A nurse prepared to inject a health-care worker with the Pfizer-BioNTech vaccine in Rome on Monday.
Filippo Monteforte/AFP via Getty ImagesThere isn’t enough of the approved Covid-19 vaccines from Pfizer, BioNTech, and Moderna, so it was good news that Novavax and Arcturus Therapeutics Holdings were moving ahead to the next phases of testing their vaccines.
But when Novavax (ticker: NVAX) said Monday that it was starting its U.S. Phase 3 trial, the stock gave up 10% on the day, to close at $116.85, though it rebounded 2.9% on Tuesday. The reaction to Arcturus’s news was even more downbeat.
After Monday’s close, Arcturus (ARCT) said that it will conduct a Phase 2 trial of its vaccine in Singapore. It released data from its initial clinical study of the shots, which use a messenger-RNA technology along the lines of the vaccines from Pfizer (PFE), BioNTech (BNTX) and Moderna (MRNA).
As analysts studied the Arcturus data, however, they found it unimpressive. With a wave of downgrades out Tuesday morning, Arcturus stock ended the day at $42.36, down 54% on 15 times recent average volumes.
“It’s been a crazy couple of days,” Arcturus Chief Executive Joe Payne told Barron’s after Tuesday’s close.
Novavax started a Phase 3 study in the U.K. earlier this year, and that 15,000-person trail is now fully enrolled. The company’s scientists are waiting to see what difference emerges in Covid case counts between those getting placebo shots and those getting the Novavax vaccine,
Early trials of the shots generated impressive levels of virus-neutralizing antibodies in recipients. The vaccine contains protein particles resembling the spikes of the SARS-CoV-2 virus, which Novavax makes through a standard genetic engineering process.
Starting this week, Novavax aims to enroll 30,000 volunteers in the U.S. and Mexico for its Phase 3 study. Public-health experts have worried that recruitment for such placebo-controlled Covid vaccine trails will become harder, following the U.S. authorizations of the vaccines from Pfizer/BioNTech and Moderna. In starting its pivotal trial now, Novavax is behind the earlier starts of developers like Johnson & Johnson (JNJ), even as Pfizer and Moderna ramp up production.
As an inducement, perhaps, Novavax plans to give the active vaccine to two-thirds of its volunteers, and the placebo to one-third. The earlier developers split their assignments half and half.
The disappointment in Monday’s Phase 1 interim data from Arcturus centers on the levels of antibodies generated by its shots. The company has nourished hopes that its vaccine will stand out by providing immunity after just a single dose. But after the first of two shots in the Phase 1 trial, antibody levels were only comparable to levels seen in patients who have recovered from a Covid-19 infection. The second booster shot achieved only a minimal improvement, noted Guggenheim analyst Seamus Fernandez, in a Tuesday note.
The Guggenheim analyst maintained his Buy rating on Arcturus, but said in his note that the data “raised more questions than answers.” Rival vaccines, including the one from Novavax, generated much higher levels of antibodies after two shots. Unless Arcturus can prove that a single dose of its vaccine is superior, Fernandez said, its product may not be a viable competitor.
Payne, the Arcturus CEO, acknowledged that the moderate antibody levels seen after a single shot of the Arcturus vaccine were lower than those produced by two shots of rival vaccines. But he noted that the company’s interim data showed that a single dose was able to activate immune T-cells against the SARS-CoV-2 coronavirus.
This could lead to useful immunity, said Ool Eng Eong. an infectious- disease professor at the Duke-NUS medical school in Singapore, on an Arcturus conference call Monday night,
Payne told Barron’s that he hopes to hear soon from the U.S. Food and Drug Administration about whether Arcturus can start a Phase 2 trial in the U.S.
Arcturus’s road to approval looks steep. At least one large, controlled Phase 3 trial will be needed to seek authorization in markets like the U.S. or Europe, of course. Arcturus hopes to start one in the second quarter, but Payne said it will have to be in some foreign jurisdiction where the unavailability of authorized vaccines from Pfizer or Moderna makes it easier to recruit volunteers who might get a placebo in an Arcturus trial.
He’d then hope to offer the overseas Phase 3 trial results for FDA authorization. “The FDA and all regulatory agencies understand the challenges to recruiting for a Phase 3 trial if there’s a vaccine being distributed,” said Payne.
Arcturus stock got five downgrades after Monday’s data, including four that cut it to a Hold and one that cut it to a Sell.
At Raymond James, analyst Steven Seedhouse said in a Tuesday note he is dropping Arcturus from an Outperform to a Market Perform (the equivalent of a Hold), because single-dose levels of neutralizing antibodies were “underwhelming.”
The Phase 3 trial data from the Pfizer-BioNTech and Moderna vaccines showed that levels of neutralizing antibodies were correlated with the shots’ Covid protection, noted Seedhouse. So with the interim data from Arcturus only equal to that from convalescent Covid patients—instead of several times higher, like the other vaccines—investors won’t take an interest in Arcturus unless it can prove its one-dose advantage in a Phase 3 trial, he expects.
Write to Bill Alpert at william.alpert@barrons.com
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