As the omicron variant spreads across the country, vaccine makers with the potential to curb the variant have been cast into the spotlight. Today, shares of Adagio Therapeutics (NASDAQ:ADGI) are soaring higher by more than 100% on seemingly no news. Even with the stock doubling today, ADGI stock is still down 60% the past week. During the month of November, ADGI stock increased by 50%.
The price action today may be explained by investors overreacting to data released this week that the company’s ADG-20 drug showed a “greater than 300-fold reduction in neutralizing activity of ADG20 against Omicron.”
Additionally, Stifel lowered its price target on ADGI stock from $50 to $9 yesterday, representing an 82% reduction. The price target reduction was in direct response to the new data showing ADG-20’s lowered effectiveness against the omicron variant. Analyst Stephen Willey explained that he had “multiple outstanding questions” that hurt his conviction on ADGI stock.
With the analyst downgrade and disappointing data this week, investors are wondering why the stock has doubled today.
What to Know as ADGI Stock Doubles
- The ADG-20 drug is designed to recognize the omicron variant spike protein and bond to it, which would neutralize the virus. CEO Tillman Gerngross added, “we anticipated that ADG20 would retain neutralizing activity against Omicron, consistent with activity observed in in vitro models with all other known variants of concern.” However, new data shows this wasn’t the case as the ADG-20 proved to have a weak neutralizing response to the variant.
- On the bright side, while the ADG-20 drug is largely ineffective against the omicron variant, previous studies have shown that the drug is still effective against other mutations of the coronavirus, such as alpha, beta, delta and gamma.
- Furthermore, testing of ADG-20 is still underway. The company announced that it plans to discuss with regulators and government agencies the potential use cases the drug could have in the prevention and treatment of other coronavirus variants.
- Morgan Stanley still has a $49 price target for ADGI stock. However, analyst Matthew Harrison’s thesis was based on ADG-20 being highly effective against the omicron variant. Investors may want to watch out for a potential price target reduction in the coming days.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
