Altimmune; Overreaction On NASH Data Creates Buying Opportunity (NASDAQ:ALT)

Altimmune (NASDAQ:ALT) traded lower by at least 40% after announcing results from its clinical data from its phase 1b study, using its drug pemvidutide for the treatment of patients with NASH. I believe the stock trading lower by this amount is unwarranted. Why do I believe this to be the case? That’s because both the primary endpoint and secondary endpoints were both met. The primary endpoint of reduction of liver fat was met in the 12-week period and the secondary endpoint of weight loss was also met. Based on this highly positive clinical data, plus the stock trading lower by such a huge amount, I believe it creates a great opportunity to buy the stock. I think that the selloff is a huge overreaction based on what was released. What I think may have contributed to the stock of Altimmune trading lower, is the positive results that Akero Therapeutics (AKRO) obtained the other day, however, I don’t believe these results should be compared. I will explain more below, but the premise is that Altimmune is only looking at liver fat reduction and ALT levels in these NASH patients (plus weight loss). Whereas Akero Therapeutics is further along and was testing other endpoints such as at least one stage improvement in liver fibrosis with no worsening of NASH by week 24 and NASH resolution without worsening of fibrosis. Akero released liver fat reduction results back in March of 2020. Therefore, you can’t compare these different endpoints. I believe this false comparison is what likely led to the stock trading lower. However, this creates a great buying opportunity for Altimmune’s stock. Especially, considering that there are two catalysts still on deck for this company. The first catalyst is the release of 24-week NASH data expected in Q4 of 2022. This provides an extended treatment period and it’s possible longer treatment with pemvidutide may provide greater weight loss for these patients. In addition, results from the MOMENTUM study, which is using pemvidutide for obesity, is expected to have an interim analysis by Q1 of 2023. Results from another phase 2 study, using HepTCell for the treatment of patients with chronic Hepatitis B, are expected in the 2nd half of 2023.

Pemvidutide Achieves Both Intended Endpoints Of Trial

What is crazy is that there was a huge overreaction of the data that was released, with the stock trading lower by more than 40% after the news was announced. However, as I stated above, I believe it offers a great entry point for investors. That’s because if you look at the clinical data itself, the primary and secondary endpoints of the phase 1b study were both met. The drug pemvidutide not only obtained both of these endpoints for this study, but was also well tolerated with no serious or severe adverse events (AEs) noted. This phase 1b study recruited a total of 94 patients with NASH and obesity. They were randomized 1:1:1:1 to the following doses:

• 1.2 mg pemvidutide
• 1.8 mg pemvidutide
• 2.4 mg pemvidutide
• Placebo

The primary endpoint of this study was the percent reduction in liver fat content from baseline. The secondary endpoint look at the percent of weight loss from baseline. Both of these endpoints were measured over a 12-week period. The mean reduction live fat percentage primary endpoint was met in all dosing groups and was as follows:

• 1.8 mg dose achieved 68.5% mean reduction of liver fat
• 1.2 mg dose achieved 46.6% mean reduction of liver fat
• 2.4 mg dose achieved 57.1% mean reduction of liver fat

All these doses compared to placebo achieved statistical significance. A reason why I believe the stock might be trading lower is timing. As stated in the beginning Akero Therapeutics released positive results from its phase 2b NASH study using its drug efruxifermin. Again, I must reiterate though that it is false to draw comparisons from Akero’s phase 2b study to Altimmune’s phase 1b study. Why is that? That’s because Akero is further along and was testing more robust endpoints. These were endpoints for its phase 2b NASH study using efruxifermin as follows:

• Primary endpoint #1 – One stage improvement in liver fibrosis with no worsening of NASH by week 24
• Primary endpoint #2 – NASH resolution without worsening of fibrosis

As you can see above, it is flawed to make comparisons to entirely different endpoints. If this is the case, then what about Akero’s results dealing with mean relative reduction percent of liver fat? Going back to March of 2020 you can see that Akero’s efruxifermin achieved 71% relative reduction of liver fat using 50 mg dose over 12-weeks. If you want to draw comparisons, then Akero’s drug performed roughly 3.5% better which is not much of a difference if at all. If anything, this confirms that once Altimmune gets its drug to a phase 2b study testing out these other very important NASH endpoints, then it too should achieve a closely similar positive outcome. My point here is that I think the drop has to do with timing of the release of results for Altimmune and possibly the immediate comparison to Akero’s data. However, as I laid out above, I believe that once Altimmune gets its own phase 2 going then it should also achieve a highly positive outcome.

