Altimmune: Potential Dual Action For Pemvidutide In Obesity, NASH

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Investment Thesis Summary

A rich | vein of risk-reward has bestowed nan financial markets successful early FY23, contempt bountiful macro-pressures that still linger from nan FY22 selloff. Chiefly, cardinal slope tightening [a‘ la "The Fed"], looming recession probabilities, and, to beryllium brutally honest, a wide disconnect successful risk-appetite to these underlying economical realities. There's statement nan rally has been spurred connected by short covering and is much a compression than an integrated rally. Nevertheless, location are still galore semipermanent opportunities for those diligent capable to sift done nan marketplace generated data. With information selection, we're rigorously analyzing companies presenting pinch breathtaking maturation prospects, robust profitability characteristics and nan imaginable for valuation upside.

One emerging inclination wrong nan biotech sphere successful nan past 12-24 months has been nan advancements made successful imaginable treatments for non-alcoholic fatty liver steatohepatitis ("NASH"). Altimmune (NASDAQ:ALT) had caught a beardown bid backmost successful H2 FY22 connected nan backmost of its developments successful this regard. However, nan rally didn't continue, and ALT banal since pared backmost to nan downside pinch nary grounds of a reversal into nan caller year.

Fig. (1)


Data: Updata

As a reminder, ALT is simply a objective shape biopharma, processing caller solutions successful 2 emerging curen segments – obesity, and NASH. It has respective pipeline assets successful situ, yet its pemvidutide compound has attracted nan astir attention. It is nary caller institution – founded backmost successful '97, it changed its sanction from Vaxin to Altimmune successful FY15. Goldman Sachs analysts tip a value target to $20, a adjacent 100% return objective, citing their predictions for pemvidutide's shape 2 readouts this year. Further sell-side investigation retired of Morgan Stanley estimate a $54Bn obesity supplier marketplace by 2030, truthful naturally, we'd expect ALT to garner immoderate buying measurement if it comes done connected nan proceedings data. There's nary basal information to activity from yet, being a objective shape name, but nan quant strategy has it rated astatine a hold, and truthful does Wall St. Subsequently, this is simply a sanction for those speculating connected clinical-stage assets – and pinch these targets, it each comes down to nan proceedings data. Notwithstanding nan truth this is an already competing space, pinch nan likes of giants pinch scourges of superior specified arsenic Pfizer (PFE), Lilly (LLY), Novo (NVO) and Amgen (AMGN).

Here I'll tally done nan applicable factors for information pinch ALT, covering each of nan moving parts successful nan finance statement for nan use of our readers. Net-net, there's still a ways to spell earlier ALT proves up its pemvidutide compound crossed a ample sample, and whilst location are cardinal inflection points group for Q1 this year, we consciousness it's amended to hold for nan validity of these earlier pulling nan trigger connected affirmative readouts from its obesity studies owed successful Q1 this year. Rate hold.

Pemvidutide – imaginable dual exertion successful obesity and NASH

As mentioned, nan cardinal catalysts for ALT looking up are centred astir its investigational pemvidutide label. For reference, pemvidutide is simply a novel, long-acting glucagon-like peptide-1 ("GLP-1") receptor agonist that is presently successful improvement for a imaginable dual exertion for treating obesity and NASH. GLP-1 is an incretin hormone that is secreted by intestinal L-cells successful consequence to nutrient intake, and plays a cardinal domiciled successful nan regularisation of glucose and energy. Like different GLP-1 receptor agonists, pemvidutide acts by binding to and activating nan GLP-1 receptor, which is expressed connected pancreatic beta cells, and is besides expressed connected neurons successful nan brainstem and hypothalamus – cardinal encephalon regions progressive successful regulatory usability and emotion. Activation of nan GLP-1 receptor leads to accrued insulin secretion, inhibition of glucagon release, delayed gastric emptying, and decreased appetite. Understandably, these are factors that would apt dainty nan underlying drivers of obesity.

This is an important lever successful nan ALT finance debate. Research put out by Morgan Stanley midway past twelvemonth noted that "obesity curen could quickly go a top-12 world therapy—growing from a $2.4Bn class successful 2022 to $54Bn by 2030" [see: Figure 2], especially fixed that obesity is now "classified medically arsenic a chronic disease". The addressable marketplace for obesity is 1 that is charismatic connected an finance front. MS noted that ~650mm group globally are obese, yet only 7% of this fig acquisition aesculapian treatment. Contrast this to different chronic conditions specified arsenic diabetes, that person ~80–90% aesculapian involution rates. This is important to admit arsenic well. Other chronic conditions, specified arsenic precocious humor pressure, dementia, and much recently, intelligence health, person each demonstrated accelerated uptake for various treatments erstwhile aesculapian breakthroughs were achieved. Such is nan prospective lawsuit for obesity treatment, and companies pinch vulnerability to nan information successful this respect person been rewarded handsomely by investors complete nan past 12-months to date.

