One of the biggest movers on Tuesday was a relatively obscure biotech stock that stumbled big time with its hottest drug candidate. Arcturus Therapeutics (NASDAQ: ARCT), a vaccine developer that has been working on its own COVID-19 vaccine for the past while now, ended up tanking after results for its vaccine were much worse than expected.
The company announced late in the evening that its ARCT-021 vaccine, which was in phase ½ trials, was still going to move ahead to a phase 2 trial. While this might be seen as a good sign overall, it’s actually more of an act of desperation on the part of the company. Early results, according to analysts, was alarmingly weak, with the undoubtedly company hoping that a larger sample size in this subsequent trial will provide better results. Nor is there much other choice for Arcturus at this point.
“While this latest dataset does not completely impair single-shot ARCT-021, which may provide protection against COVID-19 infection in Phase 3, the lack of SARS-CoV-2 neutralizing antibody (NAb) titers at or above levels seen in convalescent sera reduces our confidence that ARCT-021 will be able to achieve competitive levels of vaccine efficacy with single-shot dosing,“ wrote Stephen Seedhouse, Raymond James analyst, in a note to clients. “But this level of NAb titers … does not support the more optimistic outlook we previously had for ARCT-021 … isn’t competitive with Pfizer/Moderna and … won’t make ARCT-021 a preferred vaccine in the U.S.”
Analysts went on to say that, while most other COVID vaccines have an efficacy rate of around 90%, Arcturus’ is much less effective, just around 62%.
It definitely wasn’t what the company wanted to find out from these results. In response to the news, shares of Arcturus plunged by around 53.5% on Tuesday, making it among of the worst-performing stocks that day. Despite this, however, shares are still up substantially since the start of the year, around a 420% gain since the beginning of 2020.
However, even if phase 2 trials end up performing much better than expected, it’s hard to see how the vaccine would be a major success. We already have two approved vaccines now flooding the market, one from Pfizer (NYSE: PFE) and another from Moderna (NASDAQ: MRNA). Both are very effective, with little doubt or concern from their previous clinical trials. At the same time, both will have quite a head start in comparison to Arcturus’ vaccine candidate.
Even forgetting about this, other small-cap vaccine makers, like Inovio (NASDAQ: INO), have as much of a chance, if not better, of beating Acturus to the market. In the longer-term, there’s a solid chance that shares could end up sliding back down a fair bit. However, it’s anyone’s guess exactly when this will happen, and trying to short a stock that still has room to rise is very dangerous.
Acturus Therapeutics Company Profile
Arcturus Therapeutics Holdings Inc is an RNA medicines company focused on opportunities in rare diseases with a current focus on liver and respiratory diseases. It operates in the segment of research and development of medical applications for nucleic acid-focused technology. The product pipeline of the company includes LUNAR-OTC, LUNAR-CF, and LUNAR-2020. – Warrior Trading News
