What happened

Altimmune (ALT 1.22%) was plummeting in late trading on Wednesday, with the shares in free fall by nearly 40%. That was no surprise given the company's revelation the previous afternoon.

So what

Just after market close on Tuesday, Altimmune officially threw in the towel on the development of its COVID-19 vaccine, AdCOVID. It's also halting enrollment on a phase 1/2 clinical trial of its T-COVID drug, which had been under way.

Doctor with their head in their hands.

Image source: Getty Images.

AdCOVID, a nasal spray, disappointed in its phase 1 trial. While the vaccine appeared to be well tolerated, it produced lower-than-expected immune responses. The number and magnitude of those responses were also "substantially lower" than rival vaccines already approved for emergency use, Altimmune said.

As for T-COVID, although it was well tolerated with no observed serious adverse events, the biotech was having difficulty enrolling patients for the third of three planned cohorts. This is due to the significantly declining incidences of the disease throughout the U.S., which is rapidly lowering the chances of drafting participants.

Altimmune is therefore terminating further enrollment; it said it will consider its options once it evaluates the available data and consults with its T-COVID development partners.

Now what

Although investors are punishing Altimmune severely for these decisions, they're sensible given AdCOVID's weak performance, and the fact that the coronavirus is fading in many areas of the U.S. Altimmune has other vaccines and drugs in its pipeline, so perhaps this sell-off is an opportunity to buy a still-promising biotech on the cheap.