Adagio Therapeutics extends 3-day gain to 319% on hopes that its antiviral can treat the Omicron variant

• Adagio Therapeutics stock is up as much as 319% since the Omicron variant of COVID-19 was identified last week.
• Adagio said it believes its antibody drug candidate, ADG20, will be effective against the new strain.
• The company is anticipating emergency use authorization for its drug in the second half of 2022.

Adagio Therapeutics stock soared as much as 68% on Tuesday, extending its three-day gain to a high of 319% as investors bet that its antiviral drug candidate, ADG20, will offer protection against the Omicron variant of COVID-19.

The Waltham-based biotech said on Monday that it expects its antiviral to be effective against the new strain, citing recent data.

"Due to the highly conserved and immuno recessive nature of the epitope recognized by ADG20, we expect that ADG20 will retain activity against Omicron, as we have observed in in vitro models with all other variants of concern identified previously," Chief Scientific Officer Laura Walker said.

If successful, ADG20 will be a relief to the world as concerns grow about the effectiveness of current vaccines against the latest variant. Moderna CEO Stéphane Bancel told the Financial Times on Tuesday that he expects the effectiveness of current vaccines to experience a "material drop" against new variants like Omicron.

Adagio is preparing to submit its drug to the FDA for emergency use authorization in mid-2022. If that's granted, the company plans to have 4 million doses available for distribution over the next two years.

"ADG20 was uniquely designed to combine breadth, potency and duration of protection against SARS-CoV-2 for up to one year in a single injection. We did this anticipating that SARS-CoV-2 would continue to evolve and potentially render some early therapies and vaccines obsolete," CEO Tillman Gerngross said.

Morgan Stanley analyst Matthew Harrison raised his price target on Adagio stock to $49 on Monday, as he expects the company's antibody to prove effective against Omicron.

The company went public in August at a valuation of nearly $2 billion, having priced its IPO at $17 per share. On Tuesday, Adagio stock hit a record high of $78.82, valuing the company at about $6 billion, but pared back its gains in Tuesday afternoon trades to about 1.5%.