What happened

Shares of Atea Pharmaceuticals (NASDAQ:AVIR) fell by as much as 14.4% in premarket trading Wednesday morning. The biotech's shares are sliding today in response to Roche's (OTC:RHHBY) 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. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.