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Why Atea Pharmaceuticals Is Imploding Today

By Cory Renauer – Updated Oct 19, 2021 at 11:57AM

Key Points

  • Atea Pharmaceuticals' lead candidate AT-527 is an orally available antiviral drug that the company is developing as a treatment for mild-to-moderate COVID-19 infections.
  • Circulating virus levels among patients treated with AT-527 weren't measurably lower than they were for the placebo group during a phase 2 trial.

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The company's oral COVID-19 treatment looks like a dud in the mild-to-moderate COVID-19 setting.

What happened

Shares of Atea Pharmaceuticals (AVIR -2.74%), a clinical-stage biopharmaceutical company, are falling hard after the company shared disappointing clinical-trial data. Investors are worried about what will become of AT-527, an oral COVID-19 treatment, after failing a phase 2 study. The stock was down 61.9% as of 11:26 a.m. EDT on Tuesday.

So what 

Atea Pharmaceuticals and its big pharma partner Roche (RHHBY 1.35%) are developing AT-527 as an easy-to-swallow antiviral for COVID-19. Unfortunately, treatment with the antiviral didn't lower the amount of circulating SARS-CoV-2 virus for mild or moderate patients when measured against patients who received a placebo.

Person in lab looking through a microscope.

Image source: Getty Images.

Since AT-527 was developed using Atea Pharmaceuticals' proprietary platform, this failure makes it far more difficult to cheer for antivirals the company has in earlier stages of development.

There was a glimmer of hope in the failed phase 2 study. A closer look at results from high-risk patients with underlying health conditions suggests AT-527 works as intended. Viral loads for this patient group fell by around two-thirds. This might be enough to improve outcomes, but it's hardly remarkable. 

Now what

In collaboration with Roche, Atea Pharmaceuticals is running a phase 3 study with around 1,400 mild-to-moderate COVID-19 patients. Atea Pharmaceuticals will try to modify the phase 3 trial to include more high-risk patients.

While there's a chance for success in the ongoing phase 3 study with AT-527, if the company can modify it to include more high-risk patients, this biotech stock probably isn't worth the risk right now. Another oral COVID-19 treatment candidate from Merck called molnupiravir is miles ahead and it's going to be tough to beat. Earlier this month, Merck stopped a phase 3 trial after an interim assessment showed it reduced the risk of hospitalization or death by about half.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Atea Pharmaceuticals, Inc. The Motley Fool has a disclosure policy.

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