HHS directive linked to BARDA funding scale-back reflects shifting pandemic priorities and mRNA policy changes

Vaxart has laid off 10% of its staff after the U.S. Department of Health and Human Services unexpectedly ordered the company to halt screening new participants in its large-scale Phase IIb oral COVID-19 vaccine trial, marking a significant setback for the novel tablet-based immunization approach.

The directive represents part of broader policy changes under the current administration, with BARDA ending funding for the trial as part of mRNA vaccine program rollbacks, despite Vaxart’s technology representing a non-mRNA approach to COVID-19 vaccination.

Trial Background and Technology Platform

Vaxart’s oral COVID-19 vaccine represents a fundamentally different approach from traditional injectable vaccines. The company’s platform uses an adenovirus vector delivered in tablet form, potentially offering advantages in distribution, storage, and patient acceptance compared to needle-based administration.

The Phase 2b clinical trial aimed to evaluate the vaccine’s efficacy and safety compared to an FDA-approved mRNA vaccine, with plans to enroll 10,000 participants. The company was not developing an mRNA vaccine, but had been using one as the control in the 10,000-subject Phase IIb trial.

Funding and Regulatory Context

Vaxart had received an amendment to its funding agreement with Advanced Technology International, which increased financial support for the trial by approximately $105.9 million, bringing total funding to around $240.1 million. This substantial government investment reflected initial confidence in the oral vaccine approach and its potential strategic value.

However, the trial halt appears connected to broader policy shifts regarding pandemic preparedness funding. Department of Health and Human Services Secretary Robert F. Kennedy Jr. paused a $240 million contract to create a new coronavirus vaccine, signaling a reevaluation of COVID-19 vaccine development priorities.

Regulatory Developments and Reversals

The situation became more complex when HHS later lifted the stop work order on Vaxart’s phase 2b trial, with the biotech resuming plans to enroll participants for the 10,000-person study. This reversal suggests ongoing policy deliberations within the administration regarding pandemic preparedness investments.

The Department of Health and Human Services has lifted a stop work order on Vaxart’s phase 2b trial testing out an investigational COVID-19 vaccine pill, allowing the company to continue enrollment activities under the existing BARDA funding agreement.

Business Impact and Strategic Implications

The regulatory uncertainty has had significant operational consequences for Vaxart. The company laid off 10% of its staff following the initial halt order, reflecting the immediate financial impact of losing substantial government funding support.

Despite these challenges, analysts at Oppenheimer maintained an Outperform rating on Vaxart stock, suggesting confidence in the company’s broader platform technology and pipeline beyond the COVID-19 program.

Technology Platform Beyond COVID-19

Vaxart’s platform extends beyond COVID-19, with the company reporting promising norovirus data showing a 141% antibody increase in recent trials. This demonstrates the versatility of the oral vaccine approach across different infectious diseases.

The company’s oral vaccine technology could address significant global health challenges, particularly in regions where cold-chain storage and needle-based administration present logistical barriers to vaccination programs.

Shifting Pandemic Priorities

The Vaxart situation reflects broader changes in government pandemic preparedness strategy. While Vaxart can proceed with its study, fellow COVID-19 vaccine developers GeoVax and Novavax continue to be hamstrung by various regulatory roadblocks, indicating selective support for ongoing COVID-19 vaccine development.

The policy shifts suggest a movement away from broad-based pandemic vaccine development toward more targeted approaches, with implications for the entire biodefense and pandemic preparedness sector.

Future Outlook

With the stop work order lifted and funding restored, Vaxart can continue its pivotal trial while navigating ongoing policy uncertainty. The company’s cash runway extends into 2026, providing operational stability as it advances both COVID-19 and norovirus vaccine programs.