Two Catalysts Remain On Deck For Potential Upside

Setting aside the NASH liver fat reduction percent being explored in the phase 1b study by Altimmune with pemvidutide, it also evaluated weight loss data. This weight loss data is also important, because the patients recruited didn’t just have NASH, they were also obese. This means that achieving weight loss was also an important outcome to evaluate. Again, the 1.8 mg dose of pemvidutide (including both patients with diabetes and without diabetes) achieved an average of 4.3% weight loss. This was another endpoint that was met for the phase 1b study. I believe there is an opportunity for investors though to possibly see a recovery of the stock. What do I base this on? Well, there are two catalysts approaching. The first being topline results from the phase 1b study (12-week extension). The patients who had completed the first 12 weeks from the study are going to be treated for another 12 weeks (total treatment of 24 weeks). The goal is to see if another 12-weeks provides additional weight loss, plus that the drug is safe/tolerable. The topline results of the 12-week extension study using pemvidutide in patients with obesity and NAFLD are expected Q4 of 2022. This won’t be the only opportunity/catalyst for investors to look forward to. Altimmune intends to release results from the phase 2 MOMENTUM study in Q1 of 2023. This trial is recruiting about 320 non diabetic patients with obesity and a least one comorbidity. Patients are being randomized to one of 4 doses of pemvidutide or placebo over 48 weeks. The goal is to release interim 24-week results from about 50% of the enrolled patients in Q1 of 2023. As you can see, there are a few other catalysts coming up which could possibly allow the stock to recover.

Financials

According to the 10-Q SEC Filing, Altimmune had cash, cash equivalents and short-term investments of $184.8 million as of June 30, 2022. It believes it has enough cash on hand to fund its operations for at least 12 months from the date of this 10-Q SEC filing, which was filed on August 11, 2022. This gives its roughly one year worth of cash. It will likely not wait to raise cash until then, my estimate is that it might start to look raising cash at least by 1st half of 2023. It could possibly raise earlier if one of the other catalysts noted above cause the stock to trade higher. If one of the two catalysts achieve such a positive outcome, then I expect Altimmune to raise cash immediately. There is the possibility it could raise much earlier and that is because it has been using a “2021 Agreement” it made with Piper Sandler & Co., Everyone Group L.L.C. and B. Riley Securities, serving as sale agents with an at-the-market offering program. With this program it can sell from time to time at its sole discretion shares of its common stock with an aggregate offering of up to $125 million. During the six months ending June 30, 2022 Altimmune sold 2,493,202 shares of common stock under this 2021 Agreement, raising about $24.3 million in cash. Overall though, it has sold an aggregate of 7,293,656 shares of common stock raising about $89.2 million in net proceeds. It still has $32.9 million remaining that it could use in the coming months to raise additional cash if it needs to.

Risks To Business

There are several risk factors that investors should be aware of before investing in Altimmune. The first risk to consider is the upcoming readout of the 24-week extended results from the phase 1b study highlighted above. The only measurement using pemvidutide during this period will be weight loss. As such, there is no guarantee that the results will improve over this extended time, nor that the market will react appropriately even if the results are positive. The second risk to consider would be the results from the phase 2 MOMENTUM study, which is expected to recruit up to 320 patients. This is a very large population, however, the biotech will release interim results with only 50% of the patients recruited. There is no assurance that these interim results, which are expected Q1 of 2023, will end up being good. The final risk to consider would be in terms of the financials. As I stated above, Altimmune believes it has enough cash to fund its operations for at least the next 12 months. As such, I think it could raise cash by at least the 1st half of 2023. I must also reiterate that it could also do so after possibly releasing positive data readouts coming up.

Conclusion

The final conclusion is that Altimmune is a great speculative biotech play to look into. It has pretty much established proof of concept in using pemvidutide in treating NASH/obese patients. As I highlighted above, both the primary endpoint of relative reduction liver fat was met and the other secondary endpoint of weight loss was also met. With two catalysts coming up, one in Q4 of 2022 (24-week weight loss phase 1b extended study) and Q1 2023 (phase 2 MOMENTUM weight loss study) I believe plenty of opportunity still exists. Even then, the biotech also has another program which is not getting much attention at the moment in its pipeline. This involves the use of HepTCell, which is being explored in a phase 2 study, for the treatment of patients with chronic Hepatitis B. Results from this mid-stage study are expected in the 2nd half of 2023 and may provide another catalyst opportunity for investors to look forward to. With proof of concept established using pemvidutide for NASH/Obesity, plus several catalysts expected within a year, these are the reasons why I believe Altimmune is a great speculative biotech play to look into. Again, it is my belief that the selloff observed after the release of NASH/weight loss data was a huge overreaction and offers investors a great entry point.