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Why Arcturus Therapeutics Stock Is Plunging Today

By Keith Speights – Updated May 27, 2020 at 12:36PM

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Blame it on Moderna. Sort of.

What happened

Shares of Arcturus Therapeutics (ARCT -2.85%) were plunging 32.3% as of 11:43 a.m. EDT on Wednesday. The small drugmaker didn't report any news of its own. However, investors appear to be selling off Arcturus stock because of bad news for another biotech that's also developing a COVID-19 vaccine -- Moderna (MRNA -0.55%). Reports surfaced yesterday that one of the participants in Moderna's phase 1 study of its COVID-19 vaccine candidate experienced a severe reaction.

So what

STAT News' Matthew Herper reported on Tuesday that Ian Haydon developed a high fever after receiving a second dose of Moderna's experimental COVID-19 vaccine. Haydon then sought medical care. After returning home, he was nauseous and vomited and even fainted. Haydon was one of four participants in Moderna's phase 1 clinical trial who had serious adverse events after being dosed with the biotech's COVID-19 vaccine candidate.

Hands holding syringe and vaccine bottle

Image source: Getty Images.

Moderna stock sank on Wednesday, primarily due to this report. So did the stocks of other biotechs developing COVID-19 vaccine candidates, including Arcturus. But is the reaction to Moderna's clinical trial's adverse reactions overdone? Yes.

The side effects experienced by Ian Haydon aren't uncommon in clinical studies. The primary purpose of early-stage clinical trials is to evaluate the safety of the drug or vaccine candidate and assess such adverse reactions. It's important to note that Haydon quickly recovered from his reaction to Moderna's COVID-19 vaccine. Moderna stated that all of the adverse reactions in its phase 1 study were "transient and self-resolving."

Arcturus has only conducted preclinical testing of its COVID-19 vaccine candidate so far. However, it won't be surprising if some of the participants in the company's planned clinical trial experience adverse reactions along the lines of what Ian Haydon experienced. But a small number of patients with adverse reactions that are quickly resolved won't derail Arcturus' prospects for its COVID-19 vaccine. And they won't derail Moderna, either.

Now what

Investors should focus on Arcturus' progress with its COVID-19 vaccine program rather than the biotech stock's wild gyrations, which could be -- and arguably will be -- only temporary. Arcturus expects to begin clinical testing in humans for its COVID-19 vaccine this summer.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Arcturus Therapeutics Holdings Inc. Stock Quote
Arcturus Therapeutics Holdings Inc.
ARCT
$13.62 (-2.85%) $0.40
Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$123.64 (-0.55%) $0.68

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