Vir Biotechnology Inc has faced a tough year so far, with shares declining by 54% year-to-date.
Much of the company’s underperformance is attributed to unimpressive results from both influenza A and hepatitis B (HBV) trials, Bank of America wrote in a new note.
As a result, BofA analysts have downgraded the stock to Neutral and lowered its price target on shares to $14 from $23 – sending Vir’s shares to a new 52-week low on Friday.
“To be clear, we aren’t negative on VIR’s technology or the optionality from its pipeline (including the potential for a next-gen COVID-19 antibody) and we believe that its negative enterprise value offers some downside protection,” analysts wrote.
“Instead, we acknowledge many near-term trial readouts in HBV but we don’t think that they are likely to materially change investor sentiment that could drive a re-rating in shares.”
The change comes alongside adjustments to forecasts for HBV peak sales and the extension of potential launch timelines, now estimated to be in YE2026.
The fact that VIR currently has a negative enterprise value is seen as offering some downside protection, analysts noted.
Despite challenging results in 2023, VIR continues to work on a next-gen flu antibody and has multiple HBV trial results on the horizon, each involving different combination regimens over the next 18 months.
A crucial moment is expected in 4Q23 when results for the triple combination treatment of Vir-2218, Vir-3434, and PEG-INF in HBV become available, featuring 24 weeks of treatment data. Success in this triple combo trial is crucial for commercial viability, with substantial functional cure rates required, estimated at over 40-50% clearance.
However, the data that could potentially drive a re-rating of VIR shares won’t emerge until 2Q24.
Analysts are expecting multiple catalysts, including functional cure data from the triple combo with 24 weeks of treatment in 2Q24, initial data from the 48-week treatment arm of the triple combo in 4Q24, and updated HDV clinical data in 2Q24, which could significantly impact investor sentiment and the future trajectory of VIR shares.
Shares of Vir fell over 8% on Friday morning before regaining some ground in the afternoon to trade 4.7% lower at $11.02.
This content was originally published here.
