Josh Nathan-Kazis
The mid-cap biotech Atea Pharmaceuticals is a frontrunner in the race to develop a Covid-19 antiviral, and its share price could double if an ongoing trial returns positive data, according to a note out early Thursday from SVB Leerink .
Atea (ticker: AVIR) is one of a number of companies developing Covid-19 antivirals, amid an emerging consensus that the virus that causes Covid-19 will remain a global health challenge for the long-term.
Big pharma giants Merck (MRK) and Pfizer (PFE) both are developing their own Covid-19 antiviral pills, but SVB Leerink analyst Roanna Ruiz writes in her Thursday note that the Covid-19 therapeutic market is "not a zero-sum game."
Atea's pill, known as AT-527, works differently from the Pfizer and Merck antivirals in development. The company is partnering with Roche (RHHBY) on development of the drug, which produced positive data in a Phase 2 trial. It is currently in a Phase 3 trial in non-hospitalized patients.
The trial is expected to produce data in the second half of this year. If those results are positive, Ruiz writes, they would be enough for the company to go to the U.S. Food and Drug Administration for emergency authorization.
If the FDA approves the drug, Ruiz projects that it could hit $2.3 billion in peak annual sales.
Ruiz initiated her coverage of the stock with an Outperform rating on Thursday and a $60 target price. The stock closed Wednesday at $27.70 and was up 0.2% on Thursday. Shares are down 33.6% this year amid a broader pullback among small and midcap biotech names.
In addition to the Phase 3 study of AT-527 in non-hospitalized patients with mild to moderate Covid-19, which will read out in the second half of this year, the company is running other trials of the drug, including one set to start this year that will test the drug as a prophylaxis. Ruiz estimates that the company could submit the drug for FDA authorization in late 2021 or early 2022.
"AT-527 could be one of the first approved oral antiviral therapies against Covid-19 and [key opinion leaders] are desperate for more convenient options," Ruiz wrote.
Amid the intense focus on Covid-19 vaccines, the effort to develop Covid-19 therapeutics has received substantially less attention. While a number of Covid-19 therapeutics do exist, all of the authorized options are either relatively ineffective or relatively inconvenient. The best available treatments, monoclonal antibody therapies from companies like Regeneron Pharmaceuticals (REGN), require patients to go to clinics to receive infusions.
In her note, Ruiz notes that Merck's molnupiravir may be ahead of AT-527 in terms of timing. Still, she writes that the market for a Covid-19 oral antiviral is big enough for more than one drug.
"We believe investors are watching molnupiravir and AT-527 closely, as both are in Phase 3 trials to treat outpatient COVID19; however, we do not think that this is a zero-sum game, and we think both orals would be used broadly in practice," Ruiz writes.
She says that Pfizer's oral antiviral, known as PF-00835231, may be a bit behind molnupiravir and AT-527, but is still a key competitor. "Despite it being slightly behind Merck/Atea, Pfizer's oral protease inhibitor could become a viable outpatient treatment option for COVID-19 if its antiviral efficacy is reiterated in the recently initiated larger Phase 2/3 trial," she writes.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
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