Roche pulled the plug on a development deal with Atea Pharmaceuticals for a Covid pill, the company said Tuesday as AVIR stock toppled.
The decision comes hours after Pfizer asked the Food and Drug Administration to authorize its rival oral Covid regimen for emergency use. The FDA also is considering an antiviral pill from Merck. Atea, though, confirmed plans to move ahead independently.
"We have the financial resources and the talent to independently drive forward" with the Phase 3 test, Atea Chief Executive Jean-Pierre Sommadossi said in a written statement.
In after-hours trading on the stock market today, AVIR stock was halted at 11.36. When the stock began trading again, shares tumbled 10.2% near 10.20. Prior to that, Atea shares lost 1.2% in the regular session after Pfizer asked the FDA to authorize its Covid pill.
AVIR Stock: Shares Dive
Under the terms of the deal, Roche is returning all rights and licenses for the Covid pill back to Atea. The strategic collaboration will officially terminate on Feb. 10. Atea says it remains committed to the development of the drug, called AT-527.
Atea Pharma's drug works by blocking an enzyme the virus needs to replicate. That enzyme is highly conserved across multiple coronaviruses, Sommadossi told Investor's Business Daily in a September interview. For that reason, he expects the drug to work across multiple variants and coronaviruses.
But that also makes the drug similar to Pfizer's, which is bearish for AVIR stock. Pfizer uses one pill to block an enzyme needed for viral replication, and another to slow down how fast the body metabolizes the medicine. Market space for Covid antivirals is becoming crowded with Pfizer and Merck likely to launch this year.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.