Arcturus Therapeutics Holdings Inc (NASDAQ:ARCT) shares were retreating sharply Tuesday after the company issued an update on its coronavirus vaccine program.

What Happened: San Diego, California-based Arcturus announced interim data for a Phase 1/2 study of its vaccine candidate ARCT-021 that shows a favorable safety profile and a less favorable immunogenicity data.

Out of the 106 participants enrolled in the study, 78 received ARCT-021 and the remaining 28 received placebo, with the treatment arm being administered a 5mcg single dose or 7mcg single dose, or a prime-boost regimen of two doses of 5mcg of the vaccine candidate.

All the 44 subjects administered the doses selected for Phase 2 study — either 5mcg or 7.5mcg — had a humoral immune response for binding and/or neutralizing antibodies, the company said.

Yet the responder peak geometric mean neutralizing antibody titers were 32 for the 5mcg single dose arm, 33 for 7.5mcg single dose arm and 46 for 5mcg prime-boost dose arm.

This compares unfavorably to neutralizing titers in convalescent titers, which ranged from 12 to 1,818.

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The thesis that ARCT-021's differentiated saRNA platform could potentially produce strong humoral and cellular immune responses after vaccination with a single dose would have been strongly supported by neutralizing antibody titer levels two to four times higher than those seen in a convalescent sera panel, Raymond James analyst Steven Seedhouse said in a note.

Vaccine candidates from Pfizer Inc. (NYSE:PFE) and Moderna Inc (NASDAQ:MRNA) elicited neutralizing antibody titers of four times the convalescent sera panel.

"This reduces our confidence that ARCT-021 will be able to achieve competitive levels of vaccine efficacy with single-shot dosing," the analyst said.

Arcturus said the cellular immune responses to SARS-CoV-2 peptide pools were evident by day 15 for 5mcg and 7.5mcg doses.

Announcing new preclinical data, Arcturus said both single administration and prime-boost regimens of ARCT-021 were significantly effective in a primate challenge model.

Arcturus Gets Nod For Phase 2 Study Initiation: Arcturus said it has received approval from the Singapore Health Sciences Authority to proceed with a Phase 2 clinical study of its vaccine candidate ARCT-021.

What's Next For Arcturus: The company said the Phase 2 study will enable selection of the optimal ARCT-021 vaccination regimen for Phase 3 registrational studies.

Interim data from the Phase 2 study is likely to be released in early 2021, paving the way for the initiation of a global Phase 3 study in the second quarter of 2021.

ARCT Price Action: Arcturus shares have run up from a little over $10 at the end of 2019 to $100-plus, with the buoyancy attributable to its vaccine program.

The stock was down 52.22% at $44.16 at last check Tuesday. 

Given the underwhelming results from the Singapore-based Phase 1/2 study, Raymond James downgraded shares of Arcturus from Outperform to Market Perform and also removed a $73 price target.

H.C. Wainwright analyst Ed Arce downgraded the shares from Buy to Neutral and reduced the price target from $84 to $50.

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