The first generation of weight loss medications, like Wegovy and Ozempic, has attracted explosive attention. The market for these treatments was valued at $3.83 billion in 2023 and is expected to grow at a CAGR of 49.85% from 2024 to 2029. This growth has attracted investors’ attention to biopharma companies like Altimmune (NASDAQ:ALT), which are working on the next generation of weight loss treatments.
The company’s leading clinical-stage candidate, pemvidutide, looks to be a promising therapy for obesity and metabolic dysfunction-associated steatohepatitis (MASH). Pemvidutide’s potential success, which is still theoretical, could establish it as a leading therapy in one of healthcare’s fastest-growing markets, providing an opportunity for significant returns. The stock is currently a speculative play with high-risk, high-reward potential.
Altimmune’s Lead Treatment Candidate
Altimmune, a clinical-stage biopharmaceutical company, is making strides in its peptide research, developing therapeutic agents with the potential to treat serious health conditions like liver disease and obesity-related ailments. Its leading drug candidate, pemvidutide, is currently wrapping up Phase 2 clinical trials and has shown promising results in the treatment of obesity and metabolic dysfunction-associated steatohepatitis (MASH).
Recognizing its potential, the U.S. FDA granted it Fast Track designation for treating MASH. In addition, obesity is a global condition affecting over 1 billion people worldwide, wand there is a great demand for effective treatments that address obesity and its comorbidities.
If approved, the drug could capture a significant market share in the obesity and MASH treatment markets, with expected peak sales exceeding $5 billion. Currently, the company seeks a distribution partner to help shoulder the cost of bringing the treatment to market, and an announcement of a partnership with a large pharma company could drive the share price higher.
Analysis of Altimmune’s Recent Financials
Altimmune recently announced first-quarter financial results for fiscal year 2024. The company reported a rise in its Research and Development costs from $17.2 million in 2023 to $21.5 million in 2024, with the majority of this increase coming from the direct costs linked to its development initiatives for pemvidutide and the wrap-up of the HepTcell program.
General and administrative expenses also increased from $4.5 million to $5.3 million, with the main contributor being a $0.6 million increase in stock compensation and other labor-related costs. Despite these outlays, interest income notably rose from $1.7 million to $2.4 million, primarily attributed to a growth in interest income from cash equivalents and short-term investments.
The net loss for this period was $24.4 million, a rise from 2023’s Q1 net loss of $20.1 million. Despite this, the company reported a higher-than-expected GAAP EPS of -$0.34, beating analyst expectations by $0.02.
The company’s financial health remains solid, with a cash reserve totaling $182.1 million. Analysts project these funds are sufficient to sustain the company through its IMPACT trial and into the first half of 2026. However, the company’s cash burn escalation is a concern, and further funding may be necessary to facilitate the progress of larger trials and potential market expansion. As things stand, this will likely reduce value for shareholders.
Is ALT Stock a Buy?
Analysts covering the company have mostly been constructive about the stock. For example, JMP Securities analyst Jonathan Wolleben recently reiterated an Outperform rating while lowering the price target on the shares to $24 from $25. He indicated that data from the Phase 2b IMPACT trial remains on track for 1Q25, where success on endpoints is likely.
Altimmune is rated a Strong Buy based on the ratings and price targets assigned by six analysts over the past three months. The average price target for ALT stock is $23.20, representing a potential upside of 259.41% from current levels.
As a clinical-stage company, the stock’s valuation is purely speculative and subject to wild swings, making it highly volatile. After a 64% jump over several days in early February, the stock has cascaded down 47% and trades in the middle of its 52-week price range of $2.09-$14.84, showing ongoing negative price momentum, trading below its 20-day (7.48) and 50-day (7.86) moving averages. Any positive news will likely catalyze the shares sharply higher.
Final Analysis on ALT
Altimmune has pegged its fortunes on the success of its lead pipeline candidate, pemvidutide. The drug shows the potential to be a blockbuster in a rapidly growing market. Yet, hurdles still need to be overcome, including further clinical testing and final FDA approval making it a highly speculative play. The stock’s high risk, high reward potential may be attractive to investors willing to engage in a more risky biopharma opportunity.
