Altimmune (ALT) Appears To Have A Winner, But Will The Market Believe?

Altimmune (NASDAQ:ALT) is a small (~$450 million market cap) clinical-stage biopharmaceutical company focused on the development of therapeutics for obesity and liver diseases. Pemvidutide is the company’s lead product candidate for the treatment of obesity and nonalcoholic steatohepatitis (or NASH). In that 12-week Phase 1b nonalcoholic fatty liver disease (NAFLD) trial, 23 subjects treated with pemvidutide 1.8 mg demonstrated significant reductions compared to the 24 placebo patients (see Table 1) in liver fat (the primary efficacy endpoint or PEP), body weight (the key secondary efficacy endpoint), and serum enzymes commonly associated with NAFLD. While caution should be used when comparing different studies, pemvidutide’s 68.5% relative reduction (RR) in liver fat, as measured by magnetic resonance imaging-proton density fat fraction (MRI-PDFF), is so much higher than the 32.9% RR by resmetirom in 78 patients of a 12-week Phase 2 trial, which topped out at 37.3% by 36 weeks, and certainly to the 17% RR by obeticholic acid (or OCA) in 40 patients from Intercept Pharmaceuticals’ (ICPT) 72-week Phase 2 FLINT trial. Investors should also consider the ramifications of Madrigal Pharmaceuticals’ (MDGL) upcoming biopsy readout for resmetirom in the Phase 3 MAESTRO-NASH study sometime in December.

Table 1. Phase 1b Efficacy End Points at 12 Weeks

	Pemvidutide 1.8 mg​	Placebo​	p-value
Absolute reduction, %​	14.7	0.2	<0.001
Relative reduction, %	68.5	4.4	<0.001
30% reduction​	94.4	4.2	<0.0001
50% reduction​	72.2	0	<0.0001
Weight loss, %	4.3	0.2	<0.001
Serum ALT, Δ from baseline	-13.8	-6.2	<0.05

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MAESTRO-NASH’s dual PEPs as assessed by liver biopsy are:

1. Resolution of NASH with at least 2-point reduction in NAFLD Activity Score (or NAS) (NASH-EP), and
2. At least a 1-point improvement in fibrosis stage, with no worsening of NAS (Fibrosis-EP).

Since these correspond to the FDA’s recommended endpoints, attaining just one is enough for accelerated approval.

Madrigal’s management is confident of achieving both. It helps that resmetirom’s performance improved in the open-label active extension study (55% RR), using the two doses evaluated in MAESTRO-NASH. Further support comes from MRI data. Liver biopsy may be the gold standard and required in pivotal NASH trials, but it is expensive, invasive, and potentially risky. While MRI-PDFF isn’t a biomarker of NASH per se, it is the most accurate non-invasive assessment method for liver fat content.

The FLINT secondary analysis helped validate the concept that a 30% decline in MRI-PDFF is associated with 2-point improvement in NAS, so resmetirom is halfway to the NASH-EP. In Phase 2 at Week 36, 60.3% of resmetirom patients met that threshold, compared to 18.4% of placebo subjects. Overall, resmetirom responders (≥30% PDFF reduction) had higher rates of NASH resolution (37%) compared to non-responders (4%). Very rough math points to 25% NASH resolution in the resmetirom group vs 12-13% in placebo, which slightly favors treatment, but the p-value could still swing into non-significance for the NASH-EP. As discussed in the previous article, resmetirom is more of an anti-NASH drug than an antifibrotic, so it is likely to whiff the Fibrosis-EP in MAESTRO-NASH.

One of the latest 2022 meta-analysis compared PDFF responders (RR ≥30%) and non-responders (RR <30%) from 7 studies and had similar results. Responders were 5.45 times more likely to achieve NASH resolution (p=0.009) and had a 41% NASH resolution rate versus 7% for non-responders (p-value <0.001). On the other end, a separate 2022 study found that 40% of PDFF responders achieved fibrosis regression by at least one stage from baseline and 6.46 times more likely to do so compared to non-responders (p=0.04). Going by the totality of these odds, it would seem pemvidutide should be able to outperform placebo on either EP no matter how high the placebo effect. The same rough math predicts an easy win of 35% vs 8% achieving NASH resolution and with a lot of wiggle room.

Financials

Altimmune had cash and investments totaling $201.9 million at September 30, 2022. They generate minimal revenues ($42,000 in 2022, $2,000 in Q3). Research and development took up $20 million of the $24 million in total Q3 operating expenses. Half of R&D was spent on pemvidutide activities. With a current burn of $23.5 million, the company looks like it’ll make good on its claim to last at least until November 2023 without requiring new financing.

Risks and Takeaways

Altimmune is one of those biotechs that have no income and pemvidutide won’t be approved for several years. The market responded negatively to positive data, and the stock has declined a further 36% since then. Topline 24-week data from NAFLD 12-week extension are expected mid-December 2022 and will very likely be positive again. How the market will react to that is unclear, so straddling may be the best strategy; for the December 16 option chain, the strikes come in $1 increments and prices probably won’t stay at $10.

The MAESTRO-NASH readout is an additional catalyst. A hit on one PEP virtually guarantees approval. Having either or both resmetirom, a Thyroid hormone receptor β agonist, and OCA, a farnesoid X receptor agonist, as first-movers validates the NASH therapeutic pipeline and will prop up the sector. Because they aren’t perfect drugs and have different mechanisms than pemvidutide, a glucagon-like peptide-1 (GLP-1)/glucagon dual receptor agonist, all can co-exist on the NASH market. Finally, investors should look for a conviction of management to believe in their drug and quickly move to initiate a Phase 3 NASH trial, which based on the Phase 1 numbers, would require a smaller and easier to recruit sample size.