What happened

Shares of Atea Pharmaceuticals (AVIR -2.99%) fell by as much as 14.4% in premarket trading Wednesday morning. The biotech's shares are sliding today in response to Roche's (RHHBY -0.18%) decision to terminate its involvement in the development of the oral COVID-19 therapy known as AT-527.

Atea Pharmaceuticals will reportedly regain full commercial rights to the drug on Feb. 10, 2022. Despite Roche's exit, the company said it still plans on moving forward with AT-527's ongoing phase 3 Morningsky trial. 

A business person drawing a downward trending red line with a marker.

Image source: Getty Images.

So what

Almost one month ago today, Atea and Roche announced that AT-527 failed to outperform placebo in a mid-stage trial focused on patients with mild or moderate cases of COVID-19. Since then, Merck and Pfizer have both applied for Emergency Use Authorization from the U.S. Food and Drug Administration for their competing oral COVID-19 therapies. As a result, Roche probably didn't want to stick around for a drug that would have to compete in a crowded marketplace. Merck and Pfizer's oral therapies, after all, will likely have most of this market all sewn up by the time AT-527 posts phase 3 results in the second half of 2022.   

Now what

Is Atea Pharmaceuticals stock a buy on this dip? While AT-527 could hit the mark in Morningsky next year, the drug will probably have to go through a normal review process to gain market access in the United States. That means that AT-527 might not be commercially available until mid-2023. Atea Pharmaceuticals also doesn't have any other late-stage candidates in development right now. Therefore, investors might want to watch this story unfold from the safety of the sidelines for the time being.