One of the more disappointing biotech stocks of recent weeks, Adagio Therapeutics (IVVD -2.17%), was hammered once again on Wednesday, with its share price tumbling by over 13%. This followed a fresh analyst downgrade of the stock, one of several that have occurred lately.
The latest to downgrade Adagio stock is Jefferies' Michael Yee, who has changed his recommendation from buy to hold, at a price target of $10 per share.
As with several of his peers, Yee made the move based on Adagio's latest clinical update about its top pipeline drug, ADG20, an antibody treatment that targets the coronavirus.
The update, issued last week, revealed that in-vitro data showed that the drug was essentially ineffective in neutralizing the omicron variant. In a world struggling to contend with the alarmingly fast-spreading variant, no one wants to hear that news.
While admitting that ADG20 does show some activity against the variant, Yee wrote in a research note that "The issue is it will take a lot of time to get more answers, and we predict the Phase  timeline may be delayed due to shifting into new countries and to avoid omicron."
Not only is ADG20 Adagio's leading pipeline candidate, it's one of only two programs currently underway by the clinical-stage biotech. And Yee's downgrade isn't the only one from analysts of late. Just after the data was released, Stifel, Guggenheim, and Morgan Stanley all changed their outlook for the stock from the equivalents of buy to neutral.
At the moment, these moves look entirely justified given the recent developments.