AEZS Stock: Aeterna Zentaris Climbs on COVID-19 News

Aeterna Zentaris Inc. (NASDAQ: AEZS) is screaming for the top in the premarket hours after announcing that it has entered into an agreement that gives it access to a potential COVID-19 vaccine. 

Beyond the vaccine news, many are wondering if AEZS stock is going to be the next target of the Reddit group, Wall Street Bets. 

Here’s what’s happening:

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Aeterna Zentaris Announces COVID-19 News

Aeterna Zentaris said in a press release that it entered into an exclusive option agreement to evaluate a preclinical potential COVID-19 vaccine. The vaccine was developed by Julius-Maximilians-University Wuerzburg, a leading research institution in Germany. 

AEZS went on to explain that the vaccine technology uses a typhoid fever vaccine as a carrier strain and has the potential to be an orally active COVD-19 live-attenuated bacterial vaccine. 

According to the option agreement, AEZS has the right to negotiate an exclusive worldwide license to develop the technology for the prevention of coronavirus disease. 

AEZS said that if it is determined that there’s sufficient data to advance into human clinical trials, the development program for the vaccine is expected to be abbreviated as clinical safety data is already available for the underlying vaccine strain. 

The company went on to say that it expects to make a decision with regard to the option to license the vaccine by mid-2021. 

Management Commentary

In a statement, Dr. Klaus Paulini, CEO at Aeterna Zentaris, had the following to offer:

While vaccines for COVID-19 have been developed, we believe there is opportunity for improvement. That includes the potential to develop a more cost-effective oral alternative with less onerous storage requirements than the currently approved COVID-19 vaccines.

We are optimistic that results from further studies of this new vaccination approach may offer a much needed, safe and effective immunization alternative against COVID-19. Aeterna will contribute its expertise and experience in preclinical development and GMP-compliant manufacturing to the project.

Our new vaccine technology based on the live-attenuated Salmonella Typhi Ty21a strain modified to present two viral antigens, opens the opportunity for a new oral vaccination strategy which may have the potential to prevent people from infection with SARS-CoV-2. In addition, the use of dual antigens in one vaccine strain, may lower the likelihood of evolution of resistant viral mutants. We believe that a positive decision by Aeterna Zentaris to license this technology will start a fruitful collaboration with Aeterna, with the aim to begin the clinical development as soon as possible.

Is AEZS the Next Wall Street Bets Short Squeeze Target

While the news that AEZS is considering licensing a potential COVID-19 vaccine is exciting news, there’s undoubtedly buying into the stock this morning in hopes that it will be the next Wall Street Bets short squeeze target. 

Along with the good news, AEZS stock trades with short volume sitting at about 26%. That’s pretty high short interest, suggesting that there’s plenty of room for a squeeze. 

Going beyond the short interest, the stock trades with a pretty small float. At the moment, the public float sits at just 58.74 million shares. With such a small supply of shares, if a retail group like Wall Street Bets were to latch onto the stock, it would be pretty easy to push a short squeeze based simply on the law of supply and demand. 

Risks to Consider Before Buying AEZS Stock

Investing comes with risk. That’s true no matter what asset class you’re investing in or what specific asset you buy. When it comes to AEZS, the most significant risks to consider include:

  • Clinical Stage. Aeterna Zentaris is a clinical stage biotechnology company. As a result, it comes with increased risk. If a clinical trial fails, significant losses will be likely. 
  • Regulatory Risk. Once AEZS makes it through all clinical stages, it is at the mercy of regulatory authorities. If regulatory agencies find holes in the data, they could deny commercialization applications, resulting in significant losses. 
  • Penny Stock Risk. Finally, AEZS is a penny stock, which adds further risk. In particular, penny stocks represent companies that haven’t quite proven their business models and don’t usually generate profits. Moreover, these stocks experience high levels of volatility, which makes entrance and exit decisions difficult and losses happen fast. 

Final Thoughts

While Aeterna Zentaris is a risky play, the stock has the potential to be a strong short-term play for those that know what they’re doing in the market. In particular, if retail investors were to latch onto this stock like they did with GameStop or BioCryst Pharmaceuticals, this stock could fly. So, keep it on your watchlist.