Early underwhelming data from Icosavax's COVID-19 vaccine has sent investors sprinting towards the exits, bringing into question whether the biotech's entire platform has a "fatal flaw."
The immune response achieved with the two-dose shot, known as IVX-411, was “below our expectations”, according to Chief Medical Officer Niranjan Kanesa-thasan, M.D. The company said the shot induced a response that was “comparable to or below” the placebo, in preliminary results announced Friday.
However, CEO Adam Simpson says the company is not giving up yet.
“We plan to investigate the potential causes of these discordant clinical results, including manufacture, shipment, and administration of the product,” he said. “As COVID-19 becomes endemic, it continues to be a strategic priority for Icosavax.”
But investors were sure ready to walk away. The company’s shares spiraled down more than 50%, plummeting from more than $12 per share to $5.83 on Friday morning. The lackluster data is more than just a gut-punch with investors now questioning the value of its entire platform.
Evercore ISI analyst Josh Schimmer said the firm had already been wary of the COVID-19 shot, instead placing a higher value on Icosavax's human metapneumovirus vaccine. But the biotech's entire platform, which is based on virus-like particles, is now "at significant risk."
"The fact is that the vaccine field has become significantly more competitive due to COVID," Schimmer wrote. "Like everything else in biotech these days, there isn’t much room for error. And this is a big error."
Simpson had previously hyped the shot's potential to improve on well-known mRNA competitors because it went after a portion of the virus that was less likely to mutate, according to a November 2020 interview. He also touted IVX-41’s stability, saying the shot would not require extreme cold storage temperatures, which is the case with Moderna and Pfizer/BioNTech's offerings.
The results are "far short of the extremely high expectations the company had set," Schimmer said in a Friday note.
Icosavax's promise rests on the back of its virus-like particle vaccines, which the company touts as being able to display complex antigens that can drive home a more robust immune response. And before Friday, investors seemed enthused; the company closed a $209 million IPO in July 2021 following two fundraising rounds that, combined, topped $150 million.
The phase 1/2 trial for IVX-411 recruited a 50-50 split of unvaccinated and vaccinated patients. Unvaccinated patients received two doses of Icosavax’s shot, while vaccinated participants received one dose as a booster. The company reported no serious adverse events and no discontinuations related to the shot. Icosavax said the trial is ongoing.
An investigation will now be completed into what happened in the trial, but Icosavax did not provide a timeline for when more information may be available.
"The company will be investigating what ‘went wrong’ with the results here. No clear timelines. So we await clarity on what’s salvageable and whether too much competitive ground (and $) will be lost along the way," Schimmer said.
Simpson expressed confidence in the VLP platform and its potential to develop combination and pan-respiratory vaccines. He pointed to the RSV shot IVX-121 as Icosavax’s lead program, indicating that data from a phase 1/1b trial would be available in the second quarter. A phase 1 trial for the hMPV vaccine will also be initiated in the second quarter.
For now, Evercore plans to wait for the update "to see if this is a fatal flaw in the platform if it’s a recoverable flaw in the platform, or if it’s somehow oddly unique to COVID which we strongly doubt (but can’t rule out)."