Altimmune: Weight Loss Data Signals A Costly Confusion (NASDAQ:ALT)

Altimmune (NASDAQ:ALT), I see, has done quite well since it switched from being an infectious disease player to a NASH player. Since my April article, it is up 50% – at one point before its recent crash, it was up 400%.

Altimmune’s NASH molecule Pemvidutide showed very good phase 1 data with consistent reduction in obesity, which was marred by ALT elevation in a single patient, which tanked the stock at the time, although the ALT was resolved after the patient’s dose was paused. There was also a greater than 90% reduction in liver fat by MRI-PDFF at 6 weeks. 1.8mg Pemvidutide was the best dose, which reduced weight at a better rate than Novo Nordisk’s (NVO) anti-obesity drug semaglutide, with less side effects. There are various reasons the cross-trial comparison is not proper, including the fact that the data we have available for Pemvidutide is for 12 weeks, while for semaglutide it is 68 weeks. However, the data was still indicative of drug activity.

In my April article, I provided the following summary of planned activities for the company:

The company initiated a phase 1b NAFLD study in October, which will read out in H1 2022. Based on the findings of the NAFLD study, the Company intends to initiate a 52-week biopsy driven Phase 2 NASH study in 2022. Another phase 2 trial in obesity started enrolling this year. The study is expected to enroll 320 non-diabetic patients in the US. Data is expected next year.

This NAFLD study read out on September 14, 2022. On that day, 44 million (!) shares changed hands. ALT has a low trading volume of around 60,000, so this was huge. Much of this was something of a fire sell, with the stock slumping over 60% on that day. The market reaction would make it appear that the trial was a failure, which it certainly was not. The phase 1b trial met its primary endpoint by showing relative and absolute reductions in liver fat in patients with non-alcoholic fatty liver disease (NAFLD). Other key points:

• All 3 pemvidutide dosing groups (1.2 mg, 1.8 mg, 2.4 mg) achieved the primary endpoint of relative and absolute reductions in liver fat, with a 68.5% relative reduction in liver fat content in subjects receiving 1.8 mg dose at 12 weeks of treatment

• Mean weight loss of 4.9% (placebo-adjusted 4.7%) in subjects without diabetes receiving 1.8 mg dose at 12 weeks of treatment

Another key data was that mean serum ALT levels declined in all patients. In people with baseline serum ALT above 30 IU/L, levels declined more than 17 IU/L at all dose levels and 27.0 IU/L in the 2.4 mg dose group.

Despite the positive data, the slump in the stock price indicates major profit taking, not a correction.

However, note that obesity data, at least in this patient population, at all doses, was not so good. Mean weight loss hovered below 5%, much lower than what was seen in the earlier trial, and in semaglutide. Of course, these were different patient populations, and obesity reduction wasn’t the main goal of the trial. As Dr. Stephen A. Harrison, Medical Director, Pinnacle Research, and Principal Investigator, noted, “It is important to recognize that the baseline liver fat content and demographics in this study diverged substantially from a typical obesity study population.”

Speaking about the huge loss in stock value over the obesity data, Piper Sandler said:

…the reaction may be due to 4.7% weight-loss which came in below Street estimates and suggests that it is in alignment with Eli Lilly’s (NYSE:LLY) tirzepatide, sold as Mounjaro (6% placebo-adjusted) and Novo Nordisk’s (NVO) semaglutide (4% placebo-adjusted) at 12-weeks.

The analyst firm was pleased to see the strong data in liver fat reduction, which was, for this particular trial, a much more important measure than weight loss. However, the trial population was also much smaller compared to those other trials with which it was being compared. All in all, the data was not too clear, and neither was management’s explanations.

Here’s what management said about the difference between the obesity and the NAFLD trials, and with regard to the obesity reduction data:

Now let me talk about the Phase 2 MOMENTUM trial of pemvidutide in obesity. The trial was designed to enroll approximately 320 non-diabetic subjects with obesity or overweight with at least one comorbidity. Subjects were randomized 1 to 1 to 1 to 1 to 1.2 milligrams (PH), 1.8 milligrams, 2.4 milligrams of pemvidutide or placebo administered weekly for 48 weeks in conjunction with diet and exercise.

Baseline characteristics of the fully enrolled study population include median body weight and body mass index, BMI, of approximately 101 kilograms and 36 kilograms per meter squared respectively and median fat content of approximately 5% as measured in approximately 100 subjects participating in the body composition sub-study. The study population is approximately 75% female and approximately 20% of the subjects are of Hispanic ethnicity.

These demographics contrast sharply with the study population in the 12 week Phase 1b NAFLD trial where approximately 80% of subjects were of Hispanic ethnicity and the median fat content was approximately 22%. In addition, unlike the Phase 1b NAFLD trial, the Phase 2 MOMENTUM study employs endpoints and lifestyle interventions that are standard for multicenter obesity trials.

There are two differences the company highlighted, one of which is easily understood – the difference in median fat content in these patients. What perhaps threw investors is the reference to the ethnicity of the population, with a proper explanation as to its relevance.

Altimmune has tried to differentiate its drug from the plethora of anti-obesity drugs now available in the market:

It is our expectation that a level of weight loss consistent with the class leading obesity drugs may be achieved at the end of 48 weeks of therapy. We also believe that the tolerability profile of pemvidutide, the absence of dose titration and reduction in serum and hepatic lipids could translate into greater ease of administration, improved adherence to therapy, and greater potential for cardiovascular benefit.

However, it is our opinion that simple non-inferiority in efficacy to well-established drugs may not be adequate differentiation. In order to win this market, non-inferiority in safety and superiority in efficacy may work better, along with ease of use and convenience. These things, pemvidutide does not currently have.

Catalysts expected up ahead include:

Topline 24-week data from Phase 1b trial in subjects with non-alcoholic fatty liver disease (NAFLD) expected mid-December 2022

Interim 24-week readout from MOMENTUM Phase 2 obesity trial expected Q1 2023

Financials

ALT has a market cap of $446mn and a cash reserve of $201mn. Research and development expenses were $20.3 million in the third quarter, while general and administrative expenses were $4.5 million. At that rate, the company has adequate cash for about 8-9 quarters. However, increasingly advanced stage trials will add to the expense burden.

Bottom line

ALT’s weight loss data from the obesity trial has unfortunately been compared with weight loss data from the NAFLD trial. The two are very different populations and should not have been compared. However, ALT would have fared much better if the comparison had yielded similar data – which it didn’t. Moreover, the obesity trial itself really needed to show efficacy superiority given the highly differentiated market. I find ALT interesting, but at current prices, I think I will wait for a dip.