Vir Biotechnology (NASDAQ: VIR) stock is down 45% on the day. VIR stock slumped as a main treatment candidate failed PHASE II testing. This is, sadly, just what happens to the majority of attempts to develop a new drug or treatment regime. This is also why the entire area of investing in biotech, pharma, in fact near anything medical, is so risky. Simply because the majority of attempts fail somewhere along the way.
The specific failure here at Vir: “Despite interest from GSK and high hopes of leading the next generation of influenza A prophylaxis, Vir Biotechnology's monoclonal antibody has failed its first phase 2 challenge. The PENINSULA study encompassed 3,000 adults aged 18 to 64 years without risk factors for serious complications from influenza infection. It marked the first phase 2 outpatient trial to evaluate the role of a monoclonal antibody in the prevention of influenza A illness, Vir noted.”
We all thought monoclonal antibodies were going to be the great new thing when addressing viral diseases. Thus that interest from GSK there - meaning that if there had been some testing success there could have been a distribution agreement signed, a partnership, possibly even a buy out. There's also the obvious point that a treatment that deals with the ‘flu would also be of interest with covid, SARs and so on.
Vir Biotechnology stock price from NASDAQ
The important thing to note here is the stage of testing at which this failed for Vir Bio. Phae I is largely about, well, does it kill people? Basic safety testing that is. Phase III is about looking for side effects and so on in the wider population. Sure, this is a pencil sketch but true enough all the same. Phase II is asking the important question “Does it work?” Is it actually treating or curing the thing we want treated or cured?
Failing Phase II testing really isn't a good thing. “In the flu trial, 981 participants received a 450-milligram shot of VIR-2482 into muscle, another 992 people received a 1,200-milligram dose and 983 got a placebo. In the highest-dose group, about 57% showed a reduction in symptomatic influenza A illness, which the company said was not statistically significant.” Well, no, not noticeably, it doesn't work.
After this failure what next? There are still the ongoing tests on hepatitis to finish, Vir does have a covid treatment. Also, this wiped some $1.3 billion off the market capitalisation - which puts the current corporate valuation at about the same as their cash and investment pile. So we tend to think that further falls are either unlikely or will be muted. There's actually an interesting case for a rebound here. But trading upon that will depend upon the investor's desire to take on risk.
