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Why Atea Pharmaceuticals Is Up 17% Today

By James Brumley – Sep 20, 2021 at 1:18PM

Key Points

  • An FDA advisory panel doesn't feel another round of inoculations will help curb the pandemic.
  • Current treatments for infected people are limited, but trials of such drugs are underway. They may become more necessary in the near future.
  • Atea Pharmaceuticals is the least established and riskiest of these oral treatment developers.

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Orally administered treatments of COVID-19 infections are coming into focus as vaccine stocks lose their luster.

What happened

Shares of biotech company Atea Pharmaceuticals (AVIR 0.11%) are up 16.8% as of mid-Monday, although not in response to news from or about the company. Rather, a U.S. Food and Drug Administration advisory panel's recent recommendation against COVID-19 vaccine boosters (for most people) bodes well for Atea's trial of a drug aimed at treating the disease once a patient is infected.

So what

Investors are simply connecting the dots.

On Friday, a panel that makes drug approval and rejection recommendations to the FDA advised the agency that there would be no significant benefit in administering so-called booster vaccine injections for most people who have already been fully inoculated by the vaccine jointly made by Pfizer and BioNTech.

A drug capsule production line.

Image source: Getty Images.

The decision does not apply to the Moderna and Johnson & Johnson COVID-19 vaccines. But, given the similar efficacies of all three vaccine options, the panel's viewpoint suggests that booster injections of J&J's and Moderna's vaccines may also make little impact.

While the advisory panel's decision is nonbinding, the FDA typically follows its panels' advice.

The lack of booster injections for most of the nation's population may or may not facilitate the continued spread of the disease. But investors are broadly betting that it will. Atea Pharmaceuticals is developing AT-527 as an orally administered therapeutic for those who are already infected, which may become another much-needed weapon in the war on COVID-19. It won't prevent transmission of the coronavirus, but it should curb the symptoms and risk for those who may end up contracting the disease.

Now what

The rationalization is sound enough. Investors were widely expecting the FDA's advisory panel to recommend a third round of inoculations. Now with breakthrough cases seemingly more likely (and in patients that may not even realize they've been infected), COVID-19 may spread more than anticipated. The most symptomatic of these people must be treated somehow, and while therapies like Gilead Science's Remdesivir have their place, Remdesivir's actual efficacy is in question. Other options can only help.

Updates on the phase 3 trial of AT-527 as a treatment for COVID-19, however, are still months away, and any approval of the drug would take much longer. Much can happen in the meantime, including the successful development of a pill-based coronavirus therapy from Merck or the aforementioned Pfizer.

Speculate on Atea if you must. Just bear in mind that's all it is -- a speculation. It's hardly a buy-and-hold blue chip you can blindly tuck away for a few years.

James Brumley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Atea Pharmaceuticals, Inc. The Motley Fool recommends Gilead Sciences, Johnson & Johnson, and Moderna Inc. The Motley Fool has a disclosure policy.

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