Investors are once again getting worried over the new Covid variant. According to the CDC, around 3% of all new cases are thanks to this new strain, and the markets are beginning to get more jittery again in response. As one would expect, vaccine stocks started to make decent gains this week as well. However, one particular biotech company crashed on Tuesday after its new treatment failed to meet clinical standards.
The company in question is Adagio Therapeutics (NASDAQ: ADGO). The biotech, which was the single worst-performing stock on Tuesday, plummeted after its new vaccine treatment proved weaker than expected against the Omicron variant. Adagio has been working on a monoclonal antibody therapy, known as ADG20, that would protect patients from the virus. At least, in theory.
Originally, the company said that the treatment would remain largely effective no matter the variant. However, new clinical results suggest otherwise. The company said that, after running a test, the neutralizing effect of the antibodies went down by a startling 300-fold.
“We anticipated that ADG20 would retain neutralizing activity against Omicron, consistent with activity observed in in vitro models with all other known variants of concern,” said CEO Tillman Gerngross in the Tuesday press release. “New data show that the combination of mutations present in the Omicron spike protein led to a reduction in ADG20 neutralization that was not suggested by prior data.”
Following the results, Adagio decided to pause enrollment for its continued Covid-19 phase 2/3 trial as the company reconsiders what it’s going to do. Another treatment being developed by the company, ADG10, has also shown minimal effect in neutralizing the Omicron variant, although the results weren’t nearly as disappointing dismal as they were for ADG20.
Following the news, shares of Adagio crashed by over 89.5%, making it the single worst-performing stock over the day. Most analysts have since downgraded the company on the news, although Adagio still has a lofty $3.8 billion market cap. The company went public earlier this year for around $20 per share. Now it’s trading at around $7.3 per share.
In contrast, other big pharmaceutical companies are reporting successes with their preexisting treatments. Pfizer (NYSE: PFE) said that those who had already taken two shots were being protected against the variant. Other companies have reported similar findings, although that hasn’t stopped them from developing supplemental treatments as well.
Overall, we’ve seen the markets oscillate between bearishness and bullishness, with the driving factor being how this Omicron variant has developed. As long as the topic remains in the news cycle, traders should expect choppy performance from major indexes. Continued Covid concerns also are exacerbating other fears, such as whether the supply chain issue will get worse or not.
Adagio Therapeutics Company Profile
Adagio Therapeutics Inc is a clinical-stage biopharmaceutical company. It is focused on the discovery, development and commercialization of antibody-based solutions for infectious diseases with pandemic potential. The company’s lead product candidate, ADG20 is developed for the treatment and prevention of coronavirus disease 2019, or COVID-19, the disease caused by the virus SARS-CoV-2 and its variants. – Warrior Trading News
