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3 Reasons Altimmune Stock Could Be the Next Viking Therapeutics

Altimmune (NASDAQ:ALT) And Viking Therapeutics (NASDAQ: VKTX) have a lot in common, but the performance of their stocks is not one of them, at least for now. While Viking’s shares have risen 610% over the past three years, Altimmune’s have fallen 54%.

However, there are several arguments why Altimmune’s next move could be more like Viking’s, so let’s look at three reasons why it could be the next weight-loss biotech company to take off.

1. The company is targeting the same astronomically large market

If you have been following the biopharmaceutical sector lately, you know that weight loss drugs such as Eli Lilly‘s Zepbound and Novo NordiskWegovy products are all the rage. According to the World Health Organization (WHO), by 2025, nearly 1 billion people worldwide will meet the criteria for obesity.

The lure of the profits to be had in this market is driving investors to push Viking’s stock higher – and the same could now be happening with Altimmune, which is also developing an obesity drug. Estimates of the market’s dollar value vary widely, but there is agreement that simply calling it “big” is an understatement. According to some calculations by Morgan StanleyIts value could reach up to 77 billion dollars by 2030.

Biotech companies like Altimmune and Viking are unlikely to be able to grab the lion’s share of the pie, as Novo Nordisk and Eli Lilly currently do. Aside from being relatively late to the market compared to the big pharma companies, they also lack the manufacturing and distribution capacity to meet most of the unmet demand.

Still, as the rise in Viking stock shows, investors are more than willing to bet on them capturing enough market share to achieve tremendous growth. After all, it’s easier to post massive profits when you’re starting from zero revenue, so the barrier to success is pretty low.

In other words, from an investor’s perspective, a complete conquest of the market is not necessary at all; a relatively small market share will probably be enough. Here, too, Altimmune’s situation is very similar to that of Viking before its rise.

2. There is a promising and differentiated candidate in the works

Viking shares rose thanks to very positive data from mid-stage clinical trials for its lead candidate, suggesting it may be more effective than offerings from Novo Nordisk and Eli Lilly because it produces weight loss faster. Altimmune just reported similarly positive data, and in one important way, its candidate may be even better. Here’s why.

The biotech’s lead program is called pemvidutide, and the company currently plans to meet with the Food and Drug Administration (FDA) in the third quarter of this year to discuss how to proceed with Phase 3 clinical trials. According to data from the Phase 2 trial, patients treated with the highest dose of the drug tested for 48 weeks lost an average of 32 pounds, or 15.6 percent of their body weight. Treatment continued beyond that time could result in even more weight loss, which is a plus.

Moreover, according to data presented by the company on June 23, only 21.9% of this weight loss was due to the loss of muscle tissue, with the rest due to the loss of fat. This is a critical point, since one of the drawbacks of the current market leaders Wegovy and Zepbound is that they lead to a significant loss of muscle mass. In short, Altimmune’s candidate has a serious chance of outdoing the big boys, which is quite optimistic, even if the results need to be confirmed in further clinical trials.

3. The balance sheet looks great

Similar to Viking Therapeutics, Altimmune’s balance sheet is more than strong enough to provide the company with most of the financial resources it needs to bring its candidate to market, even if that process will take several years.

The company has no long-term debt and has $182 million in cash, equivalents and short-term investments. Total operating expenses for the trailing 12 months (TTM) were $89 million, so the company does not need to raise cash for the next 12 months and perhaps even a little longer.

If the company does eventually manage to raise money, it will have plenty of room to do so either by issuing new shares or by taking on debt. The decision will likely depend on how much the hype surrounding the company’s clinical trial results has boosted share prices – so be careful, and you won’t be surprised if your shares get diluted.

Should you invest $1,000 in Altimmune now?

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Alex Carchidi does not own any stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

3 Reasons Altimmune Stock Could Be the Next Viking Therapeutics Originally published by The Motley Fool

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