Subsequently, location are important catalysts investors must admit for ALT successful its obesity presumption due for Q1 this year:

  1. Upcoming readouts for nan shape 2 MOMENTUM study. The 48-week trial, investigating pemvidutide successful conjunction pinch fare and workout versus placebo, is group for an interim study presenting information up to nan 24-week point. Around 160 patients are enrolled successful nan cohort, pinch removal criteria including diabetes, and bodyweight + BMI beneath 101kg + 36kg/m2 respectively. The superior endpoint is nan assemblage weight delta astatine 48 weeks versus baseline.
  2. Further readouts from nan shape 1b proceedings examining pemvidutide successful patients pinch type 2 glucosuria mellitus ("T2DM"). This is simply a 12-week proceedings that will measure information and efficacy of nan compound successful nan T2DM populous, pinch ~48 patients enrolled.

Both studies are focused connected nan obesity hypothesis, meaning there's plentifulness of smart money sloshing astir fresh to beryllium allocated to nan first-moving advantage successful nan space, arsenic we've seen already. We truthful promote investors to salary adjacent attraction to immoderate updates from ALT released complete nan remainder of Q1 FY23. Positive readouts from either study could consequence successful a dense re-rating if investors work together pinch nan information presented. It is important to statement nan banal besides has >15% short interest, substantially high, hence an introduction from semipermanent buyers could besides spark a short-covering rally connected nan backmost of beardown data.

Fig. (2)


Data: Morgan Stanley Investment Research, August 2022, "Why Obesity Drugs May Be a New Blockbuster Pharma Category"

Separate to this, ALT is realizing effective proceedings momentum wrong its NASH presumption for pemvidutide. In December, it posted readouts from shape 2 RCT that sought to measure nan information and efficacy of pemvidutide successful treating individuals pinch NASH. The trial's superior endpoint was to measurement nan alteration successful liver fat contented ("LFC"). Findings showed that each pemvidutide curen groups achieved nan superior endpoint. In particular, looking astatine nan 1.8 mg and 2.4 mg dosage groups [labelled groups 1 and 2 present for convenience]:

  • The mean comparative simplification successful LFC of group 1 was 75.2% and group 2 was 76.4%
  • Also, for groups 1 and 2 respectively, 92.3% and 100% of subjects achieved a 30% simplification successful LFC
  • Moreover, astir 53.8% of group 1 and 45.5% of group 2 achieved 'normalization' of liver fat, defined arsenic liver fat fraction of ≤5%.
  • The study besides recovered that pemvidutide curen led to a statistically important alteration successful mean serum alanine aminotransferase levels successful each treated subjects.

Overall, these early-stage results show pemvidutide's information and efficacy successful action for individuals pinch NASH, pushing ALT a measurement up successful processing a imaginable curen for nan condition. This is simply a cardinal facet for information successful nan ALT finance debate, fixed nan consequence investors person shown to firm's making advancements successful nan wide NASH curen domain.

Final remarks

ALT is pre-revenue and subsequently it has a ways to spell earlier converting its pipeline assets into cash-producing assets. In position of liquidity, it has $127mm successful on-balance expanse cash, pinch different $74mm successful marketable securities. Its short-term obligations are covered >12x from liquid assets. Further, it is moving a capital-light business model, ploughing each of its rate into R&D efforts to money its objective tests for pemvidutide. Importantly, it has ~$3.90 successful tangible book worth per share, having maturation this fig crossed nan past 3-years to date.

With nan culmination of information raised present today, ALT is simply a worthwhile information for those seeking vulnerability to some obesity and NASH curen markets. Pemvidutide's imaginable dual exertion to some domains is besides a differentiator that must beryllium taken into consideration. However, positioning agelong successful nan banal correct now would beryllium a speculative move, fixed it has a ways to spell earlier proving up nan investigational compound's efficacy crossed a overmuch larger sample. Whilst some underlying markets are location for nan taking, we urge investors hold for impeding proceedings information group for readouts successful Q1 FY23 from ALT. In that regard, we complaint ALT a clasp for now, but are trigger fresh connected this name.

This article was written by

Zach Bristow floor plan picture

Buy broadside equity strategist conducting a blend of fundamental, technical, semipermanent study crossed nan wide healthcare spectrum successful developed markets. Helping you position your portfolios for nan early is my apical priority. Shoot maine a connection to talk waste and acquisition ides aliases talk portfolio construction. Disclaimer:The opinions expressed successful each articles do not represent arsenic finance advice. Please retrieve to behaviour your ain owed diligence.

Disclosure: I/we person nary stock, action aliases akin derivative position successful immoderate of nan companies mentioned, and nary plans to initiate immoderate specified positions wrong nan adjacent 72 hours. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

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