Almost two years after Covid-19 made its unwelcome entrance, the pandemic is still presenting opportunities for companies looking to stunt its progress. Merck appears to have taken the opportunity by the horns after its antiviral oral Covid-19 treatment impressed in clinical trials and appeared to reduce the hospitalization risk by half.
The pharma giant is not the only company seeking to provide patients with an alternative to more intrusive treatments. Atea Pharmaceuticals (AVIR) has also been developing its own oral solution, but it looks like here is where the resemblance to Merck’s offering ends.
On Tuesday, the company shared data from the phase 2 study (MOONSONG) of AT-527, an oral Covid 19 therapy it is developing in partnership with pharma heavyweight Roche. Investors weren’t impressed with the results, to say the least.
Shares cratered by a huge 64% after the treatment failed to meet its primary end point of lowering the virus level in patients with mild-to-moderate COVID-19 when compared to the placebo.
Atea has based AT-527 on its proprietary platform, and the lack of success doesn’t bode well for other antivirals the company is developing or for its Phase 3 MORNINGSKY trial, in which the drug is also being tested.
J.P. Morgan’s Eric Joseph had high hopes for the treatment, but concedes he was widely off the mark.
“Admittedly the only thing we seem to have had about right in our outlook for AT-527 yesterday was the timing of the MOONSONG readout,” the analyst accepted. “That said, everything else from the data presentation and mgmt commentary from [the] call would, in our view, indicate a rather challenging path forward for the COVID antiviral candidate.”
Joseph calls the massive share price drop “appropriate,” and lowered the price target from $61 all the way to $16, suggesting room for a pick-me-up of 19% from the current depressed level. Along with the reduced target there’s also a rating downgrade – from Overweight (i.e. Buy) to Neutral (i.e. Hold). The ignominy doesn’t end there: Joseph has also removed Atea from JPM’s Analyst Focus List. (To watch Joseph’s track record, click here)
Not all of Joseph’s colleagues are down on this name; with one additional Hold and 2 Buys, the stock boasts a Moderate Buy consensus rating. The average price target comes in a touch above Joseph’s objective; at $16.67, the figure implies room for 24% upside over the coming months. (See AVIR stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
