Why Analysts Lost Confidence in the Arcturus COVID-19 Vaccine

An update on its COVID-19 vaccine candidate sent Arcturus Therapeutics Holdings Inc. (NASDAQ: ARCT) shares tumbling on Tuesday. While the company did receive approval from the Singapore Health Sciences Authority to proceed with a Phase 2 clinical study of its vaccine candidate ARCT-021, the data seemed to be underwhelming.

Note that the approval is based on data from the Phase 1/2 trial that demonstrated the vaccine produced neutralizing antibodies after one dose. However, these neutralizing antibodies were at lower levels than rival vaccine candidates. Arcturus is hoping its vaccine will not require a booster shot, making it easier to administer than vaccines that require two doses.

Looking forward, Arcturus expects to be on its way with Phase 2 in early 2021 and will be looking for optimal dosing levels to start a global Phase 3 trial in the second quarter of 2021.

As a result, H.C. Wainwright downgraded the stock to Neutral with a $50 price target. Analyst Ed Arce noted in the call that the firm has lost confidence in the potential of ARCT-021 to provide meaningful protection from SARS-CoV-2 infection and COVID-19.

Raymond James also downgraded Arcturus to Market Perform from Outperform, citing that the data was “underwhelming.” The firm went on to detail:

While this latest dataset does not completely impair single-shot ARCT-021, which may provide protection against COVID-19 infection in Phase 3, the lack of SARS-CoV-2 neutralizing antibody (NAb) titers at or above levels seen in convalescent sera reduces our confidence that ARCT-021 will be able to achieve competitive levels of vaccine efficacy with single-shot dosing. … At a minimum, the question will be asked by the market and unanswered until Phase 3, thereby limiting near-term upside and justifying a Market Perform rating.

Arcturus Therapeutics stock traded down 52% on Tuesday to $43.96, in a 52-week range of $8.51 to $129.71. The consensus price target is $106.15.

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