Shares of Adagio Therapeutics (IVVD -8.39%) had crashed 77.9% as of 10:58 a.m. ET on Tuesday. The huge decline came after the company announced that its experimental antibody therapy ADG20 was essentially ineffective in neutralizing the coronavirus omicron variant. Adagio stated that its latest in-vitro data showed a more than 300-fold reduction in neutralizing activity of ADG20 against the Omicron variant compared to an earlier report.
Today's sell-off of the biotech stock was warranted. ADG20 is Adagio's only pipeline candidate in clinical testing. Now, though, the company plans to pause enrollment of patients in its phase 2/3 study being conducted in South Africa. The omicron variant is already the dominant strain in that country.
CEO Tillman Gerngross stated in the company's press release, "The continued prevalence of the delta variant in the U.S. and other countries, evolution of SARS-CoV-2 variants and potential future coronaviruses means a multitude of therapies and approaches are needed." But Gerngross might be overly optimistic about the prospects for ADG20.
The main problem for Adagio is that the omicron variant could become the most prevalent coronavirus strain across the world in a relatively short period of time. Omicron is spreading so rapidly in the United Kingdom that it's expected to become the dominant strain there within a matter of hours. The World Health Organization warned earlier this week that the omicron variant will likely move past the delta variant in countries where both strains are present.
Adagio said that it's continuing to perform analysis to determine the best path forward for ADG20. The company still hopes that it could be a prophylactic and treatment alternative for COVID-19. But with the omicron variant quickly spreading, those hopes could grow dimmer over the coming weeks.