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Pemvidutide’s Pounds and Problems: Altimmune’s Balancing Act
Since December, Altimmune’s (NASDAQ:ALT) stock has nearly tripled since revealing obesity data (MOMENTUM) in late November for their GLP-1/glucagon agonist, pemvidutide (subcutaneous weekly). Altimmune is not the first to study GLP-1/glucagon agonism. Several drugs are currently in development, including Merck’s (MRK) efinopegdutide, Eli Lilly’s (LLY) LY3437943, and Boehringer’s BI 456906, all of which are weekly subcutaneous injections in Phase 2 development. Other GLP-1/glucagon agonists have been discontinued in the past due to gastrointestinal distress. The key appears to be a suitable balance of GLP-1 and glucagon agonism. Keep in mind that GLP-1 alone creates gastrointestinal problems, and glucagon stimulation exacerbates the problem.
In Altimmune’s Phase 2 study, weight loss was dose-dependent with pemvidutide, showing -10.3%, -11.2%, and -15.6% reductions at 1.2 mg, 1.8 mg, and 2.4 mg doses, respectively, compared to -2.2% with placebo after 48 weeks. Over 80% of subjects on the highest dose achieved more than 5% weight loss, and improvements were also seen in cholesterol and triglyceride levels. However, adverse events led to high discontinuation rates, especially at higher doses (19.2% and 19.6% for 1.8 mg and 2.4 mg doses, respectively), with gastrointestinal issues being the most common. Drug-related AEs leading to discontinuation were notably higher in the treatment arms compared to placebo.
Altimmune
The number of discontinuations is striking when compared to Novo’s (NVO) GLP-1 agonist, Wegovy, which saw a discontinuation rate (related to an adverse reaction) of 6.8%.
When adjusting for placebo, pemvidutide’s nausea (48.3% for 1.8 mg) and vomiting (24.7%) AEs are noticeably higher than Wegovy’s (28% and 18%, respectively).
Novo
This disparity likely explains the observed difference in discontinuation rates. I would not think that pemvidutide’s theoretically negligible weight reduction advantages over drugs like Wegovy offset any tolerability difficulties.
Altimmune
The company is likely to go forward with the 1.8 mg dose as dose titration in the 2.4 mg cohort (described in the image above) didn’t have much impact on adverse events and discontinuations. I’ve seen some posters on social media cite the lack of dose titration for the 1.8 mg dose as a potential differentiator relative to other obesity drugs. I don’t find this to be a compelling differentiator considering the theoretical costs is an increase in side effects (which is the reasoning for titration to begin with). Now, if the drug was exceptionally well-tolerated (e.g., low drop-out rates due to adverse events), the absence of titration would be a differentiator. However, this does not appear to be the case for now.
In comparing Altimmune’s efficacy data to that of a peer, Boehringer’s BI 456906 data look superior at a glance. Of the two groups, 67% of BI 456906 patients achieved body weight loss of 15% or more, while 51.8% of pemvidutide patients achieved the same. Conversely, 24% of BI 456906 patients discontinued treatment because of an adverse event; the company stated that “most treatment discontinuations due to adverse events occurred during the rapid dose-escalation phase and may potentially be mitigated with more gradual dose escalation.”
Financial Health
Altimmune’s balance sheet showcases $140.8 million in assets, with notable liabilities like Accounts Payable ($3 million) and Accrued Expenses ($8.8 million), yielding a strong current ratio of 12.9. Despite a $59.3 million cash burn over nine months, their 21-month runway indicates manageable short-term liquidity. However, with a moderate risk of needing additional funds within a year, Altimmune’s immediate financial health is stable, but future sustainability hinges on reducing expenses or securing more capital.
Market Sentiment
According to Seeking Alpha data, the company has a market capitalization of $520.63 million, suggesting a mid-cap entity with specific market niche volatility. Its stock momentum has been exceptional, with a +258.89% increase over 3 months, significantly outperforming the SPY in the short term, despite a -30.04% decline over one year.
Short interest stands at 21.14%, representing a high level of market skepticism or speculative interest in the stock’s future price movements. Institutional ownership shows mixed sentiment, with 948,469 new positions and 1,787,438 sold-out positions. Notable holders include Blackrock, Nuveen Asset Management, and Vanguard, indicating a level of institutional confidence despite the overall challenging outlook. Insider trades reveal net sell activity over the past three months, with 22,133 shares sold, contrasting with a net buy of 12,209 shares over the past twelve months. Considering these factors, the company’s market sentiment can be qualified as “fragile.”
Is ALT Stock a Buy, Sell, or Hold?
Key takeaways:
- Several GLP-1/glucagon agonists are under development.
- It will be essential for GLP-1/glucagon agonists to have some kind of safety, efficacy, or convenience advantage (without a negative effect) over GLP-1s because, if one or more of them are approved, they will have to compete with GLP-1 medications that will already be well-established among prescribers and payers. This advantage is not yet clear.
- Weight loss drugs like semaglutide and tirzepatide are also approved in diabetes due to their ability to lower hemoglobin A1c. Obesity and diabetes are often linked together. This would reduce the obesity market (by roughly 30%) for drugs like pemvidutide that have yet to prove efficacy in diabetes.
- Moreover, GLP-1/glucagon agonists may also have to compete with other GLP-1/glucagon agonists.
- Altimmune’s GLP-1/glucagon agonist, pemvidutide, doesn’t appear to have a differentiated profile relative to other GLP-1/glucagon agonists.
Considering Altimmune’s promising yet precarious position with pemvidutide, the company confronts a complex path toward commercial success. While the stock’s substantial rally reflects optimism, the underlying efficacy against obesity must be weighed against significant competition and safety concerns. Pemvidutide’s journey to become the leading GLP-1/glucagon agonist among many contenders is fraught with challenges, not least of which include standing out in a crowded field where it must not only surpass its direct competitors but also demonstrate compelling advantages over the established and dominant GLP-1 agonists.
Given these dynamics, the recommendation to maintain a “hold” on Altimmune’s stock is underscored by strategic caution. Although I am pessimistic about Altimmune’s long-term clinical and market prospects, it’s difficult to be too pessimistic with its market capitalization of just $500 million. Given ALT’s erratic price behavior in the past, it would not surprise me to see the rally carry on.
Investors are advised to adopt a vigilant approach, mitigating risks while closely monitoring the evolving landscape of clinical outcomes and market shifts. This nuanced stance acknowledges the potential of Altimmune’s pipeline but also recognizes the hurdles to achieving standout commercial success in a competitive and rigorous market. Balancing optimism with prudence allows investors to navigate the uncertainties ahead, leveraging opportunities while preparing for the complexities inherent in the biopharmaceutical sector’s advancement.
