Reassessing Altimmune (NASDAQ:ALT) | Seeking Alpha

If absolute power corrupts absolutely, does absolute powerlessness make you pure?” – Harry Shearer

Today, we revisit Altimmune (NASDAQ:ALT) for the first time in a year and a half. We concluded that article noting the shares seemed worthy of a small ‘watch item‘ position pending further developments. The stock has been on a big tear recently, rising up to 52-week highs. Therefore, it seems a good time to circle back on this small biotech name. An analysis follows below.

Company Overview:

Altimmune is a clinical stage developmental concern based out of Maryland. In our last article, we spent some time discussing the company’s Covid development efforts, which are no longer being prioritized. In fact, they have discontinued all activities around their T-Covid program.

The company’s lead product candidate is called pemvidutide. This is a GLP-1/glucagon dual receptor agonist that is in Phase 1b trial for the treatment of obesity and non-alcoholic steatohepatitis. In January of this year, the FDA approved the company’s Investigational New Drug or IND application for its Phase 2 clinical trial of pemvidutide for obesity.

Enrollment of this approximately 320 person study ‘MOMENTUM’ began in April. As of early August, more than half the patients needed for this evaluation were enroll. Management expects full enrollment in this trial will be achieved by the end of this month. This will be a 48-week trial with interim results out at the midpoint of the study which is expected sometime in the first quarter of 2023. The trial will evaluate relative (percent) change in body weight at 48-weeks of pemvidutide versus the baseline.

Subjects are being randomized in this trial one to one to one to one to receive either 1.2 milligrams, 1.8 milligrams, 2.4 milligrams Pemvidutide or placebo administered weekly over the 48-week regimen.

Results of a Phase 1 study were encouraging especially at the 1.8mg dosage, although it should be noted that five of the nine individuals in that cohort did experience mild nausea. Management believes believe that pemvidutide has the potential to achieve weight loss equal to or exceeding 20% after only 48-weeks of treatment. This would confirm the benefit of adding a glucagon agonism to GLP-1 monotherapy.

There currently is a 12-week Phase 1b trial of subjects with obesity or overweight and Nonalcoholic fatty liver disease or NAFLD underway. 94 subjects are participating in this study and are randomized one-to-one to one-to-one to 1.2 milligrams, 1.8 milligrams, 2.4 milligrams Pemvidutide or placebo over 12-weeks of treatment. NAFLD in this trial is defined as a 10% or greater liver fat content as measured by MRI-PDFF. NAFLD often can lead to Non-Alcoholic SteatoHepatitis or NASH, which is a far more serious disease and huge potential market. Results of this evaluation should be disclosed at the middle of this month. Top line data will include an assessment of liver fat, weight loss, serum lipids, and safety at 12 weeks of treatment.

The company is also developing HepTcell, which is an immunotherapeutic product candidate, targeting patients chronically infected with the hepatitis B virus. The company is continuing to enroll in a Phase 2 trial of HepTcell in subjects with inactive Chronic Hepatitis B and management expects to have a data readout from this study in the second half of 2023.

Currently the stock trades just above $22.00 a share and sports an approximate market capitalization of $1.1 billion.

Analyst Commentary & Balance Sheet:

The analyst community is optimistic on the company and the stock these days. Over the past month, six analyst firms including Piper Sandler and Jefferies have reissued Buy ratings. Price targets proffered range from $25 to $50. Half of these contained slight upward price target revisions it should be noted.

Approximately one out of every eight shares in ALT are currently held short. Three insiders have sold just over $1.8 million worth of shares in aggregate since late June. The company ended the second quarter with just under $185 million of cash and marketable securities on its balance sheet after posting a net loss of $20.1 million for the quarter. The company also had approximately $32.9 million in availability remaining under an ATM facility at the end of the quarter.

Verdict:

Altimmune is targeting some very large markets. Morgan Stanley this summer projected this market could rise from $2.4 billion currently to $54 billion in 2030. Morgan’s analyst also said the market could end up being dominated by Novo’s (NVO) FDA-approved weight loss therapy, Wegovy (semaglutide) and Eli Lilly’s (LLY) tirzepatide. This compound is already approved in this country for diabetes. In early spring of this year, Eli Lilly disclosed late-stage data to demonstrate the weight loss benefit of tirzepatide in patients without diabetes.

Altimmune’s management also believes this market is going to grow dramatically in coming years, reaching over $27 billion by 2028. The company has some ways to go before any potential commercialization. It is likely to face entrenched competition in the Obesity space from larger players, but the market is big enough for multiple players especially if Altimmune’s candidate has some superior attributes. NASH is another potential huge market with myriad drug and biopharma concerns trying to develop effective treatments currently.

That said, the company is likely going to have to do another significant capital raise before getting either pemvidutide or HepTcell across the finish line. As another article on Seeking Alpha recently noted, Altimmune is a speculative concern at this moment. A small ‘watch item‘ position would seem to remain the way to go pending further developments and trial data.

That’s the beauty of corrupt men, you can always rely on them to be corrupt” – Stuart Turton