By Sam Boughedda
Investing.com — Adagio Therapeutics Inc (NASDAQ:ADGI) shares fell 78% Tuesday after the company reported that its antibody treatment for Covid-19 showed a reduced effectiveness to the Omicron variant.
The company said external analyses showed a more than 300-fold reduction in neutralizing activity of its antibody treatment against Omicron.
Adagio stock traded around $7.54 per share.
Additional analysis is being conducted and the company said it will speak with regulatory and government agencies to consider the role the therapy, ADG20, can play in preventing and treating Covid-19.
The news surprised Morgan Stanley after previous in vitro studies showed ADG20 retained activity against prior variants, including Alpha, Beta, Delta and Gamma. As a result, the analysts downgraded the stock to equal weight from overweight with a price target of $11, down from $49.
Analyst Matthew Harrison said in a research note that while ADG20 has broad activity against other variants, he expects Omicron to become "dominant quickly" and "the uncertainty will limit the drugs utility."