. However, on August 5, 2025, a stop work order was issued, halting new participant screening and enrollment, though follow-up on existing participants continues139 - Influenza Program: A new avian influenza vaccine candidate was 100% protective in a ferret challenge model. The company intends to work with governments for pandemic preparedness145 Results of Operations For the six months ended June 30, 2025, total revenue surged 606% to $60.6 million due to government contracts, while total operating expenses increased 84% to $90.1 million, resulting in a net loss of $30.6 million Comparison of Operations for the Six Months Ended June 30, (in thousands) | Item | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $60,606 | $8,582 | 606% | | Research and Development | $80,479 | $36,493 | 121% | | General and Administrative | $9,665 | $12,415 | (22)% | | Total Operating Expenses | $90,144 | $48,908 | 84% | | Net Loss | ($30,577) | ($40,883) | (25)% | - The increase in revenue was driven by the 2024 ATI-RRPV Contract ($59.0 million) and the 2024 ASPR-BARDA Contract165 - The rise in R&D expenses was primarily due to increased clinical trial expenses for the COVID-19 and norovirus vaccine candidates168 Liquidity and Capital Resources As of June 30, 2025, the company held $26.3 million in cash and investments, insufficient for 12 months, with a projected cash runway into Q1 2026, raising 'going concern' doubts, further complicated by a stop work order on a key BARDA contract - The company's cash, cash equivalents and investments of $26.3 million are not sufficient to fund planned operations for the next 12 months180 - Management projects the current cash runway will only last into the first quarter of 2026, which raises substantial doubt about the company's ability to continue as a going concern182 - As of June 30, 2025, the company had received $98.9 million in cash payments under the 2024 ATI-RRPV Contract. Management is currently evaluating the effect of the August 5, 2025 stop work order on its liquidity179 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its short-term investments, considered low, with minimal foreign exchange risk from Japanese yen royalty revenue - The company's main market risk is interest rate sensitivity on its $26.3 million of cash, cash equivalents, and short-term investments, but this is considered low due to the portfolio's high credit quality and short duration203204 - Foreign exchange risk is minimal, primarily affecting royalty revenue from sales in Japanese yen. A 1% strengthening of the U.S. dollar against the yen would reduce royalty revenue by 1%205 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting identified during the quarter - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025206 - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025207 Part II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in several legal proceedings, including a partially settled securities class action for $12.0 million and a pending appeal for a shareholder lawsuit against Armistice Capital - A securities class action (Putative Class Action) was partially settled with the company and its officers for $12.0 million, of which $2.0 million was paid by Vaxart and the remainder by insurers95 - A lawsuit seeking disgorgement of short-swing profits from Armistice Capital (Roth v. Armistice) was dismissed but is currently pending appeal in the Second Circuit Court of Appeals96 Item 1A. Risk Factors The company faces material risks including heavy reliance on HHS BARDA funding, a recent stop work order on its COVID-19 contract, stock volatility on OTCQX, potential 'penny stock' classification, Nasdaq delisting, and adverse trade policy impacts - A significant risk is the dependence on HHS BARDA funding. The August 5, 2025 stop work order on the 2024 ATI-RRPV Contract could negatively impact revenues and cash flows, potentially forcing the company to suspend or terminate the COVID-19 vaccine's development213216217 - Trading on the OTCQX market may be volatile and sporadic, which could depress the stock price and make it difficult for stockholders to sell shares218 - The company's common stock could become subject to the SEC's 'penny stock' rules, which would impose additional sales practice requirements on broker-dealers and could limit trading activity219 - The company faces the risk of being delisted from Nasdaq due to failure to meet the minimum bid price requirement, despite efforts to regain compliance via a potential reverse stock split221 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None224 Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter227 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, CEO and CFO certifications, and XBRL data files - The filing includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002230