Vaxart's Reverse Split: A Necessary Lifeline or a Risky Gamble?

Vaxart (NASDAQ: VXRT) stands at a critical juncture. By June 30, the biotech must either lift its stock price above Nasdaq's $1 minimum bid requirement or face delisting—a death sentence for liquidity and investor access. The company's proposed reverse stock split, now backed by influential proxy advisors ISS and Glass Lewis, is its last chance to avoid this fate. But for retail investors, the move raises red flags: Is this a strategic necessity to save the company, or a risky maneuver that could further dilute their holdings?

The Reverse Split: A Compliance Lifeline

The math is stark. Vaxart's stock price has languished below $1 for months, hitting a low of $0.42 in May. To meet Nasdaq's requirement, the company is proposing a reverse split with a ratio capped at 1-for-20, down from an earlier 1-for-50 proposal after investor pushback. The adjusted ratio aims to minimize the psychological shock of a drastic share price jump while still ensuring compliance.

ISS and Glass Lewis have both endorsed the plan, calling it “critical to avoid delisting.” Their support matters: institutional investors, who control 60% of Vaxart's shares, are far more likely to vote “for” with these endorsements. Without approval by June 1, the company risks losing its Nasdaq listing, triggering a cascade of consequences—from restricted access to capital markets to the loss of analyst coverage.

Retail Investor Concerns: Dilution or Distraction?

Retail investors, however, are skeptical. Many fear the split could lead to a post-split price drop, akin to what happened to companies like Ford and BlackBerry after similar moves. But Vaxart's management argues this isn't a typical reverse split: the ratio is tailored to the exact compliance threshold, and no shares will be issued to dilute existing holders. Instead, the move merely adjusts the number of shares (reducing them) and the per-share price to climb above $1.

Critically, Vaxart's executives have personally staked their credibility on this plan. Over half the board and leadership hold shares they believe are undervalued—a clear “skin-in-the-game” signal.

Clinical Catalysts: The Real Value Driver

The reverse split isn't just about survival—it's a bridge to unlock Vaxart's core asset: its oral vaccine platform. The company is on track to report data from its norovirus vaccine trial in Q3 2025 and its HPV vaccine in 2026. These programs, backed by a $460.7 million BARDA contract, could transform Vaxart into a leader in oral immunizations—a market projected to hit $50 billion by 2030.

The BARDA award, while not a liquidity cure-all, has already extended the company's cash runway to over a year. A successful reverse split would buy Vaxart time to execute its clinical milestones, potentially triggering a surge in interest from partners and investors alike.

The Bottom Line: Vote “Yes” or Risk Everything

The calculus is clear. A “no” vote dooms Vaxart to delisting, which would erase its ability to raise capital and advance its pipeline. A “yes” vote keeps the company alive, positions it to leverage its proprietary platform, and sets the stage for upcoming data catalysts. ISS and Glass Lewis aren't backing this plan out of charity—they see the math: survival hinges on compliance.

For investors, the split isn't a gamble—it's a strategic necessity. The adjusted 1-for-20 ratio reduces the risk of overcorrection, while upcoming clinical reads could catalyze a sustained rebound. With shares trading at pennies, the upside potential far outweighs the risks.

Action Item: Vote “FOR” the reverse split by June 1. This isn't just a vote for compliance—it's a bet on Vaxart's future as a leader in oral vaccines. The company's survival, and your potential gains, depend on it.

Disclosure: This article is for informational purposes only and should not be construed as investment advice.