3 dilapidated biotech stocks – can they recover?

THELook below for these plummeting biotech stocks. Actions of Atea Pharma (NASDAQ: AVIR), Omeros (NASDAQ: OMER), and Novavax (NASDAQ: NVAX) were big winners for investors this year until they weren’t.

When stocks fall, they tend to fall sharply. For reasons of their own, each of these shares sold more than half of its value in 2021.

Investors looking to exit don’t always have time to consider why they are pushing each other. Massive sales can create good business this way. Here’s a closer look at what happened to these three stocks to gauge their chances of recovery.

Image source: Getty Images.

1. Atea Pharma

Atea Pharmaceuticals shares have fallen 70% since the company announced bad news to investors on October 19, 2021. market capitalization is about $ 990 million, just $ 200 million more than the amount of cash on the company’s balance sheet at the end of June.

It is a clinical stage drug maker with no reliable source of revenue at the moment. The fund fell under the action because the only new drug candidate that the company has in the advanced clinical trials phase, AT-527 flopped in a phase 2 study.

Atea Pharmaceuticals was developing AT-527 as an orally available antiviral treatment for COVID-19 in partnership with rock. After seeing AT-527 fail to reduce the amount of SARS-CoV-2 virus in circulation compared to a placebo, further investment from Atea’s big pharmaceutical partner seems highly unlikely.

Atea Pharmaceuticals shares could rebound if an ongoing Phase 3 trial with AT-527 and COVID-19 patients is successful. After failing to help mild to moderately affected patients in phase 2, the odds of success appear slim.

Biotechnology lab worker without a smile.

Image source: Getty Images.

2. Omeros

Omeros stock lost about 53% of its value in October thanks to a shocking but predictable move by the FDA. The company’s market capitalization has fallen to around $ 401 million at recent prices. That’s about $ 390 million more than the company’s cash balance at the end of June.

The disappearance of Narsoplimab brings down the shares of Omeros because the only source of income for the company, Omidria, is not very secure. Omidria is an expensive pupil dilating eye wash solution made with decades old ingredients that are not hard to find.

Narsoplimab is the only potential new drug available to the company at an advanced stage of clinical development. As investors should have expected, the The FDA has not approved narsoplimab for the treatment of a rare autoimmune disease which sometimes affects patients who have a bone marrow transplant.

Investors should have seen it coming because in 2018, when narsoplimab was still known as WHO721, it failed its first placebo-controlled clinical trial with patients suffering from a similar autoimmune disease of blood origin. The company’s misguided attempt to seek approval without data from a clinical trial with a control group has been a blatant red flag to experienced biotech investors spotted a mile away. Desperate behavior like this is the only reason investors should avoid Omeros like the plague.

Baffled scientists.

Image source: Getty Images.

3. Novavax

Novavax shares are down about 58% from their peak reached in February. In terms of market cap, it’s still an $ 11.2 billion company with a whopping $ 2.1 billion in cash and cash equivalents at the end of June.

Novavax was briefly worth more than $ 20 billion after its experimental COVID-19 vaccine succeeded beyond expectations in a Phase 3 trial in January. Since, Pfizer, his collaboration partner BioNTech, and Moderna blocked more than $ 60 billion in combined sales of their COVID-19 vaccines.

Novavax’s management team secured the top spots on 2021’s worst lists, as the company still hasn’t registered a single sale in the United States or overseas. Novavax has not even filed for Emergency Use Authorization (EUA) with the FDA for its vaccine candidate yet.

The company plans to seek FDA clearance before the end of 2021, but by then there will be no more demand for another approved vaccine. It has been two months since the FDA granted full approval of Pfizer’s vaccine and Moderna submitted its application for full approval in August.

While Novavax has a chance of making significant vaccine sales overseas, the company’s poor performance to date in the United States is a warning investors should not ignore.

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Cory renauer has no position in any of the stocks mentioned. The Motley Fool owns stock and recommends Atea Pharmaceuticals, Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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