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FDA Revises EUA of Glaxo (GSK) & Vir's (VIR) COVID Therapy

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GlaxoSmithKline (GSK - Free Report) along with partner Vir Biotechnology (VIR - Free Report) announced that the FDA has revised the emergency use authorization (EUA) granted to their monoclonal antibody, sotrovimab, for the treatment of COVID-19 infection.

The revised EUA restricts the use of sotrovimab in certain regions of the country where COVID-19 infection is likely to have been caused by a non-susceptible variant of the virus. The restriction is currently limited to the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, which make up the north-eastern part of the country. The therapy is also no longer authorized for use in New Jersey, New York, Puerto Rico and the Virgin Islands.

The FDA’s decision to limit the EUA for Glaxo/Vir Biotechnology’s antibody therapy is based on new data, which showed that the treatment option was not effective against the Omicron BA.2 subvariant. Per the latest available CDC data (as of Mar 19, 2022), more than 50% of cases in the above-mentioned regions were attributable to the BA.2 subvariant.

The Omicron variant of the COVID-19 virus is currently the dominating variant in the United States. In fact, the variant has several sublineages, the most common being BA.1 and BA.2. Per WHO, the BA.2 subvariant is more transmissible than the BA.1 subvariant. Per CDC (as of Mar 19, 2022), BA.2 accounts for more than one-third of COVID-19 infections in the United States.

Following the revision, both Glaxo and Vir Biotechnology are in the process of preparing a data package that will support the use of a higher dose of sotrovimab against the BA.2 subvariant. This data will also be shared with health regulators across the world for discussion.

In the year so far, Glaxo’s shares have declined 1.9% against the industry’s 2.5% rise.

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Image Source: Zacks Investment Research

Shares of Vir Biotechnology have plunged 47.9% in the same period in comparison with the industry’s 13.8% fall.

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Image Source: Zacks Investment Research

In an SEC filing by VIR, the company has ensured investors that it still expects to record revenues from sortrovimab sales amounting to $1.1 billion in first-half 2022 and a biologic license application filing with the FDA in second-half 2022 for the therapy remain on track.

The FDA’s amendment of the EUA for sotrovimab comes as a major blow, as there are just a handful of treatments authorized for use in COVID-19 infections. We note that the COVID-19 treatment options developed by two pharma giants Pfizer (PFE - Free Report) and Merck (MRK - Free Report) , which market their respective oral antiviral pills, are expected to be effective against the BA.2 subvariant.

Pfizer’s Paxlovid and Merck’s molnupiravir are the recently authorized oral treatment options in the non-hospitalized setting for COVID-19 infection that were granted EUA by the FDA in December 2021. In fact, both Pfizer and Merck have released pre-clinical/clinical data, which has shown that their respective pills are active against the Omicron variant.

Pfizer generated $76 million from Paxlovid’s U.S. sales in fourth-quarter 2021. PFE expects to generate revenues of $22 billion from Paxlovid sales in 2022.

Merck’s molnupiravir generated sales of $952 million during the fourth quarter. Merck expects sales in the range of $5-$6 billion from molnupiravir in 2022.

Earlier this year in January, both Eli Lilly and Regeneron also faced a similar setback for their respective antibody cocktails for COVID-19 treatment. The FDA revised the EUA granted to the antibody cocktails developed by these two companies based on data showing that the treatments are unlikely to be effective against the Omicron variant.

Zacks Rank

Both GlaxoSmithKline and Vir Biotechnology carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.